EXHIBIT 1
RIGHTS AGREEMENT
dated as of
March 4, 1997
between
QUAKER FABRIC CORPORATION
and
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
TABLE OF CONTENTS
Section 1. Certain Definitions . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . 4
Section 3. Issue of Right Certificates . . . . . . . . . 4
Section 4. Form of Right Certificate . . . . . . . . . . 6
Section 5. Countersignature and Registration . . . . . . 7
Section 6. Transfer, Split-up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificate . . 7
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. . . . . . . . . . . 8
Section 8. Cancellation and Destruction of Right
Certificates. . . . . . . . . . . . . . . . . 10
Section 9. Reservation and Availability of Common
Shares . . . . . . . . . . . . . . . . . . . 10
Section 10. Common Shares Record Date . . . . . . . . . . 11
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights . . . . . 12
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares . . . . . . . . . . . . . 19
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power . . . . . . . . . . 19
Section 14. Fractional Rights and Fractional Shares . . . 21
Section 15. Rights of Action . . . . . . . . . . . . . . . 22
Section 16. Agreement of Right Holders . . . . . . . . . . 23
Section 17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . 23
Section 18. Concerning the Rights Agent . . . . . . . . . 24
Section 19. Merger or Consolidation or Change of
Name of Rights Agent . . . . . . . . . . . . 24
Section 20. Duties of Rights Agent . . . . . . . . . . . . 25
Section 21. Change of Rights Agent . . . . . . . . . . . . 27
Section 22. Issuance of New Right Certificates . . . . . . 28
Section 23. Redemption and Termination . . . . . . . . . . 28
Section 24. Exchange . . . . . . . . . . . . . . . . . . . 29
Section 25. Notice of Certain Events . . . . . . . . . . . 30
Section 26. Notices . . . . . . . . . . . . . . . . . . . 31
Section 27. Supplements and Amendments . . . . . . . . . 31
Section 28. Determin/ation and Actions by the Board of
Directors of the Corporation, etc. . . . . . . 32
Section 29. Successors. . . . . . . . . . . . . . . . . . 32
Section 30. Benefits of this Agreement . . . . . . . . . 33
Section 31. Severability . . . . . . . . . . . . . . . . . 33
Section 32. Governing Law . . . . . . . . . . . . . . . . 33
Section 33. Counterparts . . . . . . . . . . . . . . . . . 33
Section 34. Descriptive Headings . . . . . . . . . . . . . 33
Defined Term Cross Reference Sheet
Acquiring Person . . . . . . . . . . . . . . Section 1(a)
Act. . . . . . . . . . . . . . . . . . . . . Section 1(b)
Adjustment Shares. . . . . . . . . . . . . . Section 11(a)(ii)
Affiliate. . . . . . . . . . . . . . . . . . Section 1(c)
Agreement. . . . . . . . . . . . . . . . . . Preface
Associate. . . . . . . . . . . . . . . . . . Section 1(c)
Beneficial Owner . . . . . . . . . . . . . . Section 1(d)
beneficially own . . . . . . . . . . . . . . Section 1(d)
Board of Directors . . . . . . . . . . . . . Section 1(e)
Business Day . . . . . . . . . . . . . . . . Section 1(f)
common share equivalent. . . . . . . . . . . Section 11(a)(iii)
Close of business. . . . . . . . . . . . . . Section 1(g)
Common Shares. . . . . . . . . . . . . . . . Section 1(h)
Corporation. . . . . . . . . . . . . . . . . Preface
Current per share market price . . . . . . . Section 11(d)
Current Value. . . . . . . . . . . . . . . . Section 11(a)(iii)
Distribution Date. . . . . . . . . . . . . . Section 3
equivalent common shares . . . . . . . . . . Section 11(b)
Exchange Act . . . . . . . . . . . . . . . . Section 1(j)
Exchange Ratio . . . . . . . . . . . . . . . Section 24(a)
Final Expiration Date. . . . . . . . . . . . Section 7(a)
Permitted Offer. . . . . . . . . . . . . . . Section 1(l)
Person . . . . . . . . . . . . . . . . . . . Section 1(m)
Principal Party. . . . . . . . . . . . . . . Section 13(b)
Proposing Person . . . . . . . . . . . . . . Section 1(n)
Purchase Price . . . . . . . . . . . . . . . Section 4(a)
Qualified Person . . . . . . . . . . . . . . Section 1(o)
Record Date. . . . . . . . . . . . . . . . . Preface
Redemption Date. . . . . . . . . . . . . . . Section 7(a)
Redemption Price . . . . . . . . . . . . . . Section 23(a)
Right. . . . . . . . . . . . . . . . . . . . Preface
Right Certificate. . . . . . . . . . . . . . Section 3(a)
Rights Agent . . . . . . . . . . . . . . . . Preface
Rights Agreement . . . . . . . . . . . . . . Section 3(c)
Section 11(a)(ii) Event. . . . . . . . . . . Section 1(q)
Section 13 Event . . . . . . . . . . . . . . Section 1(r)
Security . . . . . . . . . . . . . . . . . . Section 11(d)
Shares Acquisition Date. . . . . . . . . . . Section 1(s)
Spread . . . . . . . . . . . . . . . . . . . Section 11(a)(iii)
Subsidiary . . . . . . . . . . . . . . . . . Section 1(t)
Substitution Period. . . . . . . . . . . . . Section 11(a)(iii)
Summary of Rights. . . . . . . . . . . . . . Section 3(b)
then outstanding . . . . . . . . . . . . . . Section 1(d)
Trading Day. . . . . . . . . . . . . . . . . Section 11(d)
Transfer . . . . . . . . . . . . . . . . . . Section 1(u)
Triggering Event . . . . . . . . . . . . . . Section 1(v)
Voting securities. . . . . . . . . . . . . . Section 13(a)
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 4, 1997 (the
"Agreement"), between Quaker Fabric Corporation, a Delaware
corporation (the "Corporation") and The First National Bank of
Boston (the "Rights Agent").
