Exhibit No. 1
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RIGHTS AGREEMENT
by and between
DONNKENNY, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
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Dated as of
April 2, 1998
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TABLE OF CONTENTS
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Section Page
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1. Certain Definitions.................................................... 2
2. Appointment of Rights Agent............................................ 14
3. Issuance of Right Certificates......................................... 14
4. Form of Right Certificates............................................. 17
5. Countersignature and Registration...................................... 18
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates.......................................... 20
7. Exercise of Rights; Exercise Price; Expiration Date
of Rights................................................... 22
8. Cancellation and Destruction of Right Certificates..................... 27
9. Reservation and Availability of Shares of Preferred
Stock....................................................... 27
10. Preferred Stock Record Date........................................... 30
11. Adjustment of Exercise Price or Number of Shares...................... 31
12. Certification of Adjusted Exercise Price or Number
of Shares................................................... 41
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power............................................ 42
14. Fractional Rights and Fractional Shares............................... 49
15. Rights of Action...................................................... 51
16. Agreement of Right Holders............................................ 52
17. Right Certificate Holder Not Deemed a Stockholder..................... 53
18. Concerning the Rights Agent........................................... 54
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Section Page
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19. Merger or Consolidation of, or Change in Name of,
the Rights Agent............................................. 55
20. Duties of Rights Agent................................................. 56
21. Change of Rights Agent................................................. 60
22. Issuance of New Right Certificates..................................... 62
23. Redemption............................................................. 62
24. Notice of Proposed Actions............................................. 65
25. Notices ............................................................. 67
26. Supplements and Amendments............................................. 68
27. Exchange ............................................................. 69
28. Successors............................................................. 71
29. Benefits of this Rights Agreement...................................... 72
30. Delaware Contract...................................................... 72
31. Counterparts........................................................... 72
32. Descriptive Headings................................................... 73
33. Severability........................................................... 73
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Certificate of Designations
of Series A Junior Preferred Stock
ii
RIGHTS AGREEMENT
Agreement, dated as of April 2, 1998, by and between
Donnkenny, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
W I T N E S S E T H :
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WHEREAS, on April 2, 1998, the Board of Directors of the
Company authorized the issuance of, and declared a dividend payable in, one
right (a "Right") for each share of Common Stock, $0.01 par value per share, of
the Company outstanding as of the close of business on April 13, 1998 (the
"Record Date"), each such Right representing the right to purchase one
one-hundredth of a share of Series A Junior Preferred Stock of the Company
("Preferred Stock") having the rights and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit C authorized by the Board
of Directors on April 2, 1998, upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further
authorized the issuance of one Right (subject to adjustment) with respect to
each share of Common Stock which may be issued between the Record Date and the
earlier to occur of the Distribution
Date, the Expiration Date or the Final Expiration Date (as such
terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
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Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates (as such term is hereinafter defined) and
Associates (as such term is hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Voting Stock of the
Company then outstanding; provided, that, an Acquiring Person
shall not include (i) an Exempt Person (as such term is
hereinafter defined) or (ii) any Person, together with all
Affiliates and Associates of such Person, who or which would
be an Acquiring Person solely by reason of (A) being the
Beneficial Owner of shares of Voting Stock of the Company, the
Beneficial Ownership of which was acquired by such Person
pursuant to any action or transaction or series of related
actions or transactions approved by the Board of Directors
before such
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Person otherwise became an Acquiring Person or (B) a reduction
in the number of issued and outstanding shares of Voting Stock
of the Company pursuant to a transaction or a series of
related transactions approved by the Board of Directors of the
Company; provided, further, that in the event such Person
described in this clause (ii) does not become an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii),
such Person nonetheless shall become an Acquiring Person in
the event such Person thereafter acquires Beneficial Ownership
of an additional 1% of the Voting Stock of the Company, unless
the acquisition of such additional Voting Stock would not
result in such Person becoming an Acquiring Person by reason
of subclause (A) or (B) of this clause (ii). Notwithstanding
the foregoing, if the Board of Directors of the Company
determines in good faith (but only if at the time of such
determination by the Board of Directors there are then in
office not less than two Continuing Directors and such action
is approved by a majority of the Continuing Directors then in
office) that a Person who would otherwise be an "Acquiring
Person" as defined pursuant to the foregoing provisions of
this paragraph (a) has become such inadvertently, and such
Person divests as
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promptly as practicable (as determined in good faith by the
Board of Directors) a sufficient number of shares of Common
Stock so that such Person would no longer be an "Acquiring
Person" as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed an
"Acquiring Person" for any purposes of this Rights Agreement.
(b) "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended
("Exchange Act"), as in effect on the date of this Rights
Agreement.
(c) "Associate" of a Person (as such term is
hereinafter defined) shall mean (i) with respect to a
corporation, any officer or director thereof or of any
Subsidiary (as such term is hereinafter defined) thereof, or
any Beneficial Owner (as such term is hereinafter defined) of
10% or more of any class of equity security thereof, (ii) with
respect to an association, any officer or director thereof or
of a Subsidiary thereof, (iii) with respect to a partnership,
any general partner thereof or any limited partner thereof who
is, directly or indirectly, the Beneficial Owner of a 10%
ownership interest therein, (iv) with respect to
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a business trust, any officer or trustee thereof or of any
Subsidiary thereof, (v) with respect to any other trust or an
estate, any trustee, executor or similar fiduciary or any
Person who has a 15% or greater interest as a beneficiary in
the income from or principal of such trust or estate, (vi)
with respect to a natural person, any relative or spouse of
such person, or any relative of such spouse, who has the same
home as such person, and (vii) any Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner"
of, or to "Beneficially Own", any securities (and correlative
terms shall have correlative meanings):
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly, for purposes of Section 13(d)
of the Exchange Act and Regulations 13D and 13G
thereunder (or any comparable or successor law or
regulation), in each case as in effect on the date
hereof; or
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or
only after the passage of time
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or the fulfillment of a condition or both) pursuant
to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange
rights, other 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 such Person or any of such Person's Affiliates or
Associates until such tendered securities are
accepted for purchase or exchange or (B) the right to
vote, alone or in concert with others, pursuant to
any agreement, arrangement or understanding (whether
or not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities if the agreement,
arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent
given in response to a proxy or consent solicitation
made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange
Act and (2) is not at the time reportable by such
Person on a Schedule 13D report
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under the Exchange Act (or any comparable or
successor report), other than by reference to a proxy
or consent solicitation being conducted by such
Person; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such
Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or
understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except as
described in clause (B) of subparagraph (ii) of this
paragraph (d)) or disposing of any securities of the
Company; provided, however, that for purposes of
determining Beneficial Ownership of securities under
this Rights Agreement, officers and directors of the
Company solely by reason of their status as such
shall not constitute a group (notwithstanding that
they may be Associates of one another or may be
deemed to constitute a group for purposes of Section
13(d) the Exchange Act) and shall not be deemed to
own shares owned by another officer or director of
the Company. Notwithstanding anything in this
paragraph (d) to the contrary, a Person engaged
in the business of
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underwriting securities shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," any securities acquired
in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close.
(f) "Close of Business" on any given date shall mean
5:00 P.M., New York 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.
(g) "Common Stock" when used with reference to the
Company shall collectively mean the Common Stock, $0.01 par
value, of the Company. "Common Stock" when used with reference
to any Person other than the Company which shall be organized
in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such
Person. "Common Stock" when used with reference to any Person
other than the Company which shall not be organized in
corporate form shall mean units of beneficial
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interest which shall represent the right to participate in
profits, losses, deductions and credits of such Person and
which shall be entitled to exercise the greatest voting power
per unit of such Person.
(h) "Continuing Director" shall mean any member of
the Board of Directors, while such person is a member of the
Board of Directors, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and who either (i) was a member
of the Board of Directors prior to the time that any Person
became an Acquiring Person (ii) subsequently became a member
of the Board of Directors, and whose nomination for election
or election to the Board of Directors was recommended or
approved by a majority of the Continuing Directors then on the
Board of Directors.
