Exhibit 4
THE WARNACO GROUP, INC.
and
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Rights Agent
Rights Agreement
Dated as of February 4, 2003
TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions............................................1
SECTION 2. Appointment of Rights Agent....................................7
SECTION 3. Issue of Rights Certificates...................................7
SECTION 4. Form of Rights Certificates....................................8
SECTION 5. Countersignature and Registration..............................9
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.........................................9
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.....................................................10
SECTION 8. Cancellation and Destruction of Rights Certificates...........12
SECTION 9. Reservation and Availability of Capital Stock.................12
SECTION 10. Preferred Stock Record Date...................................14
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights........................................14
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares....22
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power..............................................22
SECTION 14. Fractional Rights and Fractional Shares.......................25
SECTION 15. Rights of Action..............................................26
SECTION 16. Agreement of Rights Holders...................................26
SECTION 17. Rights Certificate Holder Not Deemed a Stockholder............27
SECTION 18. Concerning the Rights Agent...................................27
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.....28
SECTION 20. Duties of Rights Agent........................................28
SECTION 21. Change of Rights Agent........................................31
SECTION 22. Issuance of New Rights Certificates...........................31
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SECTION 23. Redemption and Termination....................................32
SECTION 24. Notice of Certain Events......................................32
SECTION 25. Notices.......................................................33
SECTION 26. Supplements and Amendments....................................34
SECTION 27. Successors....................................................35
SECTION 28. Determinations and Actions by the Board of Directors, Etc.....35
SECTION 29. Benefits of this Agreement....................................35
SECTION 30. Severability..................................................35
SECTION 31. Governing Law.................................................35
SECTION 32. Counterparts..................................................36
SECTION 33. Descriptive Headings..........................................36
SECTION 34. Exchange......................................................36
ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 4, 2003 (this "Agreement"),
between The Warnaco Group, Inc., a Delaware corporation (the "Company"), and
Xxxxx Fargo Bank Minnesota, National Association (the "Rights Agent").
WHEREAS, effective February 4, 2003 (the "Rights Dividend Declaration
Date"), the Company authorized and declared a distribution of one Right (each, a
"Right") for each share of Common Stock, par value $0.01 per share, of the
Company (the "Company Common Stock") outstanding at the Close of Business (as
defined below) on February 4, 2003 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted pursuant
hereto) for each share of Company Common Stock issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and, except
as otherwise provided in Section 22, the Distribution Date, each Right initially
representing the right to purchase upon the terms and subject to the conditions
hereinafter set forth one Unit (as defined below) of Series A Preferred Stock
(as defined below);
WHEREAS, the Company desires to set forth certain terms and conditions
governing the Rights; and
WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Company Common Stock then
outstanding, but shall not include (x) any such Person who has become and
is such a Beneficial Owner pursuant to a Qualifying Offer, (y) the Company,
any Subsidiary of the Company, any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity or (z) any such Person who has become
and is such a Beneficial Owner solely because (A) of a change in the
aggregate number of shares of the Company Common Stock since the last date
on which such Person acquired Beneficial Ownership of any shares of the
Company Common Stock unless and until such Person, after becoming aware
that such Person has become such a Beneficial Owner, acquires Beneficial
Ownership of additional shares of Company Common Stock representing 1% or
more of the shares of Company Common Stock then outstanding, or (B) it
acquired such Beneficial Ownership in the good faith belief that such
acquisition would not (1) cause such Beneficial Ownership to be equal to or
exceed
15% of the shares of the Company Common Stock then outstanding and such
Person relied in good faith in computing the percentage of its Beneficial
Ownership on publicly filed reports or documents of the Company that are
inaccurate or out-of-date or (2) otherwise cause a Distribution Date or the
adjustment provided for in Section 11(a)(ii) to occur. Notwithstanding
clause (z)(B) of the prior sentence, if any Person that is not an Acquiring
Person due to such clause (z)(B) does not reduce its percentage of
Beneficial Ownership of the Company Common Stock to less than 15% by the
Close of Business on the fifth Business Day after notice from the Company
(the date on which such notice is first mailed or sent being the first day)
that such person's Beneficial Ownership of the Company Common Stock is
equal to or exceeds 15%, such Person shall, at the end of such five
Business Day period, become an Acquiring Person (and such clause (y)(B)
shall no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be
conclusively determined by the vote of the majority of the Board of
Directors of the Company.
(b) "Adjustment Shares" has the meaning set forth in Section
11(a)(ii).
(c) "Adjustment Spread" has the meaning set forth in Section 34(a).
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Exchange Act Regulations as in
effect on the date of this Agreement.
(e) "Agreement" has the meaning set forth in the preamble to this
Agreement.
(f) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", and shall be deemed to have "Beneficial
Ownership" of, any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3
of the Exchange Act Regulations as in effect on the date of this
Agreement; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own", or to have
"Beneficial Ownership" of, any securities under this subparagraph (i)
as a result of an agreement, arrangement or understanding to vote such
securities if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the Exchange Act Regulations, and
(B) is not reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(ii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person (or any of such Person's Affiliates or Associates)
has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in
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the proviso to subparagraph (i) of this paragraph (g)) or disposing of
such securities; or
(iii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time or upon the satisfaction of conditions) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise;
provided, however, that under this paragraph (g) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", or to have
"Beneficial Ownership" of, (A) securities tendered pursuant to a tender or
exchange offer made in accordance with Exchange Act Regulations by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B) securities that may
be issued upon exercise of Rights at any time prior to the occurrence of a
Triggering Event or (C) securities that may be issued upon exercise of
Rights from and after the occurrence of a Triggering Event, which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(c) or
Section 22 or pursuant to Section 11(i) in connection with an adjustment
made with respect to any such Rights.
(g) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
(h) "Close of Business" on any given date shall mean 5:00 p.m., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
(i) "Common Stock" of any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or, if such
Person shall have no capital stock, the equity securities or other equity
interest having power to control or direct the management of such Person.
(j) "Company" has the meaning set forth in the preamble to this
Agreement.
(k) "Company Common Stock" has the meaning set forth in the recitals
to this Agreement.
(l) "Current Value" has the meaning set forth in Section 11(a)(iii).
(m) "Depositary Agent" has the meaning set forth in Section 7(c).
(n) "Distribution Date" has the meaning set forth in Section 3(a).
(o) "Equivalent Preferred Stock" has the meaning set forth in Section
11(b).
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(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(q) "Exchange Act Regulations" shall mean the General Rules and
Regulations under the Exchange Act.
(r) "Expiration Date" has the meaning set forth in Section 7(a).
(s) "Final Expiration Date" has the meaning set forth in Section 7(a).
(t) "Person" shall mean any individual, partnership, limited liability
company, firm, corporation, joint venture, association, trust,
unincorporated organization or other entity, as well as any syndicate or
group deemed to be a person under Section 14(d)(2) of the Exchange Act.
(u) "Preferred Stock" shall mean the Series A Preferred Stock, par
value $0.01 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions described
in the Certificate of Designation set forth as Exhibit C hereto.
(v) "preferred stock equivalents" has the meaning specified in Section
11(a)(iii).
(w) "Principal Party" has the meaning set forth in Section 13(b).
(x) "Purchase Price" has the meaning set forth in Section 7(b).
