--------------------------------------------------------------------------------
NAUTICA ENTERPRISES, INC.
and
MELLON INVESTOR SERVICES LLC
Rights Agent
----------------------------
Rights Agreement
Dated as of November 2, 2001
--------------------------------------------------------------------------------
TABLE OF CONTENTS
SECTION PAGE
1. Certain Definitions...................................................1
2. Appointment of Rights Agent...........................................5
3. Issue of Right Certificates...........................................5
4. Form of Right Certificates............................................6
5. Countersignature and Registration.....................................7
6. Transfer Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates...............7
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.........8
8. Cancellation and Destruction of Right Certificates...................10
9. Reservation and Availability of Preferred Shares.....................10
10. Preferred Shares Record Date.........................................11
11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights............................................................12
12. Certificate of Adjusted Purchase Price or Number of Shares...........17
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power................................................................18
14. Additional Covenants.................................................20
15. Fractional Rights and Fractional Shares..............................21
16. Rights of Action.....................................................23
17. Agreement of Rights Holders..........................................23
18. Right Certificate Holder Not Deemed a Stockholder....................24
TABLE OF CONTENTS
(continued)
SECTION PAGE
19. Concerning the Rights Agent..........................................24
20. Merger or Consolidation or Change of Name of Rights Agent............25
21. Duties of Rights Agent...............................................25
22. Change of Rights Agent...............................................27
23. Issuance of New Right Certificates...................................28
24. Redemption...........................................................28
25. Exchange.............................................................29
26. Notice of Certain Events.............................................30
27. Notices..............................................................31
28. Supplements and Amendments...........................................31
29. Successors...........................................................32
30. Determinations and Actions by the Board of Directors, etc............32
31. Benefits of this Agreement...........................................32
32. Severability.........................................................32
33. Governing Law........................................................32
34. Counterparts.........................................................33
35. Descriptive Headings.................................................33
Exhibit A - Form of Certificate of Designations..............................A-1
Exhibit B - Form of Right Certificate........................................B-1
Exhibit C - Form of Summary of Rights........................................C-1
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 2, 2001 (the "Agreement"),
between Nautica Enterprises, Inc., a Delaware corporation (the "Company"), and
Mellon Investor Services LLC, a New Jersey limited liability company (the
"Rights Agent").
The Board of Directors of the Company (the "Board of Directors") has
authorized and declared a dividend of one Right (as such term is defined below)
for each share of Common Stock, par value $.10 per share, of the Company (the
"Common Shares") outstanding as of the Close of Business on November 12, 2001
(the "Record Date"), and has authorized the issuance of one Right with respect
to each Common Share that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date, the Exchange Date
and the Final Expiration Date (as such terms are defined below), each Right
representing the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designations attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights").
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
defined below) who or which, together with all Affiliates and Associates (as
such terms are defined below) of such Person, shall be the Beneficial Owner (as
such term is defined below) of 15% or more of the Common Shares then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary (as such
term is defined below) of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity organized, appointed
or established by the Company for or pursuant to the terms of any such plan or
(iv) Xxxxxx Xxxxxxx or any Affiliates or Associates of Xx. Xxxxxxx.
Notwithstanding the foregoing, (i) no Person shall become an "Acquiring Person"
solely as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of the Common Shares
then outstanding; PROVIDED, HOWEVER, that if a Person becomes the Beneficial
Owner of 15% or more of the Common Shares then outstanding by reason of share
acquisitions by the Company and shall, after such share acquisitions, become the
Beneficial Owner of any additional Common Shares (other than pursuant to a stock
split or stock dividend by the Company to all holders of Common Shares), then
such Person shall be deemed to be an "Acquiring Person"; and (ii) if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph, then such Person shall not be deemed to
have become an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate", "Associate" and "control" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, within the
meaning of Rule 13d-3 or Rule 13d-5 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this
Agreement;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants
or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own",
securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase
or exchange;
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
vote or dispose of pursuant to any agreement, arrangement or
understanding; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own", any security
under this subparagraph (iii) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding (1) arises solely from a
revocable proxy given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iv) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (iii) of this paragraph (c)) or disposing of any
securities of the Company.
If a Person shall be deemed to be the Beneficial Owner of any securities which
are not outstanding, such securities shall be deemed to be outstanding for
purposes of determining the percentage of Common Shares beneficially owned by
such Person.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New Jersey are
authorized or obligated by law or executive order to close.
(e) "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.
(f) "Common Shares" when used with reference to the Company
(or without express reference to another Person) shall mean the shares of Common
Stock, par value $.10 per share, of the Company or any other shares of capital
stock of the Company into which the Common Shares are reclassified or changed.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock or other equity securities or equity or other
beneficial interests of such Person with the greatest aggregate voting power.
(g) "Common Stock Equivalent" shall mean a share, or fraction
of a share, of Preferred Stock, par value $.01 per share (or any other
authorized class of preferred stock), of the Company having dividend, voting,
liquidation and other rights which result, in the judgment of the Board of
Directors, in such share, or fraction of a share, being approximately equivalent
in value to one Common Share as of the Event Date (as such term is defined
below); PROVIDED, HOWEVER, that, if in the judgment of the Board of Directors
there are not sufficient authorized but unissued shares of preferred stock
available for the creation of Common Stock Equivalents, "Common Stock
Equivalent" shall mean such cash, reduction in Purchase Price (as such term is
defined below), other equity securities, debt securities, other assets or any
combination of the foregoing, that the Board of Directors shall determine to be
approximately equivalent in value to one Common Share as of the Event Date. As
used herein, "Event Date" shall mean (i) for purposes of any determination made
pursuant to Section 11(a)(iii) hereof, the date of occurrence of the event
described in Section 11(a)(ii) hereof and (ii) for purposes of any determination
made pursuant to Section 25(c) hereof, the Exchange Date (as such term is
defined below).
(h) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(i) "Exchange" shall have the meaning set forth in Section 25
hereof.
(j) "Exchange Date" shall have the meaning set forth in
Section 7(a) hereof.
(k) "Exchange Ratio" shall have the meaning set forth in
Section 25 hereof.
(1) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(m) "NASDAQ NMS" shall have the meaning set forth in Section
9(b) hereof.
(n) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity and shall include any
successor by merger or otherwise of such Person.
(o) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.0l per share, of the Company.
(p) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(q) "Purchase Price" shall have the meaning set forth in
Section 4 hereof.
(r) "Record Date" shall have the meaning set forth in the
recital of this Agreement.