The Board of Directors of the Corporation has
authorized and declared a dividend of one right (a "Right") for
each Common Share (as hereinafter defined) of the Corporation
outstanding at the close of business on March 14, 1997 (the
"Record Date"), each Right representing the right to purchase one
one-tenth of a Common Share, upon the terms and subject to the
conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date or
Final Expiration Date (as such terms are hereinafter defined);
provided, however, that Rights may be issued with respect to
Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date in accordance with the provisions
of Section 22 of this Agreement.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of
this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 15% or more of the then
outstanding Common Shares (other than as a result of a Permitted
Offer (as hereinafter defined)) or was such a Beneficial Owner at
any time after the date hereof, whether or not such person
continues to be the Beneficial Owner of 15% or more of the then
outstanding Common Shares. Notwithstanding the foregoing, (A)
the term "Acquiring Person" shall not include (i) the
Corporation, (ii) any Subsidiary of the Corporation, (iii) any
employee benefit plan of the Corporation or of any Subsidiary of
the Corporation, (iv) any Person or entity organized, appointed
or established by the Corporation for or pursuant to the terms of
any such plan, (v) any Qualified Person, and (B) no Person shall
become an "Acquiring Person":
(i) as a result of the acquisition of Common
Shares by the Corporation which, by reducing the number of Common
Shares outstanding, increases the proportional number of shares
beneficially owned by such Person together with all Affiliates
and Associates of such Person; provided that if (1) a Person
would be or become an Acquiring Person (but for the operation of
this subclause (i)) as a result of the acquisition of Common
Shares by the Corporation, and (2) after such share acquisition
by the Corporation, such Person, or an Affiliate or Associate of
such Person, becomes the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed an Acquiring
Person; or
(ii) if the Board of Directors determines in
good faith that a Person who would otherwise be an "Acquiring
Person" has become such inadvertently, and such Person (A) does
not attempt to exercise any control over the business affairs or
management of the Corporation, including by means of a proxy
solicitation, and (B) divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person", then such Person shall not be
deemed an "Acquiring Person" for any purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as
amended and as in effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding,
or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities) relating to the acquisition,
holding, voting (except to the extent contemplated by the proviso
to Section 1(d)(ii)(B)) or disposing of any securities of the
Corporation.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding", when used with reference to a Person's Beneficial
Ownership of securities of the Corporation, shall mean the number
of such securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
(e) "Board of Directors" shall mean the Board of
Directors of the Corporation from time to time.
(f) "Business Day" shall mean any day other than a
Saturday, Sunday, federal holiday or day on which commercial
banks are authorized or required to close in New York City.
(g) "Close of business" on any given date shall mean
5:00 p.m., New York time, on such date; provided, however, that
if such date is not a Business Day it shall mean 5:00 p.m., New
York time, on the next succeeding Business Day.
(h) "Common Shares" when used with reference to the
Corporation shall mean the shares of Common Stock, par value
$.01, of the Corporation or, in the event of a subdivision,
combination or consolidation with respect to such shares of
Common Stock, the shares of Common Stock resulting from such
subdivision, combination or consolidation. "Common Shares" when
used with reference to any Person other than the Corporation
shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(i) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(k) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(l) "Permitted Offer" shall mean a tender or exchange
offer which is for all outstanding Common Shares at a price and
on terms determined, prior to the purchase of shares under such
tender or exchange offer, by the Board of Directors to be
adequate (taking into account all factors that such directors
deem relevant) and otherwise in the best interests of the
Corporation and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose basis the offer is being
made) taking into account all factors that such directors may
deem relevant.