(y) "Qualifying Offer" shall mean a tender or exchange offer for all
outstanding shares of Company Common Stock which meets all of the following
requirements:
(i) if the per share consideration includes cash, that on or
prior to the date such offer is commenced within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act,
the offeror has, and has provided to the Company, firm written
commitments from responsible financial institutions, which have been
accepted by such offeror (or one of its Affiliates), to provide,
subject only to customary terms and conditions, funds for such offer
which, when added to the cash and cash equivalents which such offeror
then has available and has irrevocably committed in writing to the
Company to utilize for purposes of such offer, will be sufficient to
pay the per share cash consideration if all shares of Company Common
Stock outstanding on a fully diluted basis are tendered and all
related expenses;
(ii) after the consummation of such offer, the offeror, alone or
together with any of its Affiliates and Associates, owns shares of
Company Common Stock representing at least 55% of the then outstanding
Company Common Stock, excluding for purposes of determining the then
outstanding shares of Company Common Stock under this Section 1(y)(ii)
those shares of Company Common Stock owned by (A) Persons who are
directors and also officers of the Company and (B) employee stock
plans of the Company in which employee participants do
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not have the right to determine confidentially whether shares of
Company Common Stock held subject to the plan will be tendered in a
tender or exchange offer;
(iii) such offer remains open for at least 30 Business Days;
provided, however, that (A) if there is any increase in the
consideration of such offer, such offer must remain open for at least
an additional 20 Business Days after the last such increase, (B) such
offer must remain open for at least 20 Business Days after the date
that any bone fide alternative offer is made which, in the opinion of
one or more investment banking firms designated by the Company,
provides for consideration per share in excess of that provided for in
such offer, and (C) such offer must remain open for at least 20
Business Days after the date on which such Person reduces the per
share price offered in accordance with Section 1(y)(iv) below;
provided further, however, that such offer need not remain open, as a
result of this Section 1(y)(iii), beyond (1) the time which any other
offer satisfying the criteria for a Qualifying Offer is then required
to be kept open under this Section 1(y)(iii), or (2) the scheduled
expiration date, as such date may be extended by public announcement
on or prior to the then scheduled expiration date, of any other tender
or exchange offer for shares of Company Common Stock with respect to
which the holders of at least 55% of shares of Company Common Stock
have agreed to redeem the Rights pursuant to Section 23 immediately
prior to acceptance for payment of the shares of Company Common Stock
thereunder (unless such other offer is terminated prior to its
expiration without any shares of Company Common Stock having being
purchased thereunder); and
(iv) prior to or on the date that such offer is commenced within
the meaning of Rule 14d-2(a) of the general Rules and Regulations
under the Exchange Act, the offeror makes an irrevocable written
commitment to the Company (A) to consummate a transaction or series of
transactions, promptly upon completion of such offer, whereby all
shares of Company Common Stock not purchased in such offer will be
acquired at the same per share consideration paid in such offer, (B)
that such offeror will not make any amendment to such offer which
reduces the per share consideration offered (other than a reduction to
reflect any dividend declared by the Company after the commencement of
such offer or any material change in the capital structure of the
Company initiated by the Company after the commencement of such offer,
whether by way of recapitalization, reorganization, repurchase or
otherwise), changes the form of consideration offered, reduces the
number of shares being sought or which is in any other respect
materially adverse to the Company's stockholders (other than such
offeror) and (C) that neither such offeror nor any of its Affiliates
or Associates will make any offer for any equity securities of the
Company for a period of six months after the commencement of the
original offer if such original offer does not result in the tender of
the requisite percentage of the voting power of the then outstanding
shares of the Company's voting stock referred to in Section 1(y)(ii)
above, unless another tender or exchange offer by another party for
all outstanding shares of Company Common Stock is commenced (1) at a
per share consideration in excess of that provided for in such
original offer or (2) that
5
is approved by the holders of at least 55% of shares of Company Common
Stock (in which event, any new offer by such offeror or any of its
Affiliates or Associates must be at least at a per share consideration
no less than that provided for in such approved offer).
(z) "Record Date" has the meaning set forth in the recitals to this
Agreement.
(aa) "Redemption Price" has the meaning set forth in Section 23(a).
(bb) "Registered Common Stock" has the meaning set forth in Section
13(b)(ii).
(cc) "Registration Date" has the meaning set forth in Section 9(c).
(dd) "Registration Statement" has the meaning set forth in Section
9(c).
(ee) "Right" has the meaning set forth in the recitals to this
Agreement.
(ff) "Rights Agent" has the meaning set forth in the preamble to this
Agreement.
(gg) "Rights Certificates" has the meaning set forth in Section 3(a).
(hh) "Rights Dividend Declaration Date" has the meaning set forth in
the recitals to this Agreement.
(ii) "Section 11(a)(ii) Event" has the meaning set forth in Section
11(a)(ii).
(jj) "Section 11(a)(iii) Trigger Date" has the meaning set forth in
Section 11(a)(iii).
(kk) "Section 13 Event" has the meaning set forth in Section 13(a).
(ll) "Section 34(a) Exchange Ratio" has the meaning set forth in
Section 34(a).
(mm) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(nn) "Spread" has the meaning set forth in Section 11(a)(iii).
(oo) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(pp) "Subsidiary" of any Person shall mean any other Person of which a
majority of the voting securities or equity interests is beneficially
owned, directly or indirectly, by such Person, or which is otherwise
controlled by such Person.
(qq) "Summary of Rights" has the meaning set forth in Section 3(b).
(rr) "Trading Day" has the meaning set forth in Section 11(d)(i).
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(ss) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(tt) "Unit" has the meaning set forth in Section 7(b).
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.
With the consent of the Rights Agent, the Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth day after the Stock Acquisition Date and (ii)
the Close of Business on the tenth Business Day (or such later date as may be
determined by the vote of the majority of the Company's Board of Directors)
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity) is commenced within the meaning of Rule
14d-2 of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Company Common Stock then outstanding (the earlier of (i) and (ii)
above being the "Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the certificates for
shares of Company Common Stock registered in the names of the holders of shares
of Company Common Stock as of and subsequent to the Record Date (which
certificates for shares of Company Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Company Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of shares of
Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Company Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Company Common Stock has been made pursuant
to Section 11(p), at the time of distribution of the Rights Certificates, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a)) so that Rights Certificates evidencing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) The Company shall make available, as promptly as practicable
following the Record Date, a copy of a Summary of Rights to Purchase Preferred
Stock, in substantially the form attached hereto as Exhibit B (as may be
amended, the "Summary of Rights") to any holder of Rights who may so request
from time to time prior to the Expiration Date.
(c) Rights shall, without any further action, be issued in respect of
all shares of Company Common Stock that are issued (including any shares of
Company Common Stock held
7
in treasury) after the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date. Certificates evidencing such shares of Company
Common Stock issued after the Record Date shall bear the following legend:
"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement (the "Rights
Agreement"), between The Warnaco Group, Inc. (the "Company") and Xxxxx
Fargo Bank Minnesota, National Association (the "Rights Agent"), the terms
of which are hereby incorporated herein by reference and a copy of which is
on file at the office of the Rights Agent designated for such purpose.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
therefor. 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 any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void."
With respect to certificates evidencing shares of Company Common Stock
(whether or not such certificates include the foregoing legend or have appended
to them the Summary of Rights), until the earlier of the Distribution Date and
the Expiration Date, the Rights associated with the shares of Company Common
Stock evidenced by such certificates shall be evidenced by such certificates
alone and registered holders of the shares of Company Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock evidenced by such certificates.
SECTION 4. Form of Rights Certificates. (a) The Rights Certificates
(and the forms of election to purchase, assignment and certificate to be printed
on the reverse thereof) shall each be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or any rule or
regulation thereunder or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed or to conform to usage. Subject
to the provisions of Section 11 and Section 22, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of Units of Preferred
Stock as shall be set forth therein at the price set forth therein, but the
amount and type of securities, cash or other assets that may be acquired upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that evidences
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) that becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an
8
Acquiring Person (or of any such Associate or Affiliate) that becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
that receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate or Affiliate) to
holders of equity interests in such Acquiring Person (or such Associate or
Affiliate) or to any Person with whom such Acquiring Person (or such Associate
or Affiliate) has any continuing agreement, arrangement or understanding
regarding either the transferred Rights, shares of Company Common Stock or the
Company or (B) a transfer that the vote of the majority of the Company's Board
of Directors has determined to be part of a plan, arrangement or understanding
that has as a primary purpose or effect the avoidance of Section 7(e), shall
contain (to the extent feasible) the following legend:
"The Rights evidenced by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights Certificate and the Rights
evidenced hereby may become null and void in the circumstances specified in
Section 7(e) of such Agreement."
SECTION 5. Countersignature and Registration. (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, the
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any one or more of these officers on the Rights Certificates may be
manual or facsimile. Rights Certificates bearing the manual or facsimile
signatures of the individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the countersignature of such
Rights Certificates or did not hold such offices at the date of such Rights
Certificates. No Rights Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose unless there appears on such Rights
Certificate a countersignature duly executed by the Rights Agent by manual
signature of an authorized signatory, and such countersignature upon any Rights
Certificate shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4(b), 7(e) and 14, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of Units
of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to
9
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and executed the certificate set
forth in the form of assignment on the reverse side of such Rights Certificate
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of the Rights evidenced by such
Rights Certificate or Affiliates or Associates thereof as the Company shall
reasonably request; whereupon the Rights Agent shall, subject to the provisions
of Sections 4(b), 7(e) and 14, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, destroyed, lost or
stolen, upon request by the registered holder of the Rights evidenced thereby
and upon payment to the Company and the Rights Agent of all reasonable expenses
incident thereto, there shall be issued, in exchange for and upon cancellation
of the mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and evidencing the
equivalent number of Rights, but, in the case of loss, theft or destruction,
only upon receipt of evidence satisfactory to the Company and the Rights Agent
of such loss, theft or destruction of such Rights Certificate and, if requested
by the Company or the Rights Agent, indemnity also satisfactory to it.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a)Prior to the earlier of (i) the Close of Business on the third
anniversary hereof (the "Final Expiration Date") and (ii) the time at which the
Rights are redeemed as provided in Section 23 (the earlier of (i) and (ii) being
the "Expiration Date"), the registered holder of any Rights Certificate may,
subject to the provisions of Sections 7(e) and 9(c), exercise the Rights
evidenced thereby in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price (as hereinafter defined) for the
number of Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) for which such surrendered
Rights are then exercisable.