(s) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(t) "Redemption Price" shall have the meaning set forth in
Section 24(a) hereof.
(u) "Registered Common Shares" shall have the meaning set
forth in Section 13(b) hereof.
(v) "Rights Agent" shall have the meaning set forth in the
recital of this Agreement.
(w) "Right Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(x) "Rights" shall have the meaning set forth in the recital
of this Agreement.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Share Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(aa) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which a majority of the voting power of the
voting equity securities or equity or other beneficial interests is owned,
directly or indirectly, by such Person, or which is otherwise controlled by such
Person.
(bb) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(cc) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the earlier of (i)
the Close of Business on the tenth day after the Share Acquisition Date or (ii)
the Close of Business on the tenth Business Day (or such later day as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date that a tender or exchange offer by
any Person is first published, sent or given within the meaning of Rule 14d-2(a)
of the General Rules and Regulations under the Exchange Act if, upon
consummation thereof, such Person would be an Acquiring Person (the earlier of
such dates, including any such date which is after the date of this Agreement
and prior to the issuance of the Rights, being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates shall
also be deemed 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 Common Shares. As soon as practicable after the Distribution Date
and after the Rights Agent has been notified thereof and provided with a
shareholder list and all other relevant information, the Rights Agent will send,
by first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Right certificates,
in substantially the form of Exhibit B hereto (the "Right Certificates"),
evidencing one Right for each Common Share so held, subject to adjustment as
provided herein. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As promptly as practicable after the Record Date, the
Company will send a copy of a Summary of Rights in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Shares as of the Close of Business
on the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates for Common Shares together with a copy of the Summary of Rights,
and the registered holders of Common Shares shall also be the registered holders
of the associated Rights. Until the Distribution Date (or the earliest of the
Redemption Date, Exchange Date or Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
(c) Rights shall be issued in respect of all Common Shares
which become outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date,
the Exchange Date or the Final Expiration Date. Certificates representing such
Common Shares shall also be deemed to be certificates for Rights, and shall bear
the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Nautica
Enterprises, Inc. (the "Company") and Mellon Investor Services LLC,
dated as of November 2, 2001 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the Company.
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
without charge promptly after receipt of a written request therefor.
As described in the Rights Agreement, Rights beneficially owned by
(i) an Acquiring Person or any Associate or Affiliate thereof (as
such terms are defined in the Rights Agreement), (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or
(iii) under certain circumstances, a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a
transferee before or concurrently with the Acquiring Person becoming
such, shall become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date, the Exchange Date or the
Final Expiration Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone and the
registered holders of Common Shares shall also be the holders of the associated
Rights, and the surrender for transfer of any such certificates shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate (but which do not affect the rights, duties or responsibilities of
the Rights Agent) and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 23 hereof,
the Right Certificates shall entitle the holders thereof to purchase such number
of one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a share set forth therein (the "Purchase Price"),
but the number of such shares and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Company, either manually or by facsimile signature. The Right Certificates shall
be manually countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights
Agent of all necessary information, the Rights Agent will keep or cause to be
kept, at one of its offices in New York, New York, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates, the
Certificate Number of each such Right Certificate and the date of each of the
Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 7(e) and Section 15
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earliest of the Redemption Date, the
Exchange Date or the Final Expiration Date, any Right Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of Preferred Shares as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Certificates until the registered holder shall
have properly completed and signed the certificate contained in the form of
assignment set forth on the reverse side of each such Right Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company or the Rights Agent shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 7(e) and Section 15 hereof, countersign and deliver to
the person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates. The Rights Agent shall have no duty or obligation to take any
action under any Section of this Agreement which requires the payment by a
Rights holder of applicable taxes and/or governmental charges unless and until
the Rights Agent is satisfied that all such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and, at the Company's or the
Rights Agent's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall not be exercisable prior to the
Distribution Date. The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one one-hundredth of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Close of Business on November
12, 2011 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 24 hereof (the "Redemption Date") or (iii) the
time at which the Rights are exchanged as provided in Section 25 hereof (the
"Exchange Date").
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall initially be $60,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased as
set forth below and an amount equal to any applicable transfer tax or
governmental charge required to be paid by the holder of such Right Certificate
in accordance with Section 9(e) hereof, the Rights Agent shall, subject to
Section 21(j) hereof, thereupon promptly (i)(A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the number of Preferred Shares
to be purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Company shall have elected to
deposit the Preferred Shares issuable upon exercise of the Rights hereunder into
a depositary, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section 15
hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Right Certificate. The payment of the
Purchase Price shall be made in cash or by certified or bank official check or
money order payable to the order of the Company. In the event that the Company
is obligated to issue other securities of the Company pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if and when
necessary to comply with this Agreement.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Sections 6 and 15 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of the event described in Section
11(a)(ii) hereof, any 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) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Board of Directors has
determined is part of a plan, agreement, arrangement or understanding which has
as a primary purpose or effect the avoidance of this Section 7(e), shall become
null and void without any further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. No Right Certificate shall be issued pursuant to
Section 3 hereof that represents Rights beneficially owned by an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof and no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate. Any Right
Certificate delivered to the Rights Agent for transfer to any of the foregoing
Persons, or which represents void Rights, shall be cancelled. The Company shall
notify the Rights Agent when this Section 7(e) applies and shall use reasonable
efforts to effect compliance with the provisions of this Section 7(e), but
neither the Company nor the Rights Agent shall have any liability to any holder
of Right Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported transfer as set forth in Section 6 hereof or exercise as set forth
in this Section 7 unless such registered holder shall have (i) duly and properly
completed and signed the certificate contained in the form of assignment or
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such assignment or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
and/or any authorized and issued Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the exercise in
full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all Preferred Shares issued or
reserved for issuance to be listed, upon official notice of issuance, upon the
principal national securities exchange, if any, upon which the Common Shares are
listed or, if the principal market for the Common Shares is not on any national
securities exchange, to be listed or admitted to trading on the NASDAQ National
Market System (the "NASDAQ NMS") or any successor thereto or other comparable
nationally recognized securities quotation system.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the occurrence of the
event described in Section 11(a)(ii) hereof on which the consideration to be
delivered by the Company has been determined in accordance with Section
11(a)(ii) or 11(a)(iii) hereof, as the case may be, a registration statement
under the Securities Act with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) subject to Section 25 hereof, cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the Final Expiration Date. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth 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 is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date but prior to the occurrence of the event described in Section 11(a)(ii)
hereof, 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.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Right Certificates and of
any certificates or depositary receipts for Preferred Shares upon the exercise
of Rights. The Company shall not, however, be required to pay any such tax or
charge which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for Preferred Shares in a name other than that of, the
registered holder of the Right Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates or depositary receipts for
Preferred Shares in a name other than that of the registered holder upon the
exercise of any Rights until any such tax or charge shall have been paid (any
such tax or charge being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax or charge is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable taxes and governmental
charges) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the transfer books of the Company with respect to
the Preferred Shares are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the transfer books of the Company for the
Preferred Shares are open.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall, at any time after the
date of this Agreement, (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares into a greater number of shares, (C) combine the
outstanding Preferred Shares into a smaller number of shares or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided
in this Section 11(a) and in Section 7(e) hereof, the Purchase Price
in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification,
and the number and kind of Preferred Shares or shares of capital
stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number
and kind of Preferred Shares or shares of capital stock, as the case
may be, which, if such Right had been exercised immediately prior to
such date and at a time when the transfer books of the Company for
the Preferred Shares were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification.