(i) "Distribution Date" shall have the meaning set
forth in Section 3(b) hereof.
(j) "Exchange Act" shall have the meaning set forth
in Section 1(b) hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii)
any Subsidiary of the Company, (iii) any employee benefit plan
or employee stock plan of the Company or
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any Subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Common Stock for
or pursuant to the terms of any such plan (iv) any Person who,
as of April 2, 1998, together with all Affiliates and
Associates of such Person, was the Beneficial Owner of 15% or
more of the Voting Stock of the Company outstanding as of such
date; provided, however, that any Person described in this
clause (iv) shall no longer be an Exempt Person and shall
become an Acquiring Person if (A) such Person, together with
all Affiliates and Associates of such Person, after April 2,
1998, acquires Beneficial Ownership of an additional 1% or
more of the Voting Stock or (B) such Person, together with all
Affiliates and Associates of such Person, after April 2, 1998,
reduces its Beneficial Ownership of the Voting Stock to less
than 15% of the outstanding Voting Stock and thereafter
acquires Beneficial Ownership of 15% or more of the
outstanding Voting Stock, unless in the case of clause (A) or
(B) such acquisition of Voting Stock was pursuant to (i) any
action or transaction or series of related actions or
transactions approved by the Board of Directors before such
acquisition or (ii) a reduction in the number of issued and
outstanding
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shares of Voting Stock of the Company pursuant to a
transaction or a series of related transactions approved by
the Board of Directors of the Company provided, further, that
in the event such Person described in clause (A) or (B) above
does not become an Acquiring Person by reason of the foregoing
subclauses (i) or (ii), such Person nonetheless shall become
an Acquiring Person in the event such Person thereafter
acquires Beneficial Ownership of an additional 1% of the
Voting Stock of the Company, unless the acquisition of such
additional Voting Stock would not result in such Person
becoming an Acquiring Person by reason of such subclauses (i)
or (ii).
(l) "Exercise Price" shall have the meaning set forth
in Sections 4 and 7(b) hereof.
(m) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(n) "Fair Market Value" of any property shall mean
the fair market value of such property as determined in
accordance with Section 11(b) hereof.
(o) "Final Expiration Date" shall have the meaning
set forth in Section 7(a) hereof.
(p) "Person" shall mean any individual, firm,
corporation or other entity.
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(q) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(r) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(s) "Right Certificate" shall have the meaning set
forth in Section 3(d) hereof.
(t) "Stock Acquisition Date" shall mean the first
date on which there shall be a public announcement by the
Company or an Acquiring Person that an Acquiring Person has
become such (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) or such earlier date as a
majority of the Continuing Directors shall become aware of the
existence of an Acquiring Person.
(u) "Subsidiary" of a Person shall mean any
corporation or other entity of which securities or other
ownership interests having voting power sufficient to elect a
majority of the board of directors or other persons performing
similar functions are beneficially owned, directly or
indirectly, by such Person or by any corporation or other
entity that is otherwise controlled by such Person.
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(v) "Summary of Rights" shall have the meaning set
forth in Section 3(a) hereof.
(w) "Trading Day" shall have the meaning set forth in
Section 11(b) hereof.
(x) "Transfer Tax" shall mean any tax or charge,
including any documentary stamp tax, imposed or collected by
any governmental or regulatory authority in respect of any
transfer of any security, instrument or right, including
Rights, shares of Common Stock and shares of Preferred Stock.
(y) "Voting Stock" shall mean (i) the Common Stock of
the Company and (ii) any other shares of capital stock of the
Company entitled to vote generally in the election of
directors or entitled to vote together with the Common Stock
in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation,
dissolution or winding up. For purposes of this Agreement, a
stated percentage of the Voting Stock shall mean a number of
shares of the Voting Stock as shall equal in voting power that
stated percentage of the total voting power of the then
outstanding shares of Voting Stock in the election of a
majority of the Board of Directors or in respect of any
merger, consolidation, sale of all or
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substantially all of the Company's assets, liquidation,
dissolution or winding up.
Any determination required to be made by the Board of Directors of the Company
for purposes of applying the definitions contained in this Section 1 shall be
made by the Board of Directors in its good faith judgment, which determination
shall be binding on the Rights Agent and the holders of the Rights.
Section 2. Appointment of Rights Agent. The Company hereby
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appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
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(a) On the Record Date (or as soon as practicable
thereafter), the Company or the Rights Agent shall send a copy of a Summary of
Rights, in substantially the form attached hereto as Exhibit A (the "Summary of
Rights"), by first class mail, postage prepaid, to each record holder of the
Common Stock as of the close of business on the Record Date, at the address of
such holder shown on the records of the Company.
(b) Until the close of business on the day which is the
earlier of (i) the tenth day after the Stock Acquisition Date or (ii) the tenth
business day (or such later date as may be
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determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than an Exempt Person) of, or the first public announcement of the intent
of any Person (other than an Exempt Person) to commence, a tender or exchange
offer upon the successful consummation of which such Person, together with its
Affiliates and Associates, would be the Beneficial Owner of 15% or more of the
then outstanding shares of Voting Stock of the Company (irrespective of whether
any shares are actually purchased pursuant to any such offer) (the earlier of
such dates being herein referred to as the "Distribution Date"), (x) the Rights
shall be evidenced by the certificates for Common Stock registered in the name
of the holders of Common Stock (together with, in the case of certificates for
Common Stock outstanding as of the Record Date, the Summary of Rights) and not
by separate Right certificates and the record holders of such certificates for
Common Stock shall be the record holders of the Rights represented thereby and
(y) each Right shall be transferable only simultaneously and together with the
transfer of a share of Common Stock (subject to adjustment as hereinafter
provided). Until the Distribution Date (or, if earlier, the Expiration Date or
Final Expiration Date), the surrender for transfer of any certificate for Common
Stock shall constitute the surrender for transfer of the Right or Rights
associated with the Common Stock
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evidenced thereby, whether or not accompanied by a copy of the Summary
of Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become outstanding after the Record Date but prior to the earlier of
the Distribution Date, the Expiration Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date (or, in certain circumstances as provided in Section 22 hereof, after the
Distribution Date) shall have impressed, printed, written or stamped thereon or
otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof
to the same number of Rights (subject to adjustment) as the number of
shares of Common Stock represented by this certificate, such Rights
being on the terms provided under the Rights Agreement between
Donnkenny, Inc. and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agent"), dated as of April 2, 1998, as it may be amended from
time to time (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Donnkenny, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights shall
be evidenced by separate certificates and shall no longer be evidenced
by this
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certificate. Donnkenny, Inc. shall mail to the registered holder of
this certificate a copy of the Rights Agreement without charge within
five days after receipt of a written request therefor. Under certain
circumstances as provided in Section 7(e) of the Rights Agreement,
Rights issued to or Beneficially Owned by Acquiring Persons or their
Affiliates or Associates (as such terms are defined in the Rights
Agreement) or any subsequent holder of such Rights shall be null and
void and may not be transferred to any Person.
(d) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send), by first class mail, postage prepaid, to each record holder of the Common
Stock as of the close of business on the Distribution Date, as shown by the
records of the Company, at the address of such holder shown on such records, a
certificate in the form provided by Section 4 hereof (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. As of and after the Distribution Date, the Rights shall
be evidenced solely by Right Certificates and may be transferred by the transfer
of the Right Certificate as permitted hereby, separately and apart from any
transfer of one or more shares of Common Stock.