(b) The purchase price for each one one-thousandth of a share (each
such one one-thousandth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be $45.00, subject to adjustment from time to time as
provided in Sections 11 and 13(a) (such purchase price, as so adjusted, being
the "Purchase Price"), and shall be payable in accordance with paragraph (c)
below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with a corporation in good standing
organized under the laws of the United States or any state of the United States,
that is authorized under such laws to exercise
10
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority (such institution being the
"Depositary Agent"), certificates evidencing the shares of Preferred Stock that
may be acquired upon exercise of the Rights and shall cause such Depositary
Agent to enter into an agreement pursuant to which the Depositary Agent shall
issue receipts evidencing interests in the shares of Preferred Stock so
deposited. Upon receipt of a Rights Certificate evidencing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price for the Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) to be purchased thereby as
set forth below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall,
subject to Section 20(k), thereupon promptly (i) requisition from the Depositary
Agent depositary receipts or certificates evidencing such number of Units of
Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14, (iii) after receipt of such depositary receipts or
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue Company Common
Stock, other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a), the Company will make all arrangements
necessary so that such Company Common Stock, other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate. Subject to Section 34, the payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)) may be made in cash or by
certified or bank check payable to the order of the Company, or by wire transfer
of immediately available funds to the account of the Company (provided that
notice of such wire transfer shall be given by the holder of the related Right
to the Rights Agent).
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event or Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) that becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and that receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer that the
vote of the majority of the Company's
11
Board of Directors has determined to be part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall be 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 ensure that the provisions of this Section 7(e)
and Section 4(b) are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of the Company's failure to make any
determination under this Section 7(e) or Section 4(b) with respect to an
Acquiring Person or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate 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 by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights evidenced by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company.
SECTION 9. Reservation and Availability of Capital Stock. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of Preferred Stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights.
Upon the occurrence of any events resulting in an increase in the aggregate
number of shares of Preferred Stock (or other equity securities of the Company)
issuable upon exercise of all outstanding Rights above the number then reserved,
the Company shall make appropriate increases in the number of shares so
reserved.
(b) If the shares of Preferred Stock to be issued and delivered upon
the exercise of the Rights may be listed on any national securities exchange,
the Company shall during the period from the Distribution Date through the
Expiration Date use its best efforts to cause all securities reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date
12
being the "Registration Date"), to file a registration statement on an
appropriate form under the Securities Act with respect to the securities that
may be acquired upon exercise of the Rights (the "Registration Statement"), (ii)
to cause the Registration Statement to become effective as soon as practicable
after such filing, (iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration Statement and
(B) the Expiration Date and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws. The Company may temporarily suspend, for a period
of time not to exceed 45 Business Days after the event referred to in clause (i)
of the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such Registration Statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension has
been rescinded. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law, or a registration statement shall not have been declared
effective. If the Registration Statement does not become effective prior to the
Close of Business on the 45th Business Day following the occurrence of a Section
11(a)(ii) Event, the Company shall, subject to applicable law, on the 46th
Business Day following the occurrence of such Section 11(a)(ii) Event, exercise
the exchange described in Section 34.
(d) The Company shall take such action as may be necessary to ensure
that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities, duly and validly authorized and issued and fully
paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, that the Company shall not be
required to pay any such tax imposed in connection with the issuance or delivery
of Units of Preferred Stock, or any certificates or depositary receipts for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, as the case may be) to any Person other
than the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates or depositary receipts for Units of Preferred Stock (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, as the case may be) to, or in a name other than that of, the registered
holder of the Rights Certificate upon the exercise of any Rights evidenced
thereby until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
13
SECTION 10. Preferred Stock Record Date. Each Person in whose name any
certificate or depositary receipt for Units of Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) evidenced thereby on, and such certificate
or depositary receipt shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or,
following the occurrence of a Triggering Event, other securities) transfer books
of the Company are closed, such Person shall be deemed to have become the record
holder of such securities on, and such certificate or depositary receipt shall
be dated, the next succeeding Business Day on which the Preferred Stock (or,
following the occurrence of a Triggering Event, other securities) transfer books
of the Company are open; and further provided, however, that if delivery of
Units of Preferred Stock is delayed as a result of a failure to register such
Units of Preferred Stock pursuant to Section 9(c), such Persons shall be deemed
to have become the record holders of such Units of Preferred Stock only when
such Units first become deliverable. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to securities for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. (a) The Purchase Price, the number and kind of securities
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares or
(D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the
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 Preferred Stock or
capital stock, as the case may be, issuable on such date upon exercise of
the Rights, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date, such holder
would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification. If an event
occurs that would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
14
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall (1) merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and Company Common
Stock shall remain outstanding and unchanged, (2) in one transaction
or a series of transactions, transfer any assets to the Company or to
any of its Subsidiaries in exchange (in whole or in part) for shares
of Company Common Stock, for other equity securities of the Company or
any such Subsidiary, or for securities exercisable for or convertible
into shares of equity securities of the Company or any of its
Subsidiaries (whether Company Common Stock or otherwise) or otherwise
obtain from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of such equity securities or
securities exercisable for or convertible into such equity securities
(other than pursuant to a pro rata distribution to all holders of
Company Common Stock), (3) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the Company
or any of its Subsidiaries or any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such plan acting in such capacity, assets (including
securities) on terms and conditions less favorable to the Company or
such Subsidiary or plan than those that could have been obtained in
arm's-length negotiations with an unaffiliated third party, other than
pursuant to a transaction set forth in Section 13(a), (4) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of transactions,
to, from or with the Company or any of the Company's Subsidiaries or
any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity (other than transactions, if any, consistent
with those engaged in, as of the date hereof, by the Company and such
Acquiring Person or such Associate or Affiliate), assets (including
securities) having an aggregate fair market value of more than
$5,000,000, other than pursuant to a transaction set forth in Section
13(a), (5) sell, purchase, lease, exchange, mortgage, pledge, transfer
or otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries
or any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity, any material trademark or material service
xxxx, other than pursuant to a transaction set forth in Section 13(a),
(6) receive, or any designee, agent or representative of such
Acquiring Person or any Affiliate or Associate of such Acquiring
Person shall receive, any compensation from the Company or any of its
Subsidiaries other than compensation for full-time employment as a
regular employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (7) receive the benefit, directly or
indirectly (except proportionately as a holder of Company Common Stock
or as required by law or governmental regulation), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantage provided by the
15
Company or any of its Subsidiaries or any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity; or
(B) any Person shall become an Acquiring Person, unless the event
causing such Person to become an Acquiring Person is a transaction set
forth in Section 13(a); or
(C) during such time as there is an Acquiring Person, there shall
be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of
its Subsidiaries, other than a transaction or transactions to which
the provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person), which has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries that is directly
or indirectly beneficially owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person;
then, immediately upon the date of the occurrence of an event described in
Section 11(a)(ii)(A), (B) or (C) (a "Section 11(a)(ii) Event"), proper
provision shall be made so that each holder of a Right (except as provided
below and in Section 7(e)) shall thereafter have the right to receive, upon
exercise thereof at the then-current Purchase Price in accordance with the
terms of this Agreement, in lieu of the number of Units of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event, such number of Units of Preferred Stock as
shall equal the result obtained by (x) multiplying the then-current
Purchase Price by the then number of Units of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event (such product thereafter being, for all purposes of
this Agreement other than Section 13, the "Purchase Price"), and (y)
dividing that product by 50% of the then-current market price (determined
pursuant to Section 11(d)) per Unit of Preferred Stock on the date of such
first occurrence (such Units of Preferred Stock being the "Adjustment
Shares").