(ii) Subject to Sections 11(a)(iii) and 25 hereof, in
the event that any Person shall become an Acquiring Person, then
proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have a
right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of Common Shares as shall
equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and (y)
dividing that product by 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per Common Share on the date
such Person became an Acquiring Person.
(iii) Subject to Section 25 hereof, in the event that
the number of Common Shares which 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 the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Rights shall
not be exercisable for Common Shares, but proper provision shall be
made so that each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have a right to receive, upon exercise
thereof in accordance with the terms of this Agreement at the price
determined pursuant to subparagraph (ii), such number of Common
Stock Equivalents (or, in the judgment of the Board of Directors,
such combination of Common Stock Equivalents and Common Shares) as
shall equal the number of Common Shares determined pursuant to
subparagraph (ii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current market price (as determined pursuant to Section 11(d)(ii) hereof) per
Preferred Share on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date, plus
the number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares so to be offered and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. Preferred Shares
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such
rights or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend), assets, stock (other than a dividend
payable in Preferred Shares) or subscription rights, options or warrants
(excluding those referred to in or excluded pursuant to Section 11(b) hereof),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d)(ii) hereof) per one one-hundredth of a
Preferred Share on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes) of the portion of the cash, assets, stock or
evidences of indebtedness so to be distributed or of such subscription rights,
options or warrants applicable to one one-hundredth of a Preferred Share and the
denominator of which shall be such current market price (as determined pursuant
to Section 11(d)(ii) hereof) per one one-hundredth of a Preferred Share. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purposes of any computation hereunder, the
"current market price" per Common Share on any date shall be deemed
to be the average of the daily closing prices per Common Share for
the 30 consecutive Trading Days (as such term is defined below)
immediately prior to such date; PROVIDED, HOWEVER, that in the event
that the current market price per Common Share is determined during
a period following the announcement by the issuer of such Common
Shares of (A) a dividend or distribution on such Common Shares
payable in such Common Shares or securities convertible into such
Common Shares (other than the Rights) or (B) any subdivision,
combination or reclassification of such Common Shares and prior to
the expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the "current market price" shall be appropriately adjusted to
take into account ex-dividend trading. The closing price for each
day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national
securities exchange, the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NASDAQ NMS or, if
the Common Shares are not listed or admitted to trading on the
NASDAQ NMS, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use, or, if on
any such date the Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company. If
on any such date no market maker is making a market in the Common
Shares, the fair value of such shares on such date as determined in
good faith by the Board of Directors of the Company shall be used
and shall be conclusive for all purposes. The term "Trading Day"
shall mean a day on which the principal national securities exchange
on which the Common Shares are listed or admitted to trading is open
for the transaction of business or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, a
Business Day. If the Common 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 Board of
Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for
all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per Preferred Share shall be determined in
the same manner as set forth above for the Common Shares in
subparagraph (i) of this Section 11(d) (other than the last sentence
thereof). If the current market price per Preferred Share cannot be
determined in the manner provided above or if the Preferred Shares
are not publicly held or listed or traded in a manner described in
subparagraph (i) of this Section 11(d), the "current market price"
per Preferred Share shall be conclusively deemed to be an amount
equal to 100 times the current market price per Common Share (as
appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Shares
occurring after the date of this Agreement). If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or
traded, "current market price" per Preferred Share shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for
all purposes.
(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 such 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 ten-thousandth of a Common Share or other share or
one-millionth of a Preferred Share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of the expiration of
the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in this Section 11 and the provisions
of Sections 6, 7, 9, 10, 13 and 15 with respect to the Preferred Shares shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths
of a share 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 substitution
for any adjustment in the number of Preferred Shares purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment in the
number of Rights shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made, and shall promptly give the Rights Agent a copy of this
announcement. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been issued,
shall be at least 10 days later than the date of the public announcement.
If Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 15 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holder shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and 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 Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one one-hundredth of a share and
the number of shares which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(1) 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 (and shall give prompt written
notice of such election to the Rights Agent) until the occurrence of such event
the issuing to the holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(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 it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any of the Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
stock dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such stockholders.