Section 4. Form of Right Certificates. The Right
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Certificates (and the forms of election to purchase shares, cer- tificate and
assignment to be printed on the reverse thereof), when, as and if issued, shall
be substantially in the form set
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forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Common
Stock or the Rights may from time to time be listed or as the Company may deem
appropriate to conform to usage or otherwise and as are not inconsistent with
the provisions of this Rights Agreement. Subject to the provisions of Section 22
hereof, Right Certificates evidencing Rights whenever issued, (i) shall be dated
as of the date of issuance of the Rights they represent and (ii) subject to
adjustment from time to time as provided herein, on their face shall entitle the
holders thereof to purchase such number of shares (including fractional shares
which are integral multiples of one-hundredth of a share) of Preferred Stock as
shall be set forth therein at the price payable upon exercise of a Right
provided by Section 7(b) hereof as the same may from time to time be adjusted as
provided herein (the "Exercise Price").
Section 5. Countersignature and Registration.
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(a) Each Right Certificate shall be executed on behalf
of the Company by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant
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Secretary of the Company, either manually or by facsimile signature. Each Right
Certificate shall be countersigned by the Rights Agent either manually or by
facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
Right Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered 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. Any Right Certificate may be signed on
behalf of the Company by any person who, on the 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 Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Right Certificates upon
exercise or transfer, and in such other locations as may be required by law,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of
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the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
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Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Section 7(e), 7(f) and 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Right Certificate, may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Right Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Right Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Right
Certificate shall surrender the Right Certificate at the office of the Rights
Agent designated for the surrender of Right Certificates with the form of
certificate and assignment on the reverse side thereof duly endorsed (or
enclosed with such Right Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split
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up, combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate to be
split up, combined or exchanged at the office of the Rights Agent designated
therefor. Thereupon, the Rights Agent shall 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 Transfer Tax that may be imposed in connection with any transfer,
split up, combination or exchange of any Right Certificates.
(b) Subject to the provisions of Section 7(e), 7(f) and 14
hereof, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall issue 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.
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Section 7. Exercise of Rights; Exercise Price; Expiration
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Date of Rights.
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(a) The Rights shall not be exercisable until, and shall
become exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e) and 23(a) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York, New York, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earlier of (i) April 1, 2008 (the
"Final Expiration Date") or (ii) the date on which the Rights are redeemed as
provided in Section 23 hereof (such earlier date being herein referred to as the
"Expiration Date").
(b) The Exercise Price shall initially be $14.00 for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to
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adjustment from time to time as provided in Sections 11 and 13 hereof. The
Exercise Price shall be payable in lawful money of the United States of America,
in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Company or the Rights Agent of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Preferred
Stock of the Company one or more certificates representing the number of shares
of Preferred Stock to be so purchased, and the Company hereby authorizes and
directs such transfer agent to comply with all such requests, (ii) as provided
in Section 14(b), at the election of the Company, cause depositary receipts to
be issued in lieu of fractional shares of Preferred Stock, (iii) if the election
provided for in the immediately preceding clause (ii) has not been made,
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates
23
and, if applicable, 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 (v) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate; provided, however, that in the case of a
purchase of securities, other than Preferred Stock, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding in such case to that referred to in the foregoing clauses (i)
through (v) of this Section 7(c). Notwithstanding the foregoing provisions of
this Section 7(c), the Company may suspend the issuance of shares of Preferred
Stock upon exercise of a Right for a reasonable period, not in excess of 90
days, during which the Company seeks to register under the Securities Act of
1933, as amended (the "Act"), and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the Rights;
provided, however, that nothing contained in this Section 7(c) shall relieve the
Company of its obligations under Section 9(c) hereof.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights
24
Agent to the registered holder of such Right Certificate or his assign, subject
to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to
the contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, any Rights that are beneficially owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Company shall use all reasonable efforts
to ensure that the provisions of
25
this Section 7(e) are complied with, but shall have no liability to any holder
of Right Certificates or any other Person as a result of its failure to make any
determination with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. 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 provisions of this Section
7(e) or any Associate or Affiliate thereof; 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 provisions of this Section 7(e) or any Associate
or Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be void pursuant to the provisions of
this Section 7(e) shall be cancelled.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such
26
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
--------------------------------------------------
All Right Certificates surrendered for the purpose of exercise, 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 Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
cancel and retire, any 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 Shares of
-----------------------------------------
Preferred Stock.
---------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and
27
issued shares of Preferred Stock held in its treasury, such number of shares of
Preferred Stock as will from time to time 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 shares of Preferred Stock
issued or reserved for issuance in accordance with this Rights Agreement to be
listed, upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in the National Association of Securities Dealers'
Automated Quotation System or any successor thereto or other comparable
quotation system.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as
soon as practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required
28
by law following the Distribution Date, as the case may be, a registration
statement under the Act, with respect to the shares of Preferred Stock
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) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for Preferred
Stock, and (b) the date of the expiration of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety days, the
issuance of shares of Preferred Stock upon exercise of a Right in order to
prepare and file a registration statement under the Act and permit it to become
effective. 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. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement under the Act (if
required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due
and payable any and all federal and state Transfer Taxes
29
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock issued or delivered upon the
exercise of Rights. The Company shall not, however, be required to pay any
Transfer Tax which may be payable in respect of any transfer or delivery of a
Right Certificate to a Person other than, or the issuance or delivery of
certificates for Preferred Stock upon exercise of Rights in a name other than
that of, the registered holder of the Right Certificate, and the Company shall
not be required to issue or deliver a Right Certificate or certificate for
Preferred Stock to a Person other than such registered holder until any such
Transfer Tax shall have been paid (any such Transfer Tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
---------------------------
name any certificate for shares of Preferred Stock is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Stock represented thereby on, and such certificate shall be
dated as of, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Exercise Price (and any applicable
Transfer Taxes) was made; provided, however, that, if the date of such surrender
and payment is a date upon
30
which the Preferred Stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated as of, the next succeeding Business Day on which the
Preferred Stock transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate, as such, shall
not be entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any pre-emptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price or Number of Shares.
------------------------------------------------
The Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right 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 Rights Agreement (A) declare or pay any
dividend on Common Stock payable in shares of Common Stock,
(B) subdivide or split the outstanding shares of Common Stock
into a greater number of shares or (C) combine or consolidate
the outstanding shares of Common Stock into a smaller number
of shares or effect a reverse split of the
31
outstanding shares of Common Stock, then and in each such
event the number of shares of Preferred Stock issuable upon
the exercise of a Right after the record date for such event
(if one shall have been established or, if not, after the date
of such event) shall be the number of shares of Preferred
Stock issuable immediately prior to such event multiplied by a
fraction the numerator of which is the number of Rights
outstanding immediately prior to such event and the
denominator of which is the number of Rights outstanding
immediately after such event and the Exercise Price after such
event shall be the Exercise Price in effect immediately prior
to such event multiplied by such fraction. If an event occurs
which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 27 of this Agreement, in the
event that any Person (other than an Exempt Person), alone or
together with its Affiliates and Associates, shall become an
Acquiring Person, then, subject to the last sentence of
Section 23(a) and
32
except as otherwise provided in this Section 11, each holder
of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive upon exercise of such
Right in accordance with the terms of this Rights Agreement
and payment of the Exercise Price, the greater of (1) the
number of one one-hundredths of a share of Preferred Stock for
which such Right was exercisable immediately prior to the
first occurrence of the event described in this Section
11(a)(ii) or (2) such number of one one-hundredths of a share
of Preferred Stock, based on the per share Fair Market Value
of the Preferred Stock (determined pursuant to Section 11(b)
hereof) on the date of such first occurrence, having a value
equal to twice the Exercise Price; provided, however, that if
the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii).
(iii) In the event that the Company does not have
available sufficient authorized but unissued Preferred Stock
to permit the adjustments required pursuant to the foregoing
subparagraph (i) or the exercise in full
33
of the Rights in accordance with the foregoing subpara- graph
(ii), the Company shall take all such action as may be
necessary to authorize and reserve for issuance such number of
additional shares of Preferred Stock as may from time to time
be required to be issued upon the exercise in full of all
Rights from time to time outstanding and, if necessary, shall
use its best efforts to obtain stockholder approval thereof.