(iii) In the event that the number of shares of Preferred Stock that
are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess being the "Spread"), and
(B) with respect to each Right, make adequate provision to substitute for
such Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Company Common Stock or
other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock (such other shares being
"preferred stock equivalents")), (4) debt securities of the Company, (5)
other assets or
16
(6) any combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been determined by the
vote of the majority of the Company's Board of Directors, after receiving
advice from a nationally recognized investment banking firm; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the "Section
11(a)(iii) Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of
the Purchase Price, Units of Preferred Stock (to the extent available) and
then, if necessary, cash, which Units of Preferred Stock and/or cash shall
have an aggregate value equal to the Spread. To the extent that the Company
determines that some action need be taken pursuant to the first sentence of
this Section 11(a)(iii), the Company shall provide, subject to Section
7(e), that such action shall apply uniformly to all outstanding Rights. For
purposes of this Section 11(a)(iii), the value of a Unit of Preferred Stock
shall be the current market price (as determined pursuant to Section 11(d))
per Unit of Preferred Stock on the Section 11(a)(iii) Trigger Date and the
value of any preferred stock equivalent shall be deemed to have the same
value as the Preferred Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five calendar days
after such record date) shares of Preferred Stock (or shares having
substantially the same rights, privileges and preferences as shares of Preferred
Stock ("Equivalent Preferred Stock")) or securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
per share of Equivalent Preferred Stock (or having a conversion price per share,
if a security convertible into Preferred Stock or Equivalent Preferred Stock)
less than the current market price (as determined pursuant to Section 11(d)) per
share of Preferred Stock 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 sum of the number of shares of Preferred Stock outstanding on
such record date plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by a the vote of the majority of the Company's Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company or any
Subsidiary 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
17
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price that would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of shares of Preferred Stock (including any such distribution made
in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Preferred Stock,
but including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)),
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 current market price (as
determined pursuant to Section 11(d)) per share of Preferred Stock on such
record date less the fair market value (as determined in good faith by a vote of
the majority of the Company's Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holder of the Rights) of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
distributable in respect of a share of Preferred Stock and the denominator of
which shall be such current market price (as determined pursuant to Section
11(d)) per share of Preferred Stock. 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 be adjusted to be the Purchase Price that
would have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
market price" per share of Company Common Stock or Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
shares for the ten consecutive Trading Days immediately prior to such date;
provided, however, that if prior to the expiration of such requisite ten Trading
Day period the issuer announces either (A) a dividend or distribution on such
shares payable in such shares or securities convertible into such shares (other
than the Rights) or (B) any subdivision, combination or reclassification of such
shares, then, following the ex-dividend date for such dividend or the record
date for such subdivision, as the case may be, the "current market price" shall
be properly adjusted to take into account such event. The closing price for each
day shall be, if the shares are listed and admitted to trading on a national
securities exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such shares are listed or admitted to trading or,
if such shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by The
Nasdaq Stock Market Consolidated Quotations Service or such other system then in
use, or, if on any such date such shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such shares selected by the vote of
the majority of the Company's Board of Directors. If, on any such date no market
maker is making a market in such shares, the fair value of such shares on such
date as determined in good faith by the vote of the majority of the Company's
Board of Directors shall be used. If such shares are not publicly held or not so
listed or traded, "current market price" per share shall mean the fair value per
share as determined in good faith by the vote of the majority of the Company's
Board of Directors, whose determination shall be described in a statement filed
with the Rights
18
Agent and shall be conclusive for all purposes. The term "Trading Day" shall
mean, if such shares are listed or admitted to trading on any national
securities exchange, a day on which the principal national securities exchange
on which such shares are listed or admitted to trading is open for the
transaction of business or, if such shares are not so listed or admitted, a
Business Day.
(ii) For the purpose of any computation hereunder, the "current market
price" per share of Preferred Stock shall be determined in the same manner
as set forth above for Company Common Stock in clause (i) of this Section
11(d) (other than the fourth sentence thereof). If the current market price
per share of Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or traded in
a manner described in clause (i) of this Section 11(d), the "current market
price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such amount may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with
respect to Company Common Stock occurring after the Rights Dividend
Declaration Date) multiplied by the current market price per share of
Company Common Stock. If neither Company Common Stock nor Preferred Stock
is publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as determined in
good faith by the vote of the majority of the Company's Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the
Rights. For all purposes of this Agreement, the "current market price" of a
Unit of Preferred Stock shall be equal to the "current market price" of one
share of Preferred Stock divided by 1000.
(e) Anything herein to the contrary notwithstanding, 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-hundredth of a share of Company Common Stock or
Common Stock or other share or hundred-thousandth of a share of Preferred Stock,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction that mandates such
adjustment and (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted
19
Purchase Price, the number of Units of Preferred Stock (or other securities or
amount of cash or combination thereof) that may be acquired from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units of Preferred
Stock (calculated to the nearest one hundred-thousandth of a Unit) obtained by
(i) multiplying (x) the number of Units of Preferred Stock covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of Units of Preferred Stock that may be acquired upon the exercise of
a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of Units of Preferred Stock for which
a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest hundred-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten days
later than the date of such public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Unit and the number of Units of Preferred Stock
that were expressed in the Initial Rights Certificates issued hereunder without
prejudice to any such adjustment or change.
20
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then-par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such fully paid and non-assessable number
of Units of Preferred Stock 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
of that number of Units of Preferred Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of Units of Preferred Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, 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 in their good faith judgment the vote of the majority of the
Company's Board of Directors shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly
for cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities that
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (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 Stock, shall not be taxable to such holders or shall reduce the taxes
payable by such holders.
(n) The Company 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 that complies with Section 11(o)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
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 complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person that constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) shall have distributed or otherwise transferred to its
stockholders or other Persons holding an equity interest in such Person Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, that this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.
21
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Company Common Stock payable in shares of Company Common
Stock, (ii) subdivide the outstanding shares of Company Common Stock, (iii)
combine the outstanding shares of Company Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification of
Company Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), the number of Rights associated with each share of Company Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Company Common Stock following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Company Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total number of
shares of Company Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of shares of
Company Common Stock outstanding immediately following the occurrence of such
event.
SECTION 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate evidencing
shares of Company Common Stock) in accordance with Section 25. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, either (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(o)) shall consolidate with, or merge with or into, the Company,
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Company Common Stock shall be converted
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with
22
Section 11(o)), in one or more 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 (any such event described in clause (x), (y) or
(z) being a "Section 13 Event"), then, and in each such case, proper provision
shall be made so that: (i) each holder of a Right, except as provided in Section
7(e), shall thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price, such number of validly authorized and issued,
fully paid and non-assessable shares of Common Stock of the Principal Party,
which shares shall not be subject to any liens, encumbrances, rights of first
refusal, transfer restrictions or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number
of Units of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such Units for which a Right would be exercisable hereunder but
for the occurrence of such Section 11(a)(ii) Event by the Purchase Price that
would be in effect hereunder but for such first occurrence) and (2) dividing
that product (which, following the first occurrence of a Section 13 Event, shall
be the "Purchase Price" for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d)) per share of the
Common Stock of such Principal Party on the date of consummation of such Section
13 Event; (ii) 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; (iii) the term "Company" shall, for all
purposes of this Agreement, thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall be of
no further effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Company Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer,
the issuer of Common Stock that has the highest aggregate current market
price (determined pursuant to Section 11(d)) and (B) if no securities are
so issued, the Person that is the other party to such merger or
consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the highest aggregate current market price
(determined pursuant to Section 11(d)); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
largest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or
earning power transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market
23
price (determined pursuant to Section 11(d)); provided, however, that in
any such case, (1) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding twelve-month period
registered under Section 12 of the Exchange Act ("Registered Common
Stock"), or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other Person; (2) if the
Common Stock of such Person is not Registered Common Stock or such Person
is not a corporation, and such Person is a direct or indirect Subsidiary of
another Person but is not a direct or indirect Subsidiary of another Person
that has Registered Common Stock outstanding, "Principal Party" shall refer
to the ultimate parent entity of such first-mentioned Person; (3) if the
Common Stock of such Person is not Registered Common Stock or such Person
is not a corporation, and such Person is directly or indirectly controlled
by more than one Person, and one or more of such other Persons has
Registered Common Stock outstanding, "Principal Party" shall refer to
whichever of such other Persons is the issuer of the Registered Common
Stock having the highest aggregate current market price (determined
pursuant to Section 11(d)); and (4) if the Common Stock of such Person is
not Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
none of such other Persons have Registered Common Stock outstanding,
"Principal Party" shall refer to whichever ultimate parent entity is the
corporation having the greatest stockholders' equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that 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 paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable following
the execution of such agreement, a registration statement under the
Securities Act with respect to the Common Stock that may be acquired upon
exercise of the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the requirements of
the Securities Act) until the Expiration Date, and (C) as soon as
practicable following the execution of such agreement take such action as
may be required to ensure that any acquisition of such Common Stock upon
the exercise of the Rights complies with any applicable state securities or
"blue sky" laws; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates that comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) In case the Principal Party that is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other instrument
governing its corporate affairs, which provision
24
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then current market price per share (determined pursuant to
Section 11(d)) or securities exercisable for, or convertible into, Common Stock
of such Principal Party at less than such then current market price (other than
to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13, then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
(f) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to any event described in clause (x) or (y)
of Section 13(a) if (i) the transaction is consummated with a Person or Persons
who or which, alone or together with all Affiliates and Associates of such
Person or Persons, acquired shares of Company Common Stock pursuant to a
Qualifying Offer, (ii) the consideration per share of Company Common Stock
offered in such transaction is not less than the consideration per share of
Company Common Stock given to all holders of shares of Company Common Stock
whose shares were acquired pursuant to such Qualifying Offer and (iii) the form
of consideration being offered to the remaining holders of shares of Company
Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such Qualifying Offer. Upon consummation of any
such transaction contemplated by this Section 13(f), 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 Rights
Certificates that evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the Persons to which such fractional Rights would
otherwise be issuable, an amount in cash equal to such fraction of the market
value of a whole Right. For purposes of this Section 14(a), the 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 of the Rights for any day shall be, if the
Rights are listed or admitted to trading on a national securities 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 The Nasdaq Stock Market Consolidated
Quotations Service or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by the vote
25
of the majority of the Company's Board of Directors. 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 vote of the majority of the
Company's Board of Directors shall be used and such determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence such fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of such fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share, the Company
may pay to the registered holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction of
the then current market price of a share of Preferred Stock on the day of
exercise, determined in accordance with Section 11(d).