(n) In the event that any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (ii) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and/or 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts and computations accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Shares and the Common Shares a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate (or,
if prior to the Distribution Date, to each holder of a certificate representing
Common Shares) in accordance with Section 27 hereof. The Rights Agent shall have
no duty with respect to and shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Share Acquisition Date,
(x) the Company, directly or indirectly, shall consolidate with, or merge with
and into, any other Person, and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person, directly
or indirectly, shall consolidate with, or merge with and 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 Common Shares shall be changed into or exchanged
for stock or other securities of any other Person (or of the Company) or cash or
any other property, or (z) the Company, directly or indirectly, shall sell or
otherwise transfer (or one or more of its Subsidiaries, directly or indirectly,
shall sell or otherwise transfer), 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) to any Person or Persons (other
than the Company or one or more wholly owned Subsidiaries of the Company), then,
and in each such case, proper provision shall be made so that (i) each holder of
a Right (except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof), in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid, nonassessable and freely tradeable Common Shares of the
Principal Party (as defined below), free and clear of any liens, encumbrances
and other adverse claims and not subject to any rights of call or first refusal,
as shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof) and (2)
dividing that product by 50% of the current market price (determined pursuant to
Section 11(d)(i) hereof) per Common Share of the Principal Party on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) except for purposes of Section
1(f) hereof, the term "Company" shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common Shares) in
connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; PROVIDED, HOWEVER, that, upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all of the
assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right (except as otherwise provided herein) shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Purchase Price, such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had he, at the time of such transaction, owned the Common
Shares of the Principal Party purchasable upon the exercise of a Right (after
giving effect to the foregoing provisions of this Section 13(a)), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Sections
11(a)(ii) and 11(a)(iii) hereof shall be of no effect following the occurrence
of any event described in clauses (x), (y) and (z) of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any merger described in clause (x) or
(y) of Section 13(a), any Person that is the issuer of any
securities into which Common Shares of the Company are converted in
such merger, and if no securities are so issued, any Person that is
a party to such merger that survives the merger;
(ii) in the case of any consolidation described in
clause (x) or (y) of Section 13(a), any Person that directly
controls, alone or with other Persons, a corporation that is
consolidating with the Company; and
(iii) in the case of any transaction or transactions
described in clause (z) of Section 13(a), any Person that receives
any assets or earning power transferred pursuant to such transaction
or transactions;
PROVIDED, HOWEVER, that with respect to such Person (or, if there is more than
one such Person, with respect to each such Person), (1) if the Common Shares of
such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act ("Registered Common Shares"), or such Common Shares are deregistered as a
consequence of any merger described in Section 13(a), or such Person is not a
corporation, and such Person is (or, upon consummation of any merger described
in Section 13(a), becomes) a direct or indirect Subsidiary of another Person
which has Registered Common Shares outstanding, "Principal Party" shall refer to
such other Person; (2) if the Common Shares of such Person are not Registered
Common Shares, or such Common Shares are deregistered as a consequence of any
merger described in Section 13(a), or such Person is not a corporation, and such
Person is (or, upon consummation of any merger described in Section 13(a),
becomes) a direct or indirect Subsidiary of another Person but is not a direct
or indirect Subsidiary of another Person which has Registered Common Shares
outstanding, "Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Person; (3) if the Common Shares of such Person are not
Registered Common Shares, or such Common Shares are deregistered as a
consequence of any merger described in Section 13(a), or such Person is not a
corporation, and such Person is (or, upon consummation of any merger described
in Section 13(a), becomes) directly or indirectly controlled by more than one
Person, and one or more of such latter Persons have Registered Common Shares
outstanding, "Principal Party" shall refer to whichever of such latter Persons
is the issuer of outstanding Registered Common Shares having the greatest
aggregate current market value (determined pursuant to Section 11(d)(i) hereof);
or (4) if the Common Shares of such Person are not Registered Common Shares, or
such Common Shares are deregistered as a consequence of any merger described in
Section 13(a), or such Person is not a corporation, and such Person is (or, upon
consummation of any merger described in Section 13(a), becomes) directly or
indirectly controlled by more than one Person, and none of such latter Persons
have Registered Common Shares outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the entity having the greatest net assets;
PROVIDED, FURTHER, HOWEVER, that if under the foregoing provisions of this
Section 13(b) there shall for any reason be more than one Principal Party,
"Principal Party" shall refer to whichever of such Persons is the issuer of
outstanding Registered Common Shares having the greatest aggregate current
market value (determined pursuant to Section 11(d)(i) hereof) or, if none of
such Persons has Registered Common Shares outstanding, whichever of such Persons
is the entity having the greatest net assets.
(c) Notwithstanding anything herein to the contrary, if the
Principal Party as determined pursuant to paragraph (b) above is not a
corporation, proper provision shall be made so that such Principal Party shall
create or otherwise make available for purposes of the exercise of the Rights in
accordance with the terms of this Agreement, a type or types of securities
having a fair market value (as determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company) equal to at
least the value of the Common Shares which each holder of a Right would have
been entitled to receive if such Principal Party had been a corporation.
(d) The Company shall not consummate any such consolidation,
merger, sale or transfer unless (1) at the time of and after such consummation
the Principal Party shall have a sufficient number of authorized Common Shares
which have not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and (2) prior to such
consummation 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 this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale or transfer of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to
(A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Final Expiration Date,
and similarly comply with 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 which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
Section 14. ADDITIONAL COVENANTS.
(a) Except as expressly provided herein, no adjustment to the
Purchase Price, the number of Preferred Shares or other securities for which a
Right is exercisable or the number of Rights outstanding (except as permitted by
Section 24 or Section 25 hereof) or any similar adjustment shall be made or be
effective if such adjustment would have the effect of reducing or limiting the
benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Section 11(a)(ii) and Section
13 hereof, unless the terms of this Agreement are amended so as to preserve such
benefits.
(b) The Company covenants and agrees that, following the the
Share Acquisition Date, except as permitted by Section 25 hereof, it shall not,
directly or indirectly, take any action the purpose or effect of which is to
eliminate or otherwise diminish in any material respect the benefits intended to
be afforded by the Rights.
(c) The Company covenants and agrees that it shall not
consummate any of the transactions described in clauses (x), (y) and (z) of
Section 13(a) hereof if (i) at the time of or after such consummation there are
or would be any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect (whether of the
Company or any other Person) or any other action taken (whether by the Company
or any other Person) the purpose or effect of which is to eliminate or otherwise
diminish in any material respect the benefits intended to be afforded by the
Rights or (ii) the stockholders of the Principal Party shall have received,
either prior to, simultaneously with, or after the consummation of such
transaction, a distribution of Rights previously owned by the Principal Party or
any of its Affiliates and Associates.
(d) The Company further covenants and agrees that it shall not
consummate any of the transactions described in clauses (x), (y) and (z) of
Section 13(a) hereof unless prior thereto the Company and the Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with paragraph (c) above and further providing that the
Principal Party covenants and agrees that it shall not, directly or indirectly,
take any action the purpose or effect of which is to eliminate or otherwise
diminish in any material respect the benefits intended to be afforded by the
Rights. The provisions of this paragraph (d) and paragraph (c) above shall
similarly apply to successive mergers, consolidations, sales or other transfers.
Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 15(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NASDAQ NMS or, if the Common
Shares are not listed or admitted to trading on the NASDAQ NMS, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used and shall be conclusive for
all purposes.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one one-hundredth of a
Preferred Share. For purposes of this Section 15(b), the current market value of
one one-hundredth of a Preferred Share shall be one one-hundredth of the closing
price of a Preferred Share (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 15.
(d) Whenever a payment for fractional Rights or fractional
shares is to be made by the Rights Agent, the Company shall (i) promptly prepare
and deliver to the Rights Agent a certificate setting forth in reasonable detail
the facts related to such payments and the prices and/or formulas utilized in
calculating such payments, and (ii) provide sufficient monies to the Rights
Agent in the form of fully collected funds to make such payments. The Rights
Agent shall be fully protected in relying upon such a certificate and shall have
no duty with respect to, and shall not be deemed to have knowledge of, any
payment for fractional Rights or fractional shares under any Section of this
Agreement relating to the payment of fractional Rights or fractional shares
unless and until the Rights Agent shall have received such a certificate and
sufficient monies.