In lieu of issuing shares of Preferred Stock in accordance
with the foregoing subparagraphs (i) and (ii), the Company
may, if the Board of Directors determines (but only if at the
time of such determination by the Board of Directors there are
then in office not less than two Continuing Directors and such
action is approved by a majority of the Continuing Directors
then in office) that such action is necessary or appropriate
and not contrary to the interests of holders of Rights, elect
to issue or pay, upon the exercise of the Rights, cash,
property, shares of Preferred or Common Stock, or any
combination thereof, having an aggregate Fair Market Value
equal to the Fair Market Value of the shares of Preferred
Stock which otherwise would have been issuable pursuant to
Section 11(a)(ii), which Fair Market Value shall be determined
by an investment banking firm
34
selected by the Board of Directors (but only if at the time of
such selection there are then in office not less than two
Continuing Directors and such selection is approved by a
majority of the Continuing Directors then in office). For
purposes of the preceding sentence, the Fair Market Value of
the Preferred Stock shall be as determined pursuant to Section
11(b). Subject to Section 23 hereof, any such election by the
Board of Directors of the Company must be made and publicly
announced within thirty (30) days after the date on which the
event described in Section 11(a)(ii) occurs. (b) For the
purpose of this Rights Agreement, the
"Fair Market Value" of any share of Preferred Stock, Common Stock or any other
stock or any Right or other security or any other property on any date shall be
determined as provided in this Section 11(b). In the case of a publicly-traded
stock or other security, the Fair Market Value on any date shall be deemed to be
the average of the daily closing prices per share of such stock or per unit of
such other security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that in
the event that the Fair Market Value per share of any share of Common Stock is
determined during a period which includes any date that is within 30 Trading
35
Days after (i) the ex-dividend date for a dividend or distribution on such stock
payable in shares of Common Stock or securities convertible into shares of
Common Stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or, if
the securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange on
which such security is listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last quoted price
(or, if not so quoted, the average of the high bid and low asked prices) in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use; or, if no bids for such security
36
are quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in such
security selected by the Board of Directors of the Company. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which such security is listed or admitted to trading is open for the transaction
of business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. If a security is not publicly held
or not so listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of securities
selected in good faith by the Board of Directors of the Company, or, if no such
investment banking firm is, in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the Board of
Directors of the Company; provided, however, that for purposes of making the
adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a
share of Preferred Stock shall not be less than 100% of the product of the Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock (as defined
in the Certificate of Designations relating to the Preferred Stock) and shall
not exceed 105% of the
37
product of the then Fair Market Value of a share of Common Stock multiplied by
the higher of the then Dividend Multiple or Vote Multiple applicable to the
Preferred Stock. In the case of property other than securities, the "Fair Market
Value" thereof shall be determined in good faith by the Board of Directors of
the Company based upon such appraisals or valuation reports of such independent
experts as the Board of Directors of the Company shall in good faith determine
to be appropriate in accordance with good business practices and the interests
of the holders of Rights. Any such determination of Fair Market Value shall be
described in a statement filed with the Rights Agent and shall be binding upon
the Rights Agent.
(c) All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-hundredth of a share, as the case may
be.
(d) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of shares to be issued
upon exercise of the Rights as in the initial Right Certificates issued
hereunder but, nevertheless, shall represent the Rights as so adjusted.
38
(e) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon exercise of
the Rights below the then par value, if any, of the shares of Preferred Stock,
the Company shall use its best efforts to 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 non-assessable shares of such Preferred
Stock at such adjusted purchase price per share.
(f) Anything in this Section 11 to the contrary
notwithstanding, in the event of any reclassification of stock of the Company or
any recapitalization, reorganization or partial liquidation of the Company or
similar transaction, the Company shall be entitled to make such further
adjustments in the number of shares of Preferred Stock which may be acquired
upon exercise of the Rights, and such adjustments in the Exercise Price
therefor, in addition to those adjustments expressly required by the other
paragraphs of this Section 11, as the Board of Directors of the Company shall
determine to be necessary or appropriate in order for the holders of the Rights
in such event to be treated equitably and in accordance with the purpose and
intent of this Rights Agreement or in order that any such event shall not, but
for such adjustment, in the opinion of counsel to the Company,
39
result in the stockholders of the Company being subject to any United States
federal income tax liability by reason thereof.
(g) In the event the Company shall at any time after the
Record Date make any distribution on the shares of Common Stock of the Company,
whether by way of a dividend or a reclassi- fication of stock, a
recapitalization, reorganization or partial liquidation of the Company or
otherwise, in cash or any debt security, debt instrument, real or personal
property or any other property (other than any shares of Common Stock or other
capital stock of the Company and other than any right or warrant to acquire any
such shares, including any debt security convertible into or exchangeable for
any such share, at less than the Fair Market Value of such shares) and the
amount of such cash dividend or the Fair Market Value of such debt security,
debt instrument or property exceeds 150% of the aggregate amount of the cash
dividends declared or paid on the Common Stock of the Company in the 15-month
period immediately preceding such distribution, then and in each such event,
unless such distribution is part of or is made in connection with a transaction
to which Section 11(a)(ii) or Section 13 hereof applies, the Exercise Price
shall be reduced by an amount equal to the cash or the Fair Market Value of such
distribution, as the case may be, per share of Common Stock of the Company. For
purposes hereof, the Fair Market Value of any property distributed to the
holders of shares of Common Stock of
40
the Company shall be the Fair Market Value of such property as determined by an
independent investment banking firm experienced in the valuation of securities
or the other property so distributed, as the case may be, selected in good faith
by the Board of Directors of the Company, or, if no such investment banking firm
is in the good faith judgment of the Board of Directors available to make such
determination, in good faith by the Board of Directors of the Company, whose
determination shall be final and binding on the Company, the Rights Agent and
the holders of Rights.
Section 12. Certification of Adjusted Exercise Price or Number
--------------------------------------------------
of Shares. Whenever an adjustment is made as provided in Section 11, 13 or
---------
23(c), the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11, 13 or 23(c) of this Rights Agreement shall be effective
as of the date of the
41
event giving rise to such adjustment. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer
-----------------------------------------
of Assets or Earning Power.
--------------------------
(a) In the event that, at any time after the time that any
Person becomes an Acquiring Person, (x) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person or
Persons (other than an Exempt Person) and the Company shall not be the surviving
or continuing corporation of such consolidation or merger, or (y) any Person or
Persons (other than an Exempt Person) shall, directly or indirectly, 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
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (other than an Exempt Person) or of the Company
or cash or any other property, or (z) the Company or one or more of its
Subsidiaries shall, directly or indirectly, sell or otherwise transfer to any
other Person or any Affiliate or Associate of such Person, in one or
42
more transactions, or the Company or one or more of its Subsidiaries shall sell
or otherwise transfer to any Persons in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that (i) each
holder of record of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof and payment of
the Exercise Price in accordance with the terms of this Rights Agreement, such
number of shares of validly issued, fully paid, non-assessable and freely
tradeable Common Stock of the Principal Party (as defined herein), not subject
to any liens, encumbrances, rights of first refusal or other adverse claims, as
shall, based on the Fair Market Value of the Common Stock of the Principal Party
on the date of the Consummation of such consolidation, merger, sale or transfer,
equal twice the Exercise Price; (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 Rights
Agreement; (iii) the term "Company" for all purposes of this Rights Agreement
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
43
number of shares of its Common Stock in accordance with the provisions of
Section 9 hereof applicable to the reservation of Preferred Stock) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
its shares of Common Stock 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 shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Exercise Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, 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
Section 11(a)(ii) hereof shall be of no effect following the occurrence of any
event described in clause (x), (y) or (z) above of this Section 13(a).