(c) The holder of a Right by the acceptance of such Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates evidencing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate evidencing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate evidencing shares of Company Common
Stock), may, on such registered holder's own behalf and for such registered
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company or any other Person to enforce, or otherwise
act in respect of, such registered holder's right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. Agreement of Rights 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 Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent
26
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates duly
executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Company
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Company Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e), shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or any 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, judgment or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, that the Company must use its best efforts
to have any such order, decree, judgment or ruling lifted or otherwise
overturned as promptly as practicable.
SECTION 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company that may at any time be
issuable on the exercise of the Rights evidenced thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise.
SECTION 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability hereunder.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this
27
Agreement in reliance upon any Rights Certificate or certificate or depositary
receipt for Preferred Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to have been signed, executed and, where
necessary, verified or acknowledged by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or shareholder services 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 document 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.
In case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (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 "current market price") 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 specified
28
herein) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent;
provided, however, that so long as any Person is an Acquiring Person
hereunder, such certificate shall only be signed and delivered by any such
individual following approval of at least 55% of shares of the Company
Common Stock; 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
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except the
due execution and delivery hereof by the Rights Agent) or for the validity
or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or failure by the Company to satisfy conditions 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 Section 13 or 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 Rights Certificates after
receipt by the Rights Agent of the certificate describing any such
adjustment contemplated by Section 12); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or any other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock or any other securities will, when so
issued, be validly authorized and issued, fully paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by
the Rights Agent for the performance by the Rights Agent of its duties
under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer; provided, however, that so long as
any Person is an Acquiring Person hereunder,
29
the Rights Agent shall accept such instructions and advice only from any
such officers following approval of at least 55% of shares of the Company
Common Stock and shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with such instructions and advice.
Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this
Rights Agreement and the date on and/or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five
Business Days after the date any such officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying
the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents.
(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 or in the exercise of its rights
hereunder if the Rights Agent shall have reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed, not signed or indicates an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company. If such certificate has been completed and
signed and shows a negative response to clauses 1 and 2 of such
certificate, unless previously instructed otherwise in writing by the
Company (which instructions may impose on the Rights Agent additional
ministerial responsibilities, but no discretionary responsibilities), the
Rights Agent may assume without further inquiry that the Rights Certificate
is not owned by a person described in Section 4(b) or Section 7(e) and
shall not be charged with any knowledge to the contrary.
30
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 days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates (or
certificates for the Company Common Stock prior to the Distribution Date) by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior 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 Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates (or certificates for the
Company Common Stock prior to the Distribution Date) by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate or, prior to the Distribution Date, the
holder of a certificate for the Company Common Stock (who shall, with such
notice, submit such holder's Rights Certificate or certificate for Company
Common Stock, as the case may be, for inspection by the Company), then any
registered holder of any Rights Certificate or, prior to the Distribution Date,
the holder of a certificate for the Company Common Stock may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or any state of the United States in good standing, shall be
authorized to do business as a banking institution in the State of Delaware,
shall be authorized under such laws to exercise corporate trust or stock
transfer powers, shall be subject to supervision or examination by federal or
state authorities and shall have at the time of its appointment as Rights Agent
a combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a
corporation described in clause (a). After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Preferred Stock and the Company Common Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates
(or certificates for the Company Common Stock prior to the Distribution Date).
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.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the vote of the majority of the Company's Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Agreement in the Purchase Price or the number or kind or
class of shares or other securities or property that may be acquired upon
exercise of the Rights. In addition, in connection with the issuance or sale of
shares of Company Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with
31
respect to shares of Company Common Stock 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 hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the vote of the majority of the Company's Board of Directors, issue Rights
Certificates evidencing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Rights Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (ii) no such Rights Certificate 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) The Company shall upon
approval of holders of at least 55% of shares of Company Common Stock (other
than shares of Company Common Stock held by any Person or Persons or an
Affiliate or Associate of any such Person or Persons, who has or have commenced
(and not withdrawn) a tender or exchange offer for shares of Company Common
Stock), at any time prior to the earlier of (i) the Close of Business on the
Stock Acquisition Date or (ii) the Final Expiration Date, redeem all but not
less than all of the then outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the Rights Dividend
Declaration Date (such redemption price being the "Redemption Price"), and the
Company may, at its option, by action of the vote of the majority of the
Company's Board of Directors, pay the Redemption Price either in shares of
Company Common Stock (based on the current market price, determined in
accordance with Section 11(d), of the shares of Company Common Stock at the time
of redemption) or cash. The redemption of the Rights shall be made effective at
such time, on such basis and with such conditions as approved at the meeting of
holders of shares of Company Common Stock.
(b) Immediately upon the approval by shareholders of the redemption of
the Rights in accordance with Section 23(a), evidence of which shall be 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. Promptly after the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder's last address
as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for Company
Common Stock. Any notice that 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.
SECTION 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
(ii) to offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other
32
securities, rights or options, (iii) to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction that complies with Section 11(o)), 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 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 complies with Section 11(o)) or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Rights Certificate (or,
prior to the Distribution Date, to each holder of certificates for Company
Common Stock), to the extent feasible and in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, 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 shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the shares of Preferred Stock for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock, whichever shall be the
earlier; provided, however, that no such notice shall be required pursuant to
this Section 24 if any Subsidiary of the Company effects a consolidation or
merger with or into, or effects a sale or other transfer of assets or earning
power to, any other Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii) shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii).
SECTION 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing and mailed or
sent or delivered (including by facsimile transmission), if to the Company, at
its address at:
The Warnaco Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
and if to the Rights Agent, at its address at:
33
Xxxxx Fargo Bank Minnesota, National Association
Shareowner Services
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
Attention: Account Manager
Telecopy No.: (000) 000-0000
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder of certificates evidencing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Company
Common Stock.