Section 16. RIGHTS OF ACTION. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 17. 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 the Common Shares;
(b) after the Distribution Date, the Right Certificates will
be transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and
the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 26 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 19. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed upon and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the preparation, administration,
delivery, execution and amendment of this Agreement and the exercise and
performance of its duties hereunder in accordance with such fee schedule. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent (each as determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction), for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including,
without limitation, the costs and expenses of defending against any claim of
liability hereunder. The costs and expenses incurred by the Rights Agent in
enforcing this right of indemnification shall be paid by the Company. In no case
will the Rights Agent be liable for special, indirect, punitive, incidental or
consequential loss or damages of any kind whatsoever (including, but not limited
to, lost profits), even if the Rights Agent has been advised of the possibility
of such damages. The provisions of this Section 19 and Section 21 below shall
survive the termination of this Agreement, the exercise or expiration of the
Rights and the resignation or removal of the Rights Agent.
(b) The Rights Agent shall be authorized and protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its acceptance and administration of this
Agreement in reliance upon any Right Certificate or certificate for the Common
Shares or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
instruction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons, or otherwise upon the
advice of counsel to the extent provided in Section 21. The Rights Agent shall
not be deemed to have knowledge of any event of which it was supposed to receive
notice thereof hereunder, and the Rights Agent shall be fully protected and
shall incur no liability for failing to take any action in connection therewith
unless and until it has received such notice in writing.
Section 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. (a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged with or with which it may be consolidated, or any Person resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any Person succeeding to the stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 22 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at such time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at such time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 21. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes only
the duties and obligations expressly imposed by this Agreement (and no implied
duties and obligations) upon the following terms and conditions, by all of which
the Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent, and
the Rights Agent shall incur no liability for, or in respect of, any action
taken, suffered or omitted by it in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking, suffering or
omitting to take any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President, a Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization and protection to the Rights Agent for any action
taken, suffered or omitted by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct (each as determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction). Any liability of the Rights Agent under this Agreement will be
limited to the amount of fees paid by the Company to the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates or be required to verify the same (except as to its
countersignature thereof), but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility or
any liability in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Common Shares or Preferred Shares
to be issued pursuant to this Agreement or any Right Certificate or as to
whether any Common Shares or Preferred Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, a Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and such instructions
shall be full authorization and protection to the Rights Agent, and the Rights
Agent shall not be liable for any action taken, suffered or omitted to be taken
by it in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, affiliate, 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, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents for any loss to the Company resulting from any such
act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct (each as determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction) in the
selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to any item therein, the
Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if it believes in good faith that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
Section 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and, if
instructed by the Company, to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and, at the expense of the
Company, to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares and Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a Person organized and doing business under the laws of the United
States or of the State of New York (or of any other State of the United States
so long as such Person is authorized to do business in the State of New York),
in good standing, having a principal office in the State of New York, which is
authorized under such laws to exercise stock transfer powers and is subject to
supervision or examination by federal or state authority and which has (or whose
Affiliate has) at the time of such Person's appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and the Preferred Shares, and mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 22, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 23. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the earliest of the Redemption Date, the Exchange Date and the Final
Expiration Date, the Company (a) shall, with respect to Common Shares so issued
or sold pursuant to the exercise of employee stock options or under any employee
plan or arrangement outstanding, granted or awarded as of the Distribution Date,
or upon the exercise, conversion or exchange of securities issued by the Company
prior to such date, and (b) may, in any other case, if deemed necessary or
appropriate by a majority of the Continuing Directors, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; PROVIDED, HOWEVER, that (i) no such Right 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 Right Certificates would be issued and
(ii) no such Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 24. REDEMPTION. (a) The Board of Directors of the Company
may, at its option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then outstanding Rights
at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend, reclassification or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Without limiting the generality of the
foregoing, the Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the "current market price," as defined in Section
11(d)(i) hereof, of the Common Shares at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; PROVIDED, HOWEVER, that the failure to give or
any defect in such notice shall not affect the validity of such redemption.
Within 10 days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give prompt written notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to the Rights Agent and to all such holders at their 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 the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
(c) Neither the Company nor any of its Subsidiaries may
redeem, acquire or purchase for value any Rights at any time in any manner
except (i) pursuant to a redemption in accordance with this Section 24 or an
exchange pursuant to Section 25 hereof or (ii) in connection with the purchase
or other acquisition of Common Shares prior to the Distribution Date.
Section 25. EXCHANGE. (a) Subject to paragraph (c) of this Section
25, the Board of Directors of the Company may, at its option, at any time
following such time as any Person becomes an Acquiring Person, exchange all but
not less than all of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to the provisions of
Section 7(e) hereof) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend,
reclassification or similar transaction occurring after the date hereof (such
exchange being hereinafter referred to as the "Exchange" and such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect the Exchange
at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any
Person organized, appointed or established by the Company for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of Common Shares aggregating 50% or more of
the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company authorizing the Exchange, and without any further action and without
any notice, the right to exercise the Rights shall terminate and the only right
thereafter of a holder of Rights included in the Exchange shall be to receive
that number of Common Shares equal to the number of Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of the Exchange (with prompt written notice thereof to the Rights Agent);
PROVIDED, HOWEVER, that the failure to give or any defect in such notice shall
not affect the validity of the Exchange. Within 10 days after the effectiveness
of the Exchange pursuant to the first sentence of this Section 25(b), the
Company shall mail a notice of Exchange to the Rights Agent and the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given whether or not the holder receives the notice. Each such notice
of Exchange will state the method by which the Exchange will be effected.
(c) In the event that the number of Common Shares which 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 the Exchange, the Exchange Ratio shall equal one Common
Stock Equivalent (in lieu of one Common Share) per Right. Alternatively, the
Board of Directors of the Company may, at its option, determine that the Company
shall (i) issue Common Shares in the Exchange to the extent Common Shares are
available and (ii) utilize Common Stock Equivalents in the Exchange as provided
above to the extent Common Shares are not available, in which case such Common
Shares shall be allocated on such basis as the Board of Directors determines
pursuant to Section 30 hereof.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional shares, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional shares
would otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of one Common Share. For the purposes of this paragraph
(d), the current market value of one Common Share shall be the closing price of
a Common Share (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the Exchange Date.