44
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
(x) or (y) of the first sentence of Section 13(a) hereof: (A) the Person that is
the issuer of the securities into which shares of Common Stock of the Company
are changed or otherwise exchanged or converted in such merger or consolidation,
or, if there is more than one such issuer, the issuer of the Common Stock of
which has the greatest market value or (B) if no securities are so issued, (x)
the Person that is the other party to the merger or consolidation and that
survives such merger or consolidation, or, if there is more than one such
Person, the Person the Common Stock of which has the greatest market value or
(y) if the Person that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that does survive the merger
or consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in
(z) of the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of
45
such Persons as is the issuer of Common Stock having the greatest market value
of shares outstanding; provided, however, that in any such case, if the Common
Stock of such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, the term "Principal Party" shall
refer to such other Person, or if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of all of which are and
have been so registered, the term "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest market value
of shares outstanding.
(c) The Company shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
46
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under
the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration
statement to become effective as soon as practicable after
such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the
date of expiration of the Rights, and similarly comply with
applicable state securities laws;
(ii) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon
exercise of the Rights on a national securi-
47
ties exchange or to meet the eligibility requirements
for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in
all respects with the requirements for registration on Form 10
(or any successor form) under the Exchange Act. In the event
that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have
not theretofore been exercised shall, subject to the
provisions of Section 7(e) hereof, thereafter be exercisable
in the manner described in Section 13(a). (d) In case the
Principal Party which is to be a party
to a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at
48
less than such then Fair Market Value (other than to holders of Rights pursuant
to this Section 13) or (ii) providing for any special tax or similar payment in
connection with the issuance to any holder of a Right of Common Stock of such
Principal Party pursuant to the provisions of this Section 13, then, in such
event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which evidence
fractional Rights (i.e., Rights to acquire less than one one-hundredth of a
share of Preferred Stock), unless such fractional Rights result from a
transaction referred to in Section 11(a)(i) hereof. If the Company shall
determine not to issue such fractional Rights, then, in lieu of such fractional
Rights, there shall be paid to the holders of record of the Right Certificates
with regard to which such fractional Rights would
49
otherwise be issuable, an amount in cash equal to the same fraction of the Fair
Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-hundredth of a share). In lieu of issuing fractions of
shares of Preferred Stock, the Company may, at its election, issue depositary
receipts evidencing fractions of shares 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 of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one-hundredth of a share, if the Company does not issue
such fractional shares or depositary receipts in lieu thereof, there shall be
paid to the holders of record of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any
50
fractional shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect
----------------
of this Rights Agreement, except the rights of action given to the Rights Agent
in Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the holders of record
of the Common Stock); and any holder of record of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), 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 Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights 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 Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
51
threatened violations of, the obligations of any Person subject to this Rights
Agreement.
Section 16. Agreement of Right Holders. Each 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 shall be
evidenced by the certificates for Common Stock registered in the name
of the holders of Common Stock (together, as applicable, with the
Summary of Rights), which certificates for Common Stock shall also
constitute certificates for Rights, and not by separate Right
Certificates, and each Right shall be transferable only simultaneously
and together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) 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 Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any nota-
52
tions of ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
-------------------------------------------------
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities 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 (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 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.
53
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad faith
or willful misconduct on the part of the Rights Agent, for anything done or
omitted to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement.
(b) The Rights Agent shall be protected against, and shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it in connection with its administration of this Rights Agreement in reliance
upon any Right Certificate or certificate for Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to
54
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation of, or Change in Name of,
-------------------------------------------------
the Rights Agent.
----------------
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement any of the
Rights 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 that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent
55
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 Rights 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; in case at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
----------------------
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
56
(b) Whenever in the performance of its duties under this
Rights 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 or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, the President or any Vice President and by the Treasurer or the
Secretary of the Company and delivered to the Rights Agent. Any such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect, consequential or incidental loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be required
to verify the same, but
57
all such statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights 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 Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate describing any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock will, when 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,
58
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 the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President or any Vice President or the Secretary
or the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents,
59
and the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued employment
thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) 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 Stock and the Preferred Stock by registered or certified
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.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapaci-
60
βββββ 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
incumbent Rights Agent or the holder of record 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) a corporation organized and doing business under the laws of
the United States or of any state thereof, in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination in the conduct of its corporate trust or
stock transfer business by federal or state authorities and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $5,000,000 or (b) an Affiliate controlled by a corporation described in
clause (a) of this sentence. 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
61
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Company shall have the authority to act
as the Rights Agent until a successor Rights Agent shall have assumed the duties
of the Rights Agent hereunder.
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Rights 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 Exercise Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Rights Agreement.
Section 23. Redemption.
----------
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors, redeem all but not
62
less than all of the then outstanding Rights, at any time prior to the Close of
Business on the earlier of (i) the tenth day following the Stock Acquisition
Date (subject to extension by the Company as provided in Section 26 hereof) or
(ii) the Final Expiration Date, at a redemption price of $.01 per Right, subject
to adjustments as provided in subsection (c) below (the "Redemption Price");
provided, however, that from and after the time that any Person shall become an
Acquiring Person, the Company may redeem the Rights only if at the time of the
action of the Board of Directors there are then in office not less than two
Continuing Directors and such redemption is approved by a majority of the
Continuing Directors then in office. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable pursuant to
Section 11(a)(ii) prior to the expiration of the Company's right of redemption
hereunder.
(b) Without any further action and without any notice, the
right to exercise the Rights will terminate effective at the time so designated
by action of the Board of Directors ordering the redemption of the Rights and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the effective time of the action of the
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of
63
the then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each notice of
redemption will state the method by which the payment of the Redemption Price
will be made. At the option of the Board of Directors, the Redemption Price may
be paid in cash to each Rights holder or by the issuance of shares (and, at the
Company's election pursuant to Section 14(b) hereof, cash or depositary receipts
in lieu of fractions of shares other than fractions which are integral multiples
of one one-hundredth (1/100) of a share) of Preferred Stock or Common Stock
having a Fair Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date
of this Rights Agreement (A) pay any dividend on Common Stock in shares of
Common Stock, (B) subdivide or split the outstanding shares of Common Stock into
a greater number of shares or (C) combine or consolidate the outstanding shares
of Common Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then, and in each such event, the Redemption
Price shall be appropriately adjusted to reflect the foregoing.
64
Section 24. Notice of Proposed Actions.
--------------------------
(a) In case the Company, after the Distribution Date,
shall propose (i) to effect any of the transactions referred to in Section
11(a)(i) or 11(g) or (ii) to offer to the holders of record of its Common Stock
options, warrants, or other rights to subscribe for or to purchase shares of
Common Stock (including any security convertible into or exchangeable for Common
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to
effect any reclassification of its Preferred Stock or Common Stock or any
recapitalization or reorganization of the Company, or (iv) to effect any
consolidation or merger with or into, 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
each holder of record of a Right Certificate, in accordance with Section 25,
notice of such proposed action, which shall specify the record date for the
purposes of such transaction referred to in Section 11(a)(i) or such dividend or
distribution, or the date on which such reclas- sification, recapitalization,
reorganization, consolidation,
65
merger, sale or transfer of assets, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by the
holders of record of Common Stock or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of record of Common Stock or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case any of the transactions referred to in Section
11(a)(i), 11(g) or 13 of this Rights Agreement are proposed, then, in any such
case, the Company shall give to each holder of Rights, in accordance with
Section 25 hereof, notice of the proposal of such transaction at least 10 days
prior to consummating such transaction, which notice shall specify the proposed
event and the consequences of the event to holders of Rights under Section
11(a)(i), 11(g) or 13 hereof, as the case
66
may be, and, upon consummating such transaction, shall similarly give notice
thereof to each holder of Rights.
Section 25. Notices. Notices or demands authorized by this
-------
Rights Agreement to be given or made by the Rights Agent or by the holder of
record of any Right Certificate or Right 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) as
follows:
Donnkenny, Inc.