SECTION 26. Supplements and Amendments. (a) Subject to the penultimate
sentence of this Section 26(a), 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 evidencing shares of Company Common
Stock; provided, however, that no supplement or amendment would have the effect
of terminating, revoking or otherwise rendering ineffective this Agreement or
any material provision of this Agreement; provided further, however, that any
supplement or amendment that (i) supplements or amends Section 1(y) being the
definition of "Qualifying Offer", (ii) has the effect of shortening the Final
Expiration Date, (iii) supplements or amends any provision of Section 23 or this
Section 26, or (iv) otherwise adversely affects the interests of the holders of
Rights Certificates (other than an Acquiring Person), shall only be effective
with the approval of holders of at least 55% of shares of Company Common Stock
(other than shares of Company Common Stock held by (x) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or (y) any Person or Persons or an
Affiliate or Associate of any such Person or Persons, who has or which have
commenced (and not withdrawn) a tender or exchange offer for shares of Company
Common Stock); provided further, however, that, from and after the Distribution
Date, the Company and the Rights Agent shall, if the Company so directs, only
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order to cure any ambiguity or to correct or supplement any
provision contained herein that may be defective or inconsistent with any other
provisions herein. Upon the delivery of a certificate from an appropriate
officer of the Company that states that the proposed supplement or amendment is
in compliance with the terms of this Section 26(a), the Rights Agent shall
execute such supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Company Common Stock.
(b) Prior to the Expiration Date, the Company shall not terminate or
revoke this Agreement or any material provision of this Agreement or enter into
any other shareholder rights agreement or similar agreement, or take any action,
that would have the effect of replacing or overriding this Agreement or
otherwise rendering this Agreement ineffective prior to the Expiration Date,
other than upon approval of holders of at least 55% of shares of Company Common
Stock.
34
SECTION 27. 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 28. Determinations and Actions by the Board of Directors, Etc.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power (i) to interpret
the provisions of this Agreement and (ii) to make all determinations deemed
necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
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 Rights and all
other parties, and (y) not subject the Board of Directors of the Company or any
member thereof to any liability to the holders of the Rights.
SECTION 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement. This Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock).
SECTION 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the vote of the
majority of the Company's Board of Directors determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement and the Rights shall not then be
redeemable, the right of redemption set forth in Section 23 shall be reinstated
and shall not expire until the Close of Business on the tenth Business Day
following the date of such determination by the vote of the majority of the
Company's Board of Directors.
SECTION 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware.
35
SECTION 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 33. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 34. Exchange. (a) The Company may, within ten Business Days
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 null and void pursuant to Section 7(e)) for Units of Preferred Stock or
each holder of Rights may, at any time after any Person becomes an Acquiring
Person, exchange all or part of such holder's then outstanding and exercisable
Rights (which shall not include Rights that have become null and void pursuant
to Section 7(e)) for Units of Preferred Stock, in either case, at an exchange
ratio specified in the following sentence, as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the
Rights Dividend Declaration Date. Subject to such adjustment, each Right may be
exchanged for that number of Units of Preferred Stock obtained by dividing the
Adjustment Spread (as defined below) by the then-current market price
(determined pursuant to Section 11(d)) per Unit of Preferred Stock on the
earlier of (i) the date on which any Person becomes an Acquiring Person and (ii)
the date on which a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity) is commenced within the meaning of Rule
14d-2 of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Company Common Stock then outstanding (such exchange ratio being
the "Section 34(a) Exchange Ratio"). The "Adjustment Spread" shall equal (x) the
aggregate market price on the date of such event of the number of Adjustment
Shares determined pursuant to Section 11(a)(ii), minus (y) the Purchase Price.
(b) Immediately upon the exchange of any Rights pursuant to Section
34(a) 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 Units of Preferred Stock equal
to the number of such Rights held by such holder multiplied by the Section 34(a)
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
shall state the method by which the exchange of Units of Preferred Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights that will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights that have become null and void
pursuant to Section 7(e)) held by each holder of Rights.
36
(c) In the event that the number of shares of Preferred Stock that are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 34, the Company shall take all such action as may be necessary
to authorize additional shares of Preferred Stock for issuance upon exchange of
the Rights or make adequate provision to substitute (1) cash, (2) Company Common
Stock or other equity securities of the Company, (3) debt securities of the
Company, (4) other assets or (5) any combination of the foregoing, having an
aggregate value equal to the Adjustment Spread, where such aggregate value has
been determined by the vote of the majority of the Company's Board of Directors.
(d) The Company shall not be required to issue fractions of Units of
Preferred Stock or to distribute certificates that evidence fractional Units. In
lieu of fractional Units, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exchanged as herein provided an
amount in cash equal to the same fraction of the current market price
(determined pursuant to Section 11(d)) of one Unit of Preferred Stock.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their behalf as of the date first above written.
THE WARNACO GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President - Administration,
Chief Administrative Officer
and Secretary
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
EXHIBIT A
Form of Rights Certificate
EXHIBIT A
[Form of Rights Certificate]
Certificate No. Rights
--- ---
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT REFERRED TO BELOW). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
RIGHTS CERTIFICATE
THE WARNACO GROUP, INC.
This certifies that __________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement (the "Rights Agreement"; terms defined therein are used
herein with the same meaning unless otherwise defined herein) between The
Warnaco Group, Inc., a Delaware corporation (the "Company"), and Xxxxx Fargo
Bank Minnesota, National Association, as Rights Agent (which term shall include
any successor Rights Agent under the Rights Agreement), to purchase from the
Company at any time after the Distribution Date and prior to the Expiration Date
at the office of the Rights Agent, one one-thousandth of a fully paid and
non-assessable share of Series A Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), of the Company at the Purchase Price initially of $45.00 per
one one-thousandth share (each such one one-thousandth of a share being a
"Unit") of Preferred Stock, upon presentation and surrender of this Rights
Certificate with the Election to Purchase and related certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number of
Units that may be purchased upon exercise thereof) set forth above, and the
Purchase Price per Unit set forth above shall be subject to adjustment in
certain events as provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event or Section 13 Event,
if the Rights evidenced by this Rights Certificate are beneficially owned by an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person or,
under certain circumstances described in the Rights Agreement, a transferee of
any such Acquiring Person, Associate or Affiliate, 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.
----------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase capital
stock of an entity other than the Company or to receive common stock, cash or
other assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Company and are available
from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate shall be redeemed by the Company upon approval of
holders of at least 55% of the common stock of the Company under certain
circumstances at a redemption price of $0.01 per Right, payable at the Company's
option in cash or in common stock of the Company, subject to adjustment in
certain events as provided in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Company or any
holder of Rights may exchange each Right for such number of Units of Preferred
Stock as will equal (x) the difference between the aggregate market price of the
number of Units of Preferred Stock to be received upon a Section 11(a)(ii) Event
and the purchase price set forth in the Rights Agreement, divided by (y) the
market price per Unit of Preferred Stock upon a Section 11(a)(ii) Event.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock), but in
lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities that may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or
2
otherwise, until the Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ____ __, 200_.
ATTEST: THE WARNACO GROUP, INC.
By: By:
------------------------------ ----------------------------------------
Name: Name:
Title: Title:
Countersigned:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Rights Agent
By:
------------------------------
Name:
Title:
3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate.)
FOR VALUE RECEIVED ________________________________ hereby sells, assigns and
transfers unto (please print name and address of transferee) ___________________
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________ , Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 200
----- -- -
-------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
1. this Rights Certificate [_] is [_] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
2. after due inquiry and to the best knowledge of the undersigned, it
[_] did [_] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , 200
----- -- - -------------------------------------
Signature
Signature Guaranteed:
------------------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: THE WARNACO GROUP, INC.
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Rights Certificate to purchase the Units of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property that may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:
----------------------------------------------------
(Please print name and address)
----------------------------------------------------
----------------------------------------------------
Please insert social security
or other identifying number:
-----------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
----------------------------------------------------
(Please print name and address)
----------------------------------------------------
----------------------------------------------------
Please insert social security
or other identifying number:
-----------------------
Dated: , 200
----- -- -
-------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
3. the Rights evidenced by this Rights Certificate [_] are [_] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
4. after due inquiry and to the best knowledge of the undersigned, the
undersigned [_] did [_] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: , 200
----- -- - -------------------------------------
Signature
Signature Guaranteed:
------------------------------------------
NOTICE
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
EXHIBIT B
Form of Summary of Rights
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On February 4, 2003 (the "Effective Date"), The Warnaco Group, Inc.