Section 26. 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 Shares or to make any
other distribution to the holders of Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of Preferred Shares
rights, options or warrants to subscribe for or to purchase any additional
Preferred Shares at less than the current market price of the Preferred Shares,
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, 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, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to the Rights Agent and to each holder of a Right Certificate, in
accordance with Section 27 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights, options or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Preferred Shares, if any such date is to be fixed, 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 Preferred Shares
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 Preferred Shares, whichever shall be
the earlier.
(b) In case the event set forth in Section 11(a)(ii) of this
Agreement shall occur, then (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right Certificate,
in accordance with Section 27 hereof, 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) hereof and (ii) all references in the preceding
paragraph to Preferred Shares shall thereafter be deemed to refer to Common
Shares or, if appropriate, to Common Stock Equivalents.
Section 27. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) or by, facsimile transmission as follows:
Nautica Enterprises, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
Facsimile No.: (000) 000-0000
Subject to the provisions of Section 22 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Mellon Investor Services LLC
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Relationship Manager
Facsimile No.: (000) 000-0000
With a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 28. SUPPLEMENTS AND AMENDMENTS. Prior to the Share
Acquisition Date, and subject to the last sentence of this Section 28, the
Company and the Rights Agent shall, if the Company so directs but subject to the
other provisions of this Section, supplement or amend any provision of this
Agreement, whether or not adverse to the holders of Rights, without any approval
of the holders of Rights. From and after the Share Acquisition Date, and subject
to the last sentence of this Section 28, the Company and the Rights Agent may
from time to time supplement or amend this Agreement without any approval of the
holders of Rights in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or (iii) to change or supplement the
provisions herein to effectuate the purposes of this Agreement, or to make any
other provisions with respect to the Rights, which, in either such case, shall
not materially adversely affect the interests of the holders of Rights (other
than Acquiring Persons and Affiliates or Associates thereof). Upon the delivery
of a certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 28, the Rights Agent shall execute such supplement or amendment;
PROVIDED, HOWEVER, that the Rights Agent may, but shall not be obligated to,
enter into any such supplement or amendment which affects the Rights Agent's own
rights, duties, liabilities or obligations under this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which decreases the Redemption Price.
Section 29. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. 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 or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
to redeem the Rights pursuant to Section 24 hereof, to exchange or not to
exchange the Rights pursuant to Section 25 hereof or to supplement or amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purpose of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors 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 to any liability to the holders of the Rights. The Rights Agent shall
always be entitled to assume that the Board of Directors acted in good faith and
shall be fully protected and incur no liability in reliance thereon.
Section 31. 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 Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 32. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 33. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State; PROVIDED, HOWEVER, that all provisions
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State.
Section 34. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 35. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date and year first above written.
NAUTICA ENTERPRISES, INC.
By: /S/ XXXXX X. XXXXXX
----------------------------------
Name: XXXXX X. XXXXXX
----------------------------------
Title: SENIOR VICE PRESIDENT &
----------------------------------
CHIEF FINANCIAL OFFICER
----------------------------------
MELLON INVESTOR SERVICES LLC
By: /S/ XXXXXXXXX XXXXX
----------------------------------
Name: XXXXXXXXX XXXXX
----------------------------------
Title: ASSISTANT VICE PRESIDENT
----------------------------------
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
NAUTICA ENTERPRISES, INC.
NAUTICA ENTERPRISES, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, and pursuant to the
provisions of Sections 141 and 151 of the General Corporation Law of the State
of Delaware, said Board of Directors, at a meeting duly called and held on
November 2, 2001, duly adopted a resolution providing for the issuance of one
series of the Corporation's Preferred Stock, $.01 par value, to be designated
"Series A Junior Participating Preferred Stock," and fixing the designation,
powers, preferences and relative, participating, optional or other rights, and
the qualifications, limitations or restrictions thereof, which resolution is as
follows:
RESOLVED, that pursuant and subject to the provisions of Article
Fifth of the Certificate of Incorporation of the Corporation, as amended, there
is hereby established a series of Preferred Stock to which the following
provisions shall be applicable:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. DESIGNATION. The series shall be designated as "Series A Junior
Participating Preferred Stock" (hereinafter "this Series").
2. NUMBER. The number of shares of this Series authorized to be
issued is 400,000. Such number may be increased or decreased by resolution of
the Board of Directors; PROVIDED, HOWEVER, that no decrease shall reduce the
number of shares of this Series to a number less than that of the shares then
outstanding.
3. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to this
Series with respect to dividends, the holders of shares of this Series shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, quarterly dividends payable in cash on the
last day of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date") commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of this Series, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions (other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock by reclassification or otherwise), declared on the Common Stock,
par value $.10 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of this Series. In the event the Corporation shall at any
time after November 12, 2001 declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of this Series were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on this
Series as provided in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the 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 $1.00 per share on this Series
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of this Series from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares of this Series, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of this Series 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
the shares of this Series in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of this Series entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (a "Liquidation"), no distribution shall be made (x) to the holders
of Common Stock or any other shares of stock ranking junior (either as to
dividends or upon Liquidation) to this Series unless, prior thereto, the holders
of shares of this Series shall have received an amount per share equal to the
greater of (i) $100, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(ii) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate amount to be distributed per share to holders of Common Stock or
(y) to the holders of stock ranking on a parity (either as to dividends or upon
Liquidation) with this Series, except distributions made ratably on this Series
and all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such Liquidation. In the event the
Corporation shall at any time after November 12, 2001 declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of this Series were
entitled immediately prior to such event under clause (ii) of clause (x) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
For purposes of this Certificate, the voluntary sale, lease,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation to, or a consolidation or merger of the Corporation with, one or
more corporations shall not be deemed to be a Liquidation.
5. REDEMPTION. The shares of this Series shall not be redeemable.
6. VOTING RIGHTS. The holders of shares of this Series shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of this Series shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the Common stockholders of the Corporation. In
the event the Corporation shall at any time after November 12, 2001 declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares of this
Series were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation of the Corporation or by law, the holders of shares of this Series
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of Common stockholders of the Corporation.
(C) (i) If at any time dividends on any shares of this Series shall
be in arrears in an amount equal to six full quarterly dividends
thereon, the holders of this Series and all other series of
Preferred Stock (in each case to the extent then entitled pursuant
to the terms of such series), voting together as one class, shall
have the exclusive and special right to elect two directors of the
Corporation, and the number of directors constituting the Board of
Directors of the Corporation shall be increased by two (if not
previously increased in connection with the right of other series of
Preferred Stock entitled to vote together with this Series to elect
directors of the Corporation) for such purpose and, if necessary,
the By-laws of the Corporation shall be deemed amended to so
provide.