ββββ ββββββββ
βββ ββββ, βββ ββββ βββββ
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate or Right 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:
ChaseMellon Shareholder Services, L.L.C.
βββ ββββ ββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently
67
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 26. Supplements and Amendments. For as long as the
--------------------------
Rights are then redeemable and except as provided in the last sentence of this
Section 26, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. At any time when
the Rights are not then redeemable and except as provided in the last sentence
of this Section 26, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend this Rights Agreement without the approval of
any holders of Right Certificates (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
hereunder in any manner which the Company may deem necessary or desirable,
provided that no such supplement or amendment pursuant to this clause (iii)
shall materially adversely affect the interest of the holders of Right
Certificates. 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 26, the Rights Agent shall execute
such supplement or
68
amendment. This Agreement may be amended or supplemented at any time with the
approval of a majority of the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Stock). Notwithstanding anything
contained in this Rights Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price or the Final Expiration Date
and supplements or amendments may be made after the time that any Person becomes
an Acquiring Person only if at the time of the action of the Board of Directors
approving such supplement or amendment there are then in office not less than
two Continuing Directors and such supplement or amendment is approved by a
majority of the Continuing Directors then in office.
Section 27. Exchange. (a) The Board of Directors of the
--------
Company may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one
share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than an
69
Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Voting Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 27 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void
70
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 27, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock for the Trading Day immediately prior to the date of exchange pursuant to
this Section 27.
Section 28. Successors. All of the covenants and provisions of
----------
this Rights 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.
71
Section 29. Benefits of this Rights Agreement. Nothing in this
---------------------------------
Rights Agreement shall be construed to give to any person or corporation other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the holders of
record of the Right Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
Section 30. Delaware Contract. This Rights 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 and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 31. Counterparts. This Rights 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.
72
Section 32. Descriptive Headings. Descriptive
--------------------
headings of the several Sections of this Rights Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 33. Severability. If any term, provision, covenant or
------------
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
Attest: By /s/ ββββββ β. Appelle
--------------------------
(SEAL) Name: ββββββ β. Appelle
Title: Chairman of the
Board and Chief
Executive Officer of
Donnkenny, Inc.
Attest: By /s/ βββββββ βββββββ
--------------------------
(SEAL) Name: βββββββ βββββββ
Title: Vice President of
ChaseMellon
Shareholder
Services, L.L.C.
74
EXHIBIT A
---------
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
DONNKENNY, INC.
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On April 2, 1998, the Board of Directors of Donnkenny, Inc. (the
"Company") declared a dividend distribution of one Preferred Stock Purchase
Right for each outstanding share of Common Stock, par value $.01 per share (the
"Common Stock"), of the Company. The distribution is payable as of April 13,
1998 to stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-hundredth (1/100) of a share of
preferred stock of the Company, designated as Series A Junior Preferred Stock
(the "Preferred Stock") at a price of $14.00 per one one-hundredth (1/100) of a
share ("Exercise Price"). The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 15% or more of
the outstanding voting stock of the Company (an "Acquiring Person") and (ii) the
tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or
NYFS07...:\53\42053\0005\1585\EXH9167R.41E
exchange offer the consummation of which would result in the ownership of 15% or
more of the Company's outstanding voting stock (even if no shares are actually
purchased pursuant to such offer); prior thereto, the Rights would not be
exercisable, would not be represented by a separate certificate, and would not
be transferable apart from the Company's Common Stock, but will instead be
evidenced, with respect to any of the Common Stock certificates outstanding as
of April 13, 1998, by such Common Stock certificate with a copy of this Summary
of Rights attached thereto. An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan, (D) any person or group whose
ownership of 15% or more of the shares of voting stock of the Company then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person or (ii) a reduction in the number of issued and outstanding
shares of voting stock of the Company pursuant to a transaction or transactions
approved by the Board of Directors (provided that any person or group that does
not become an Acquiring Person by reason of clause (i) or (ii) above shall
become an Acquiring Person upon acquisition of an additional 1% of the Company's
voting stock unless such acquisition of additional voting stock will not result
in such person or group becoming an Acquiring Person by reason of such clause
(i) or (ii)) or (E) any Person who, as of April 2, 1998, together with all
Affiliates and Associates of such Person, was the Beneficial Owner of 15% or
more of the Voting Stock of the Company outstanding as of such date; provided,
however, that any Person described in this clause (E) shall no longer be an
exempt person and shall become an Acquiring Person if (i) such Person, together
with all Affiliates and Associates of such Person, after April 2, 1998, acquires
Beneficial Ownership of an additional 1% or more of the Voting Stock (unless
such acquisition is pursuant to a transaction described in clause (D)(i) or
(D)(ii) above) or (ii) such Person, together with all Affiliates and Associates
of such Person, after April 2, 1998, reduces its Beneficial Ownership of the
Voting Stock to less than 15% of the outstanding Voting Stock and thereafter
acquires Beneficial Ownership of 15% or more of the outstanding Voting Stock
(unless such acquisition is pursuant to a transaction described in clause (D)(i)
or (D)(ii) above).
2
Until the Distribution Date (or earlier redemption or expiration of
the Rights), new Common Stock certificates issued after April 13, 1998 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as of
April 2, 1998, with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock 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 Stock as of the
close of business on the Distribution Date and such separate certificates alone
will evidence the Rights from and after the Distribution Date.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on April 1, 2008, unless earlier
redeemed by the Company as described below.
The Preferred Stock is nonredeemable and, unless otherwise provided
in connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock. The Preferred
Stock may not be issued except upon exercise of Rights. Each share of Preferred
Stock will be entitled to receive when, as and if declared, a quarterly dividend
in an amount equal to the greater of $0.10 per share or 100 times the cash
dividends declared on the Company's Common Stock. In addition, the holders of
the Preferred Stock are entitled to receive 100 times any non-cash dividends
(other than dividends payable in equity securities) declared on the Common
Stock, in like kind. In the event of the liquidation of the Company, the holders
of Preferred Stock will be entitled to receive, for each share of Preferred
Stock, a payment in an amount equal to the greater of $0.10 or 100 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
100 votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which Common Stock is exchanged, each
share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. The rights of Preferred Stock as to
dividends, liquidation and voting are protected by anti-dilution provisions.
3
The number of shares of Preferred Stock issuable upon exercise of
the Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed, in the event that, after the
time that a Person becomes an Acquiring Person, the Company were to be acquired
in a merger or other business combination (in which any shares of Common Stock
are changed into or exchanged for other securities or assets) or more than 50%
of the assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred in one or a series of related
transactions, the Rights Agreement provides that proper provision will be made
so that each holder of record of a Right will from and after such date have the
right to receive, upon payment of the Exercise Price, that number of shares of
common stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price.
In addition, unless the Rights are earlier redeemed, in the event
that a person or group becomes an Acquiring Person, the Rights Agreement
provides that proper provisions will be made so that each holder of record of a
Right, other than the Acquiring Person (whose Rights will thereupon become null
and void), will thereafter have the right to receive, upon payment of the
Exercise Price, that number of shares of the Preferred Stock having a market
value at the time of the transaction equal to two times the Exercise Price (such
market value to be determined with reference to the market value of the
Company's Common Stock as provided in the Rights Agreement).
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding voting stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock
per Right (subject to adjustment).
Fractions of shares of Preferred Stock (other than fractions which
are integral multiples of one one-hundredth
4
of a share) may, at the election of the Company, be evidenced by depositary
receipts. The Company may also issue cash in lieu of fractional shares which are
not integral multiples of one one-hundredth of a share.