(the "Company") emerged from its reorganization proceedings under Chapter 11 of
the United States Bankruptcy Code pursuant to the First Amended and Restated
Joint Plan of Reorganization of the Warnaco Group, Inc. and its Affiliated
Debtors and Debtors in Possession under Chapter 11 of the Bankruptcy Code (the
"Plan"). Pursuant to the Plan, on the Effective Date, the Company distributed
one Right (a "Right") for each outstanding share of Common Stock, par value
$0.01 per share (the "Company Common Stock"), to stockholders of record at the
Effective Date and authorized the issuance of one Right for each share of
Company Common Stock issued by the Company thereafter and prior to the
Distribution Date. Each Right entitles the registered holder, subject to the
terms of the Rights Agreement (as defined below), to purchase from the Company
one one-thousandth of a share (a "Unit") of Series A Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), at a purchase price of $45.00 per Unit
(the "Purchase Price"), subject to adjustment. The Purchase Price is payable in
cash or by certified or bank check payable to the order of the Company or by
wire transfer to the account of the Company (provided a notice of such wire
transfer is given by the holder of the related Right to the Rights Agent). The
description and terms of the Rights are set forth in a Rights Agreement between
the Company and Xxxxx Fargo Bank Minnesota, National Association, as Rights
Agent (the "Rights Agreement").
A copy of the Rights Agreement and the Certificate of Designation for
the Preferred Stock (attached as an exhibit thereto) have been filed with the
Securities and Exchange Commission as an exhibit to a Current Report on Form
8-K, dated February 4, 2003 (the "Form 8-K"). Copies of the Rights Agreement and
the Certificate of Designation are available free of charge from the Company.
This summary description of the Rights and the Preferred Stock does not purport
to be complete and is qualified in its entirety by reference to all the
provisions of the Rights Agreement and the Certificate of Designation, including
the definitions therein of certain terms, which Rights Agreement and Certificate
of Designation are incorporated herein by reference.
The Rights Agreement
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(other than the Company, any subsidiary of the Company or any employee benefit
plan of the Company or such subsidiary or pursuant to a "Qualifying Offer" as
defined in the Rights Agreement) (an "Acquiring Person") has acquired, obtained
the right to acquire, or otherwise obtained beneficial ownership of 15% or more
of the then outstanding shares of Company Common Stock (such date of public
announcement being the "Stock Acquisition Date"), and (ii) 10 business days
following the commencement of a tender offer or exchange offer (other than by
the Company, any subsidiary of the Company or any employee benefit plan of the
Company or such subsidiary) that would result in a person or group beneficially
owning 15% or more of the then outstanding shares of Company Common Stock (or
such later date as may be determined by the Company's board of directors). Until
the Distribution Date, (i) the Rights will be evidenced by Company Common Stock
certificates and will be transferred with and only with such Company Common
Stock certificates, (ii) new Company Common Stock certificates issued after the
Record Date (also including shares distributed from Treasury) will contain a
notation incorporating the Rights Agreement by reference and (iii) the surrender
for transfer of any certificates representing outstanding Company Common Stock
will also constitute the transfer of the Rights associated with the Company
Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the third anniversary of the Rights Agreement
unless earlier redeemed by the Company upon the approval of holders of at least
55% of the Company Common Stock as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a person becomes an Acquiring Person, or (iii) during such
time as there is an Acquiring Person, an event occurs that results in such
Acquiring Person's ownership interest being increased by more than 1% (e.g., by
means of a recapitalization) (each such event being a "Section 11(a)(ii)
Event"), then, in each such case, each holder of a Right will thereafter have
the right to receive, upon exercise, Units (or, in certain circumstances,
Company Common Stock, cash, property or other securities of the Company) having
a value equal to two times the exercise price of the Right. The exercise price
is the Purchase Price multiplied by the number of Units issuable upon exercise
of a Right prior to the events described in this paragraph. Notwithstanding any
of the foregoing, following the occurrence of any of the events set forth in
this paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person will
be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger (other than a merger described in the
preceding paragraph) or other business combination transaction and the Company
is not the surviving corporation, (ii) any Person consolidates or merges with
the Company and all or part of the Company Common Stock is converted or
exchanged for securities, cash or property of any other Person or (iii) 50% or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as described
above) shall thereafter have the right to receive, upon exercise, common stock
of the ultimate parent of the Acquiring Person having a value equal to two times
the exercise price of the Right.
The Purchase Price payable, and the number of Units 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 Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to the holders of the Preferred Stock of
evidences of indebtedness, cash or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time prior to the earlier of (i) the Stock Acquisition Date or
(ii) the Final Expiration Date (as defined in the Rights Agreement), the Company
shall, upon approval of the holders of at least 55% of the shares of Company
Common Stock (other than shares of Company Common Stock held by any Person or
Persons or an Affiliate or Associate of any such Person or Persons, who has or
have commenced (and not withdrawn) a tender of exchange offer for shares of
Company Common Stock), redeem the Rights in whole, but not in part, at a price
of $0.01 per Right (subject to adjustment in certain events) (the "Redemption
Price"), payable, at the election of a majority of the Company's board of
directors, in cash or shares of Company Common Stock. Immediately upon the
approval by the stockholders of the redemption of the Rights, the Rights will
terminate and the only remaining right of the holders of Rights will be to
receive the Redemption Price.
Subject to the provisions of the Rights Agreement, the Company or any
holder of Rights may exchange each Right for such number of Units as will equal
(x) the difference between the aggregate market price of the number of Units to
be received upon a Section 11(a)(ii) Event and the Purchase Price set forth in
the Rights Agreement, divided by (y) the market price per Unit upon a Section
11(a)(ii) Event.
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 or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units (or other consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date; provided, however, that no amendment may have the effect of
terminating or otherwise rendering any material provision of the Rights
Agreement ineffective; and provided further, however, that certain amendments
require the approval of holders of at least 55% of shares of Company Common
Stock. After the Distribution Date, the provisions of the Rights Agreement may
only be amended in order to cure any ambiguity or defect or inconsistency.
Description of Preferred Stock
The Units that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
Each Unit will have a minimum preferential quarterly dividend rate of
$0.01 per Unit, but will, in any event, be entitled to a dividend equal to the
per share dividend declared on the Company Common Stock.
In the event of liquidation, the holder of a Unit will receive a
preferred liquidation payment equal to the greater of $0.01 per Unit and the per
share amount paid in respect of a share of Company Common Stock.
Each Unit will have one vote, voting together with the Company Common
Stock. The holders of Units, voting as a separate class, shall be entitled to
elect two directors if dividends on the Preferred Stock are in arrears for six
fiscal quarters.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Unit will be entitled
to receive the per share amount paid in respect of each share of Company Common
Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit that may be acquired upon the
exercise of each Right should approximate the economic value of one share of
Company Common Stock.
EXHIBIT C
Certificate of Designation for Preferred Stock
ANNEX A
CERTIFICATE OF DESIGNATION
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
SERIES A PREFERRED STOCK
------------------------------
Pursuant to Section 303 of the
General Corporation Law of
the State of Delaware
------------------------------
I, Xxxxxxx X. Xxxxxxxxxxx, Vice President - Administration, Chief Administrative
Officer and Secretary of The Warnaco Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), DO HEREBY CERTIFY:
that, pursuant to authority conferred upon the Board of Directors of
the Corporation by its Amended and Restated Certificate of Incorporation (the
"Certificate"), and, pursuant to the provisions of Section 303 of the General
Corporation Law of the State of Delaware and Section 5.5 of the First Amended
Joint Plan of Reorganization of the Warnaco Group, Inc. and its Affiliated
Debtors and Debtors in Possession under Chapter 11 of the Bankruptcy Code, dated
November 8, 2002 (the "Plan"), effective as of the "Effective Date" as defined
in the Plan, the following Series A Preferred Stock, par value $0.01 per share,
is hereby created and authorized, having the voting powers, designation,
relative, participating, optional and other special rights, preferences, and
qualifications, limitations and restrictions as set forth below:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock" and the number of shares constituting
such series shall be 112,500.