(ii) Whenever any such right of the holders of this Series
shall have vested, such right may be exercised initially either at a
special meeting of the holders of this Series and all other series
so entitled to vote, if any, called as hereinafter provided, or at
any annual meeting of stockholders, and thereafter at annual
meetings of stockholders. The right of the holders of this Series
voting separately as a class with such other series to elect members
of the Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accrued on all shares of
this Series shall have been paid in full, or declared and set apart
for payment, at which time the special right of the holders of this
Series so to vote separately as a class with such other series for
the election of directors shall terminate, subject to revesting in
the event of each and every subsequent occurrence of an arrearage
specified in subparagraph (C)(i) above.
(iii) At any time when such special voting power shall have
vested in the holders of this Series as provided in the preceding
subparagraph (C)(i), the proper officer of the Corporation shall,
upon the written request of the holders of record of at least 10% of
the then outstanding voting power of shares of this Series and all
other series entitled to vote in the election of such directors
addressed to the Secretary of the Corporation, call a special
meeting of the holders of this Series for the purpose of electing
directors pursuant to this paragraph (C). Such meeting shall be held
at the earliest practicable date. If such meeting shall not be
called by the proper officer of the Corporation within twenty days
after personal service of such written request upon the Secretary of
the Corporation, or within twenty days after mailing the same within
the United States of America, by registered mail addressed to the
Secretary of the Corporation at its principal office, then the
holders of record of at least 10% of the then outstanding voting
power of shares of this Series and all other series entitled to vote
in the election of such directors may designate in writing one of
their number to call such meeting at the expense of the Corporation,
and such meeting may be called by such person so designated by
giving the notice required for annual meetings of stockholders. Any
holder of this Series so designated shall have access to the stock
books of the Corporation for the purpose of causing meetings of
stockholders to be called pursuant to these provisions.
Notwithstanding the provisions of this subparagraph (C)(iii), no
such special meeting shall be called during the period within ninety
days immediately preceding the date fixed for the next annual
meeting of stockholders.
(iv) At any meeting held for the purpose of electing directors
at which the holders of this Series and any other series of
Preferred Stock shall have the special right to elect directors as
provided in this paragraph (C), the presence, in person or by proxy,
of the holders of 50% of the voting power of the then outstanding
aggregate number of shares of this Series and such other series
shall be required to constitute a quorum for the election of any
director by the holders of such series. At any such meeting or
adjournment thereof, (a) the absence of a quorum shall not prevent
the election of directors other than those to be elected by all such
series of Preferred Stock voting separately as a class, and the
absence of a quorum for the election of such other directors shall
not prevent the election of the directors to be elected by this
Series and any other series of Preferred Stock that may be voting
with it separately as a class, and (b) in the absence of either or
both such quorums, the holders of a majority of the voting power of
the shares present in person or by proxy of the stock or stocks
which lack a quorum shall have power to adjourn the meeting for the
election of directors who they are entitled to elect from time to
time without notice other than announcement at the meeting until a
quorum shall be present.
(v) During any period when the holders of this Series have the
right to vote separately as a class for directors as provided in
paragraph (C) hereof, (1) the directors so elected by the holders of
the one or more series of Preferred Stock entitled to vote for such
directors shall continue in office until the next succeeding annual
meeting or until their successors, if any, are elected by such
holders and qualify or, until termination of the right of the
holders of the one or more series of Preferred Stock entitled to
vote for such directors to vote separately as a class for directors
as provided in paragraph (C) hereof and (2) vacancies in the Board
of Directors shall be filled only by vote of a majority (even if
that be only a single director) of the remaining directors
theretofore elected by the holders of the one or more series of
Preferred Stock which elected the directors whose office shall have
become vacant or if there be no such remaining director, directors
to fill such vacancies shall be elected by the holders of the one or
more series of Preferred Stock entitled to vote for such directors
at a special meeting called pursuant to the provisions of paragraph
(C) hereof. Immediately upon any termination of the right of the
holders of this Series and any other series of Preferred Stock to
vote separately as a class for directors as provided in paragraph
(C) hereof, the term of office of the directors then in office so
elected by the holders of this Series and any such other series
shall terminate. Whenever the term of office of the directors so
elected by the holders of this Series and any such other series
shall terminate and the special voting power vested in the holders
of this Series and any such other series as provided in paragraph
(C) hereof shall have terminated, the number of directors shall be
such number as may be provided for in the by-laws irrespective of
any increase made pursuant to the provisions of paragraph (C).
(D) So long as any shares of this Series are outstanding, the
Corporation shall not, without the consent of the holders of two-thirds of the
outstanding shares of this Series, given by such holders as one class, and given
by vote in person or by proxy at a meeting called for that purpose or given in
writing, amend the Certificate of Incorporation or adopt or amend any
resolutions of the Board of Directors to alter or change the powers, preferences
or special rights of this Series so as to affect them adversely.
(E) Except as provided herein, in the Certificate of Incorporation
of the Corporation or by law, holders of shares of this Series shall have no
special voting rights and their consent shall not be required for taking any
corporate action.
7. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on this Series as provided in Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of this Series outstanding 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
Common Stock or any other shares of stock ranking junior (either as
to dividends or upon Liquidation) to this Series;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as
to dividends or upon Liquidation) with this Series, except dividends
paid ratably on this Series and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon Liquidation) with this Series; 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 stock of the Corporation ranking junior (either as to dividends
or upon Liquidation) to this Series; or
(iv) purchase or otherwise acquire for consideration any
shares of this Series, or any shares of stock ranking on a parity
(either as to dividends or upon Liquidation) with this Series,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The 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 7, purchase or otherwise acquire such shares at such time and in
such manner.
8. 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 changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
this Series shall at the same time be similarly exchanged for or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time after November 12, 2001 declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of this Series shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
9. RANKING. This Series shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets upon Liquidation, unless the terms of any such series
shall provide otherwise.
10. FRACTIONAL SHARES. This Series may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of this
Series.
11. OTHER RIGHTS. The holders of shares of this Series shall not
have any other preferences or special rights.
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be signed by Xxxxx X. Xxxxxx, its Senior Vice President and Chief Financial
Officer, this ____ day of November, 2001.
NAUTICA ENTERPRISES, INC.