At any time on or prior to the close of business on the earlier of
(i) the tenth day after the time that a person has become an Acquiring Person
(or such later date as a majority of the Board of Directors and a majority of
the Continuing Directors (as defined in the Rights Agreement) may determine) or
(ii) April 1, 2008, the Company may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price"). The Rights may be
redeemed after the time that any Person has become an Acquiring Person only if
approved by a majority of the Continuing Directors. Immediately upon the
effective time of the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
For as long as the Rights are then redeemable, the Company may,
except with respect to the redemption price or date of expiration of the Rights,
amend the Rights in any manner, including an amendment to extend the time period
in which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement from and after the time that any Person
becomes an Acquiring Person requires the approval of a majority of the
Continuing Directors (as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
5
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form 8-K dated
April 2, 1998. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
which is incorporated in this summary description herein by reference.
6
EXHIBIT B
---------
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER APRIL 1, 2008 OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND UNDER CERTAIN
OTHER CIRCUMSTANCES, AT $.01 PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE
TERMS SET FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW),
RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID
AND MAY NOT BE TRANSFERRED TO ANY PERSON.
Right Certificate
This certifies that , or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of April 2, 1998 (the "Rights Agreement") between Donnkenny, Inc., a
Delaware corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company, (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (New York time) on
April 1, 2008 at the office of the Rights Agent designated in the
NYFS07...:\53\42053\0005\1585\EXH9167S.13D
Rights Agreement for such purpose, or its successor as Rights Agent, in New
York, New York, one one-hundredth (1/100) of a fully paid nonassessable share of
Series A Junior Preferred Stock (the "Preferred Stock") of the Company at a
purchase price of $14.00, as the same may from time to time be adjusted in
accordance with the Rights Agreement (the "Exercise Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the
number of shares of Preferred Stock 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 and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are 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,
2
obligations, duties and immunities of the Rights Agent, the Company and the
holders of record of Right Certificates. Copies of the Rights Agreement are on
file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office of the Rights Agent designated in the Rights
Agreement for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
of record to purchase a like aggregate number of shares of Preferred Stock as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option or
under certain other circumstances at a redemption price of $.01 per Right.
No fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-hundredth (1/100) of a share) are required to
be issued upon
3
the exercise of any Right or Rights evidenced hereby, and in lieu thereof the
Company may cause depositary receipts to be issued and/or a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities 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 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.
4
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________, 199_.
ATTEST:
By
------------------------ ------------------------
Secretary Title:
Countersigned:
[Rights Agent]
By
------------------------------
Authorized Signature
5
[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 Certificates.)
FOR VALUE RECEIVED
-------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
Rights evidenced by 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: ________________, 199__
----------------------------------
Signature
Signature Guaranteed:
6
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
------------------------------
Dated: ____________, 199__ Signature
NOTICE
------
The signature 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.
7
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO _____________________:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such share(s) be issued in the following name:
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 remaining of such Rights
shall be registered in the name of and delivered to:
8
Please insert social security
or other identifying number:
---------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: _____________, 199__
-------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate)
Signature Guaranteed:
9
EXHIBIT C
---------
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PREFERRED STOCK
OF
DONNKENNY, INC.
Pursuant to Section 151 of the Delaware
General Corporation Law
I, ββββββ β. ββββ, Vice President-Finance and Assistant Secretary of
Donnkenny, Inc., a corporation organized and existing under the Delaware General
Corporation Law (the "Company"), in accordance with the provisions of Section
151 of such law, DO HEREBY CERTIFY that pursuant to the authority conferred upon
the Board of Directors by the Amended and Restated Certificate of Incorporation
of the Company, the Board of Directors on April 2, 1998 adopted the following
resolution which creates a series of 200,000 shares of Preferred Stock
designated as Series A Junior Preferred Stock, as follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware General
Corporation Law and the authority vested in the Board of Directors of the
Company in accordance with the provisions of ARTICLE FOURTH of the Amended and
Restated Certificate of Incorporation of the Company, a series of Preferred
Stock of the Company be, and hereby is, created, and the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the
NYFS07...:\53\42053\0005\1585\CRT9257P.34C
qualifications, limitations or restrictions thereof, be, and
hereby are, as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting such series shall be 200,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment here-
inafter set forth, the holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, (i) cash dividends in an amount per
share (rounded to the nearest cent) equal to 100 times the aggregate per share
amount of all cash dividends declared or paid on the Common Stock, $0.01 par
value per share, of the Company (the "Common Stock") and (ii) a preferential
cash dividend (the "Preferential Dividends"), if any, in preference to the
holders of Common Stock, on the first day of March, June, September and December
of each year (each 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 Series A Preferred Stock, payable in an amount (except in the case
of the first Quarterly Dividend Payment if the date of the first issuance of
Series A Preferred Stock is a date other than a Quarterly
2
Dividend Payment date, in which case such payment shall be a prorated amount of
such amount) equal to $0.10 per share of Series A Preferred Stock less the per
share amount of all cash dividends declared on the Series A Preferred Stock
pursuant to clause (i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Company shall, at any time after the
issuance of any share or fraction of a share of Series A Preferred Stock, make
any distribution on the shares of Common Stock of the Company, whether by way of
a dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Company or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence, a
distribution of shares of Common Stock or other capital stock of the Company or
a distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for any such share, at a price
less than the Fair Market Value (as hereinafter defined) of such share), then,
and in each such event, the Company shall simultaneously pay on each then
outstanding share of Series A Preferred Stock of the Company a distribution, in
like kind, of
3
100 times such distribution paid on a share of Common Stock (subject to the
provisions for adjustment hereinafter set forth). The dividends and
distributions on the Series A Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to as
"Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Dividends, which shall be 100
initially but shall be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Dividend Multiple". In the event the Company
shall at any time after April 2, 1998 declare or pay any dividend or make any
distribution on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then in each such case the Dividend Multiple thereafter applicable
to the determination of the amount of Dividends which holders of shares of
Series A Preferred Stock shall be entitled to receive shall be the Dividend
Multiple applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
4
of shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Dividend is required
to be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series A Preferred
Stock.
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series A Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series A Preferred Stock
in an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
5
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the holders of the Common Stock. The
number of votes which a holder of Series A Preferred Stock is entitled to cast,
as the same may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Vote Multiple". In the event the Company shall
at any time after April 2, 1998 declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series A Preferred Stock
shall be entitled after such event shall be the Vote Multiple immediately prior
to such event multiplied by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Amended and Restated
Certificate of Incorporation or By-laws, the holders of shares of Series A
Preferred Stock and the holders of
6
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Company.
(C) In the event that the Preferential Dividends accrued on the
Series A Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or irrevocably set
aside for payment, the holders of record of Preferred Stock of the Company of
all series (including the Series A Preferred Stock), other than any series in
respect of which such right is expressly withheld by the Amended and Restated
Certificate of Incorporation or the authorizing resolutions included in any
Certificate of Designations therefor, shall have the right, at the next meeting
of stockholders called for the election of directors, to elect two members to
the Board of Directors, which directors shall be in addition to the number
required by the By-laws prior to such event, to serve until the next Annual
Meeting and until their successors are elected and qualified or their earlier
resignation, removal or incapacity or until such earlier time as all accrued and
unpaid Preferential Dividends upon the outstanding shares of Series A Preferred
Stock shall have been paid (or irrevocably set aside for payment) in full. The
holders of shares of Series A Preferred Stock shall continue to have the right
to elect directors as provided by the immediately preceding sentence until all
accrued and unpaid Preferential Dividends upon
7
the outstanding shares of Series A Preferred Stock shall have been paid (or set
aside for payment) in full. Such directors may be removed and replaced by such
stockholders, and vacancies in such directorships may be filled only by such
stockholders (or by the remaining director elected by such stockholders, if
there be one) in the manner permitted by law; provided, however, that any such
action by stockholders shall be taken at a meeting of stockholders and shall not
be taken by written consent thereto.