Section 2. Dividends and Distributions. (e) Subject to the prior and
superior rights of the holders of any shares of preferred stock of the
Corporation ranking prior and superior to the shares of Series A Preferred Stock
with respect to dividends, each holder of one one-thousandth (1/1,000) of a
share (a "Unit") of Series A Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
that purpose, (i) quarterly dividends payable in cash on the last day of March,
June, September and December in each year (each such date being a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of such Unit of Series A Preferred Stock, in an amount
per Unit (rounded to the nearest cent) equal to the greater of (a) $0.01 or (b)
subject to the provision for adjustment hereinafter set forth, the
aggregate per share amount of all cash dividends declared on shares of 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 a Unit of Series A Preferred Stock, and (ii) subject to the
provision for adjustment hereinafter set forth, quarterly distributions (payable
in kind) on each Quarterly Dividend Payment Date in an amount per Unit equal to
the aggregate per share amount 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 shares of 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 a Unit of Series A Preferred Stock. In the event
that the Corporation shall at any time after February 4, 2003 (the "Rights
Declaration Date") (i) declare any dividend on outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, then in each such case the amount to which the holder of a
Unit of Series A Preferred Stock was entitled immediately prior to such event
pursuant to the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which shall be the number of shares of Common
Stock that are outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on Units
of Series A Preferred Stock as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the shares of Common Stock (other than
a dividend payable in shares of Common Stock); provided, however, that, 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 $0.01 per Unit on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding Unit of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issuance of such Unit of Series A Preferred
Stock, unless the date of issuance of such Unit is prior to the record date for
the first Quarterly Dividend Payment Date, in which case, dividends on such Unit
shall begin to accrue from the date of issuance of such Unit, or unless the date
of issuance is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of Units of Series A 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. Dividends paid on Units of Series A Preferred
Stock in an amount less than the aggregate amount of all such dividends at the
time accrued and payable on such Units shall be allocated pro rata on a
Unit-by-Unit basis among all Units of Series A Preferred Stock at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of Units of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
2
Section 3. Voting Rights. The holders of Units of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each Unit of Series A Preferred Stock shall entitle the holder thereof to one
vote on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
then in each such case the number of votes per Unit to which holders of Units of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which shall
be the number of shares of Common Stock outstanding immediately after such event
and the denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
Units of Series A 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) (i) If, at any time, dividends on any Units of Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends thereon,
then during the period (a "default period") from the occurrence of such event
until such time as all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all Units of
Series A Preferred Stock then outstanding shall have been declared and paid or
set apart for payment, all holders of Units of Series A Preferred Stock, voting
separately as a class, shall have the right to elect two Directors.
(ii) During any default period, such voting rights of the holders of
Units of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting rights nor any right of the
holders of Units of Series A Preferred Stock to increase, in certain cases, the
authorized number of Directors may be exercised at any meeting unless one-third
of the outstanding Units of Preferred Stock shall be present at such meeting in
person or by proxy. The absence of a quorum of the holders of Common Stock shall
not affect the exercise by the holders of Units of Series A Preferred Stock of
such rights. At any meeting at which the holders of Units of Series A Preferred
Stock shall exercise such voting rights initially during an existing default
period, they shall have the right, voting separately as a class, to elect
Directors to fill up to two vacancies in the Board of Directors, if any such
vacancies may then exist, or, if such right is exercised at an annual meeting,
to elect two Directors. If the number which may be so elected at any special
meeting does not amount to the required number, the holders of the Series A
Preferred Stock shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of the required
number. After the holders of Units of Series A Preferred Stock shall have
exercised their right to elect Directors during any default period, the number
of Directors shall not be increased or decreased except as approved by a vote of
the holders of Units of Series A Preferred Stock as herein provided or pursuant
to the rights of any equity securities ranking senior to the Series A Preferred
Stock.
3
(iii) Unless the holders of Series A Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than 25% of the total number of the Units of
Series A Preferred Stock outstanding may request, the calling of a special
meeting of the holders of Units of Series A Preferred Stock, which meeting shall
thereupon be called by the Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Units of Series A Preferred Stock
are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each
holder of record of Units of Series A Preferred Stock by mailing a copy of such
notice to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20 days
and not later than 60 days after such order or request, or, in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than 25% of the total number of outstanding Units of Series A
Preferred Stock. Notwithstanding the provisions of this paragraph (C)(iii), no
such special meeting shall be called during the 60 days immediately preceding
the date fixed for the next annual meeting of the stockholders.
(iv) During any default period, the holders of shares of Common Stock
and Units of Series A Preferred Stock, and other classes or series of stock of
the Corporation, if applicable, shall continue to be entitled to elect all the
Directors until holders of the Units of Series A Preferred Stock shall have
exercised their right to elect two Directors voting as a separate class, after
the exercise of which right (x) the Directors so elected by the holders of Units
of Series A Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except as provided in
paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of capital
stock that elected the Director whose office shall have become vacant.
References in this paragraph (C) to Directors elected by the holders of a
particular class of capital stock shall include Directors elected by such
Directors to fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Units of Series A Preferred Stock as a separate class to elect
Directors shall cease, (y) the term of any Directors elected by the holders of
Units of Series A Preferred Stock as a separate class shall terminate, and (z)
the number of Directors shall be such number as may be provided for in the
Certificate or by-laws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate or by-laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(vi) The provisions of this paragraph (C) shall govern the election of
Directors by holders of Units of Preferred Stock during any default period
notwithstanding any provisions of the Certificate to the contrary, including,
without limitation, the provisions of Article V of the Certificate.
4
(D) Except as set forth herein, holders of Units of Series A Preferred
Stock shall have no special voting rights and their consents shall not be
required (except to the extent they are entitled to vote with holders of shares
of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions. (A) Whenever quarterly dividends or
other dividends or distributions payable on Units of Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on outstanding
Units of Series A Preferred Stock shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of junior
stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of parity stock, except dividends paid ratably on Units of Series A
Preferred Stock and shares of all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
such Units and all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any parity stock; provided, however, that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any junior stock; or
(iv) purchase or otherwise acquire for consideration any Units of
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such Units.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Units of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (i) to the holders of shares of
junior stock unless the holders of Units of Series A Preferred Stock shall have
received, subject to adjustment as hereinafter provided in paragraph (B), the
greater of either (a) $0.01 per Unit plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not earned or declared, to the
date of such payment, or (b) the amount equal to the aggregate per share amount
to be distributed to holders of shares of Common Stock, or (ii) to the holders
of shares of parity stock, unless simultaneously therewith distributions are
made ratably on Units of Series A Preferred Stock and all other shares of such
parity stock in proportion to the total amounts to which the holders of Units of
Series A Preferred Stock are entitled under clause (i)(a) of this sentence and
to which the holders of shares of such parity stock are entitled, in each case
upon such liquidation, dissolution or winding up.
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(B) In the event the Corporation shall, at any time after the Rights
Declaration Date, (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, or (iii) combine outstanding shares of Common Stock into a smaller number
of shares, then in each such case the aggregate amount to which holders of Units
of Series A Preferred Stock were entitled immediately prior to such event
pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of common stock are exchanged for or converted into other stock or
securities, cash and/or any other property, then in any such case Units of
Series A Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for adjustment
hereinafter set forth) equal to the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is converted or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the immediately preceding sentence with respect to the
exchange or conversion of Units of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which shall be the number
of shares of Common Stock that are outstanding immediately after such event and
the denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. Redemption. The Units of Series A Preferred Stock shall not
be redeemable.
Section 9. Ranking. The Units of Series A Preferred Stock shall rank
junior to any other class of preferred stock that hereafter may be issued by the
Corporation as to the payment of dividends and the distribution of assets,
unless the terms of any such class shall provide otherwise.
Section 10. Amendment. The Certificate, including, without limitation,
this resolution, shall not hereafter be amended, either directly or indirectly,
or through merger or consolidation with any other corporation or corporations in
any manner that would alter or change the powers, preferences or special rights
of the Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding Units
of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. The Series A Preferred Stock may be
issued in Units or other fractions of a share, which Units or fractions shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
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Section 12. Certain Definitions. As used herein with respect to the
Series A Preferred Stock, the following terms shall have the following meanings:
(A) The term "Common Stock" shall mean the class of stock designated
as the common stock, par value $0.01 per share, of the Corporation at the date
hereof or any other class of stock resulting from successive changes or
reclassification of such common stock.
(B) The term "junior stock" (i) as used in Section 4, shall mean the
Common Stock and any other class or series of capital stock of the Corporation
hereafter authorized or issued over which the Series A Preferred Stock has
preference or priority as to the payment of dividends and (ii) as used in
Section 6, shall mean the Common Stock and any other class of capital stock of
the Corporation over which the Series A Preferred Stock has preference or
priority in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
(C) The term "parity stock" (i) as used in Section 4, shall mean any
class of stock of the Corporation hereafter authorized or issued ranking pari
passu with the Series A Preferred Stock as to the payment of dividends and (ii)
as used in Section 6, shall mean any class of capital stock ranking pari passu
with the Series A Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
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IN WITNESS WHEREOF, The Warnaco Group, Inc. has caused this
Certificate to be signed by its Vice President - Administration, Chief
Administrative Officer and Secretary and attested by its Senior Vice President -
Finance and Chief Financial Officer this 4th day of February, 2003.
THE WARNACO GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President - Administration,
Chief Administrative Officer
and Secretary
Attest:
/s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President - Finance
and Chief Financial Officer
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