By
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President &
Chief Financial Officer
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ___________________ Rights
NOT EXERCISABLE AFTER NOVEMBER 12, 2011 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY AT
$.01 PER RIGHT, AND TO EXCHANGE AT THE OPTION OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY (1) AN ACQUIRING PERSON OR ANY ASSOCIATE OR AFFILIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), (2) A TRANSFEREE OF
AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR AFFILIATE) WHO BECOMES A
TRANSFEREE AFTER THE ACQUIRING PERSON BECOMES SUCH OR (3) UNDER CERTAIN
CIRCUMSTANCES, A TRANSFEREE OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR
AFFILIATE) WHO BECOMES A TRANSFEREE BEFORE OR CONCURRENTLY WITH THE ACQUIRING
PERSON BECOMING SUCH, SHALL BECOME NULL AND VOID.
Right Certificate
NAUTICA ENTERPRISES, INC.
This certifies that ______________________________________________,
or registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of November 2, 2001
(the "Rights Agreement"), between Nautica Enterprises, Inc., a Delaware
corporation (the "Company"), and Mellon Investor Services LLC (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M. (New
York City time) on November 12, 2011 at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, non-assessable share of Series A Junior
Participating Preferred Stock (the "Preferred Shares") of the Company, at a
purchase price of $60 per one one-hundredth of a share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of November 12, 2001, based on the Preferred
Shares as constituted at such date.
From and after the occurrence of the event described in Section
11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate thereof (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or (iii) under
certain circumstances, a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee before or concurrently with the
Acquiring Person becoming such, such Rights shall become null and void and no
holder hereof shall have any rights with respect to such Rights.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of Preferred Shares or other securities, which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company and are also available upon written request to the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.01 per Right or (ii) may be exchanged by the Company
at its option for Common Shares (or, in certain circumstances, Common Stock
Equivalents (as such term is defined in the Rights Agreement)).
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one-hundredth of a Preferred Share, which may, at the election of
the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of __________________, ____
ATTEST: NAUTICA ENTERPRISES, INC.
By:
----------------------------------- ------------------------------------
Secretary Title:
Countersigned:
MELLON INVESTOR SERVICES LLC
By:
---------------------------------
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated as of _______________, ____
-----------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
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 an Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the Rights evidenced by this Right Certificate [ ] are [ ] are not being sold,
assigned and transferred to a Person who is an Acquiring Person, an Affiliate or
Associate of an Acquiring Person or a nominee of any such Acquiring Person,
Associate or Affiliate;
(3) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated as of _______________, ____
-----------------------------------------
Signature
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Right Certificate.)
To NAUTICA ENTERPRISES, INC.:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such Rights
shall be registered in the name and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated as of _______________, ____
-----------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated as of _______________, ____
-----------------------------------------
Signature
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On November 2, 2001, the Board of Directors of Nautica Enterprises,
Inc. (the "Company") declared a dividend distribution of one Right for each
outstanding share of Common Stock, par value $.10 per share, of the Company (the
"Common Shares") to stockholders of record on November 12, 2001 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company a
unit ("Unit") consisting of one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company (the
"Preferred Shares"), at a price of $60 per Unit (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Mellon Investor
Services LLC, as Rights Agent.
Initially, the Rights will be attached to all Common Share
certificates representing Common Shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (other than Xxxxxx Xxxxxxx, Chairman of the Board, Chief
Executive Officer and President of the Company, and his affiliates and
associates) has acquired, or obtained the right to acquire, beneficial ownership
of 15% or more of the outstanding Common Shares (an "Acquiring Person"), or (ii)
10 business days (or such later day as may be determined by action of the Board
of Directors prior to such time as any person or group becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer if, upon
consummation thereof, any person or group would be an Acquiring Person (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such certificate together with a copy of this Summary of
Rights. The date of announcement of the existence of an Acquiring Person
referred to in clause (i) above is hereinafter referred to as the "Share
Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Share certificates.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption, exchange or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, with or without a copy of this Summary of Rights attached thereto, will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares on the
Distribution Date and, thereafter, such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on November 12, 2011, unless earlier redeemed or
exchanged by the Company as described below.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, the Rights Agreement provides that proper
provision shall be made so that each holder of a Right, except as provided
below, shall thereafter have the right to receive, upon exercise, Common Shares
(or, in certain circumstances, Common Stock Equivalents (as such term is defined
in the Rights Agreement)) having a value equal to two (2) times the exercise
price of the Right. Upon the occurrence of any event described in the preceding
sentence, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate (as such terms are defined in the Rights Agreement) of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, agreement, arrangement or
understanding which has as a primary purpose or effect the avoidance of the
Rights Agreement, shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of the Rights Agreement or otherwise.
At any time after the occurrence of the event described in the first
sentence of the preceding paragraph (and prior to the acquisition by any person
or group of affiliated or associated persons of 50% or more of the outstanding
Common Shares), the Board of Directors of the Company may exchange the Rights
(except Rights which previously have been voided as described above), in whole,
but not in part, at an exchange ratio of one Common Share (or, in certain
circumstances, one Common Stock Equivalent) per Right.
In the event that, at any time after any person or group of
affiliated or associated persons becomes an Acquiring Person, (i) the Company
engages in a merger or other business combination transaction in which the
Company is not the surviving corporation, (ii) the Company engages in a merger
or other business combination transaction with another person in which the
Company IS the surviving corporation, but in which its Common Shares are changed
or exchanged, or (iii) more than 50% of the Company's assets or earning power is
sold or transferred, the Rights Agreement provides that proper provision shall
be made so that each holder of a Right (except Rights which previously have been
voided as described above) shall thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, common stock
of the acquiring company having a value equal to two (2) times the exercise
price of the Right.
The Purchase Price payable, and the number of Units of Preferred
Shares or other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares, or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, stock (other than a dividend payable in Preferred Shares), assets
or cash (excluding regular quarterly cash dividends) or of subscription rights,
options or warrants (other than those referred to above). Such terms are also
subject to adjustment in the event of a stock split of the Common Shares or a
stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made as provided in the Rights Agreement.
At any time prior to such time as any person or group of affiliated
or associated persons becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.01 per Right,
subject to adjustment (the "Redemption Price"). Immediately upon the action of
the Board of Directors of the Company ordering the redemption of the Rights (or
at such later time as the Board of Directors may establish for the effectiveness
of such redemption), the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price. 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.
The terms of the Rights may be amended by the Company and the Rights
Agent, provided that following the Share Acquisition Date the amendment does not
materially adversely affect the interests of holders of Rights (other than an
Acquiring Person) and provided that no amendment shall be made which decreases
the Redemption Price.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement will be available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