(D) Except as otherwise required by the Certificate of Incorporation
or By-laws or set forth herein, holders of Series A Preferred Stock shall have
no other special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in arrears or
the Company shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
or set irrevocably aside for payment in full, and in addition to any and all
other rights which any holder of shares of Series A Preferred Stock may have in
such circumstances, the Company shall not
8
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series A
Preferred Stock, unless dividends are paid ratably on the Series A
Preferred Stock 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 if the full dividends accrued thereon
were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph 4(A),
redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided
that the Company may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Company ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; or
9
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer
made 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 Company shall not permit any Subsidiary (as hereinafter
defined) of the Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors of such
corporation or other entity or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Company or by any corporation
or other entity that is otherwise controlled by the Company.
10
(C) The Company shall not issue any shares of Series A Preferred
Stock except upon exercise of Rights issued pursuant to that certain Rights
Agreement dated as of April 2, 1998 between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, a copy of which is on file with
the Secretary of the Company at its principal executive office and shall be made
available to stockholders of record without charge upon written request therefor
addressed to said Secretary. Notwithstanding the foregoing sentence, nothing
contained in the provisions hereof shall prohibit or restrict the Company from
issuing for any purpose any series of Preferred Stock with rights and privileges
similar to, different from, or greater than, those of the Series A Preferred
Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
upon their retirement and cancellation shall become authorized but unissued
shares of Preferred Stock, without designation as to series, and such shares may
be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or
11
winding up of the Company, no distribution shall be made (i) to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless the holders of
shares of Series A Preferred Stock shall have received for each share of Series
A Preferred Stock, subject to adjustment as hereinafter provided, (A) $1,400
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment or, (B) if greater than the
amount specified in clause (i)(A) of this sentence, an amount equal to 100 times
the aggregate amount to be distributed per share to holders of Common Stock, as
the same may be adjusted as hereinafter provided and (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with the
Series A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series A
Preferred Stock may be entitled upon liquidation, dissolution or winding up of
the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Partici-
12
pating Liquidation Amount" and the multiple of the amount to be distributed to
holders of shares of Common Stock upon the liquidation, dissolution or winding
up of the Company applicable pursuant to said clause to the determination of the
Participating Liquidation Amount, as said multiple may be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "Liquidation
Multiple". In the event the Company shall at any time after April 2, 1998
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Common Stock into a greater or lesser number
of shares of Common Stock, then, in each such case, the Liquidation Multiple
thereafter applicable to the determination of the Participating Liquidation
Amount to which holders of Series A Preferred Stock shall be entitled after such
event shall be the Liquidation Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after April 2, 1998 in respect of
13
their shares of Common Stock any share of capital stock of the Company (other
than any share of Common Stock of the Company), whether by way of
reclassification, recapitalization, reorganization, dividend or other
distribution or otherwise (a "Transaction"), then, and in each such event, the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Company of the shares of Series A Preferred Stock shall be
adjusted so that after such event the holders of Series A Preferred Stock shall
be entitled, in respect of each share of Series A Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such adjustment, to (i) such additional dividends as equal
the Dividend Multiple in effect immediately prior to such Transaction multiplied
by the additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such capital
stock, (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such Transaction multiplied by the additional voting rights
which the holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately prior to such
Transaction multiplied by the
14
additional amount which the holder of a share of Common Stock shall be entitled
to receive upon liquidation, dissolution or winding up of the Company by virtue
of the receipt in the Transaction of such capital stock, as the case may be, all
as provided by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after April 2, 1998 in respect of their shares of Common Stock
any right or warrant to purchase Common Stock (including as such a right, for
all purposes of this paragraph, any security convertible into or exchangeable
for Common Stock) at a purchase price per share less than the Fair Market Value
of a share of Common Stock on the date of issuance of such right or warrant,
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be
the product of the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple, as the case may be, in effect immediately prior to such event
multiplied by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock which could be acquired upon
exercise in full of all such
15
rights or warrants and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the number of shares of Common Stock which could be purchased, at the Fair
Market Value of the Common Stock at the time of such issuance, by the maximum
aggregate consideration payable upon exercise in full of all such rights or
warrants.
(C) In the event that holders of shares of Common Stock of the
Company receive after April 2, 1998 in respect of their shares of Common Stock
any right or warrant to purchase capital stock of the Company (other than shares
of Common Stock), including as such a right, for all purposes of this paragraph,
any security convertible into or exchangeable for capital stock of the Company
(other than Common Stock), at a purchase price per share less than the Fair
Market Value of such shares of capital stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights, voting rights
and rights upon liquidation, dissolution or winding up of the Company of the
shares of Series A Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior to
such event, to receive (i) such additional dividends as equal the
16
Dividend Multiple in effect immediately prior to such event multiplied, first,
by the additional dividends to which the holder of a share of Common Stock shall
be entitled upon exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and multiplied again by the
Discount Fraction (as hereinafter defined) and (ii) such additional voting
rights as equal the Vote Multiple in effect immediately prior to such event
multiplied, first, by the additional voting rights to which the holder of a
share of Common Stock shall be entitled upon exercise of such right or warrant
by virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Company as
equal the Liquidation Multiple in effect immediately prior to such event
multiplied, first, by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company upon exercise of such right or warrant by virtue of
the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a fraction the numerator of which shall be the difference
between the Fair Market Value of a share of the capital stock subject to a right
or warrant distributed to holders of shares of Common
17
Stock of the Company as contemplated by this paragraph immediately after the
distribution thereof and the purchase price per share for such share of capital
stock pursuant to such right or warrant and the denominator of which shall be
the Fair Market Value of a share of such capital stock immediately after the
distribution of such right or warrant.
(D) For purposes of this Certificate of Designations, the "Fair
Market Value" of a share of capital stock of the Company (including a share of
Common Stock) on any date shall be deemed to be the average of the daily closing
price per share thereof over the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that, in
the event that such Fair Market Value of any such share of capital stock is
determined during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on stock
payable in shares of such stock or securities convertible into shares of such
stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case, no such sale takes place on
18
such day, the average of the closing bid and asked prices, regular way (in
either case, as reported in the applicable transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange), or, if the shares are not listed or admitted to trading on the New
York Stock Exchange, as reported in the applicable transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the shares are listed or admitted to trading or, if the shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or if on any such date the shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares are listed or
admitted to trading is open for the transaction of business or, if the shares
are not listed or admitted to trading on any national securities exchange, on
which the New York Stock Exchange or such other national securities exchange as
may be
19
selected by the Board of Directors of the Company is open. If the shares are not
publicly held or not so listed or traded on any day within the period of 30
Trading Days applicable to the determination of Fair Market Value thereof as
aforesaid, "Fair Market Value" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Company. In
either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company 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 each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
20
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock
required by the provisions hereof shall be effective as of the time at which the
event requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each holder of a
share of Series A Preferred Stock of the effect of any adjustment to the voting
rights, dividend rights or rights upon liquidation, dissolution or winding up of
the Company of such shares required by the provisions hereof. Notwithstanding
the foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment.
Section 10. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
provisions hereof and the Amended and Restated Certificate of Incorporation of
the Company.
Section 11. Ranking. Unless otherwise provided in the Certificate of
Incorporation of the Company or a Certificate of Designations relating to a
subsequent series of preferred stock of the Company, the Series A Preferred
Stock shall rank junior to all other series of the Company's preferred stock as
to the pay-
21
ment of dividends and the distribution of assets on liquidation, dissolution or
winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the Certificate of
Incorporation of the Company shall not be amended in any manner which would
adversely affect the rights, privileges or powers of the Series A Preferred
Stock without, in addition to any other vote of stockholders required by law,
the affirmative vote of the holders of two-thirds or more of the outstanding
shares of Series A Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate
of Designations and do affirm the foregoing as true under the penalties of
perjury this 13th day of April, 1998.
-------------------------
Name: ββββββ β. ββββ
Title: Vice President-Finance
and Assistant Secretary
ATTEST:
--------------------------