(m) "Person" shall mean any individual, firm,
partnership, corporation, trust, association, joint venture or
other entity, and shall include any successor (by merger or
otherwise) of such entity.
(n) "Proposing Person" shall mean any Person proposing
or attempting to effect a business combination, tender offer,
exchange offer or similar transaction with the Corporation or its
stockholders, including, without limitation, a merger, tender
offer or exchange offer, sale of all or substantially all of the
Corporation's assets, or liquidation of the Corporation's assets.
(o) "Qualified Person" shall mean any Person who,
together with all Affiliates of such Person, as of the date
hereof, is the Beneficial Owner of 20% or more of the outstanding
Common Shares or any Person (other than a Person who is then an
Acquiring Person) who acquires 15% or more of the then
outstanding Common Shares from such a Person who, immediately
prior to such acquisition, continues to be a Qualified Person;
provided, however, that a Qualified Person shall cease to be a
Qualified Person if such Person ceases to be the Beneficial Owner
of at least 5% of the outstanding Common Shares.
(p) "Redemption Date" shall have the meaning set forth
in Section 7 hereof.
(q) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
(r) "Section 13 Event" shall mean any event described
in clause (x), (y) or (z) of Section 13(a) hereof.
(s) "Shares Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to the Exchange Act) by the Corporation or an Acquiring
Person that an Acquiring Person has become such; provided, that,
if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a)(ii) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(t) "Subsidiary" of any Person shall mean any
corporation or other Person of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
(u) "Transfer" shall mean any sale, assignment,
transfer or other disposition.
(v) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The
Corporation hereby appoints the Rights Agent to act as agent for
the Corporation in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Corporation may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable, upon ten (10) days
prior written notice to the Rights Agent. The Rights Agent shall
have no duty to supervise, and shall in no event be liable for
the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Right Certificates. (a) Until
the earlier of (i) the Shares Acquisition Date or (ii) the close
of business on the tenth day (or such later date as may be
determined by action of the Corporation's Board of Directors)
after the date of the commencement by any Person (other than the
Corporation, any Subsidiary of the Corporation, any Qualified
Person, any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation or any Person or entity organized,
appointed or established by the Corporation for or pursuant to
the terms of such plan) of a tender or exchange offer the
consummation of which would result in any Person becoming an
Acquiring Person (including, in the case of both (i) and (ii),
any such date which is after the date of this Agreement and prior
to the issuance of the Rights), the earlier of such dates being
herein referred to as the "Distribution Date", (x) the Rights
will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Rights Certificates
will be transferable only in connection with the transfer of the
underlying Common Shares (including a transfer to the
Corporation); provided, however, that if a tender offer is
terminated prior to the occurrence of a Distribution Date, then
no Distribution Date shall occur as a result of such tender
offer. As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will
countersign and the Corporation will send or cause to be sent by
first-class, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the
Corporation, a Right Certificate, substantially in the form of
Exhibit A hereto (a "Right Certificate"), evidencing one Right
for each Common Share so held. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As promptly as practicable following the Record
Date, the Corporation will send a copy of a Summary of Rights to
Purchase Common Shares in the form of Exhibit B hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to
each record holder of Common Shares as of the close of business
on the Record Date, at the address of such holder shown on the
records of the Corporation. With respect to certificates for
Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of
any certificate for Common Shares outstanding on the Record Date
shall also constitute the transfer of the Rights associated with
such Common Shares.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the
Distribution Date, and the Redemption Date or the Final
Expiration Date shall be deemed also to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles
the holder hereof to certain rights as set forth in a
Rights Agreement between Quaker Fabric Corporation and
The First National Bank of Boston, dated as of March 4,
1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of
Quaker Fabric Corporation. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
Quaker Fabric Corporation will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights
Agreement) and certain related persons, whether
currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the
foregoing legend, until the Distribution Date, the Rights
associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone, and
the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Corporation
purchases or acquires any Common Shares after the Record Date but
prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the
Corporation shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificate. (a) The
Right Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit A hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Corporation may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of tenths of a Common
Share as shall be set forth therein at the price per Common Share
set forth therein (the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided
herein.
(b) Any Right Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights which are null
and void pursuant to Section 7(e) of this Agreement and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall contain (to
the extent feasible) the following legend:
The Rights represented by this Right
Certificate are or were beneficially owned by a Person
who was or became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this
Right Certificate and the Rights represented hereby are
null and void.
The provisions of Section 7(e) of this Rights Agreement
shall be operative whether or not the foregoing legend is
contained on any such Right Certificate.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Corporation
by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Corporation's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the
Corporation, either manually or by facsimile signature. The
Right Certificates shall be countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In
case any officer of the Corporation who shall have signed any of
the Right Certificates shall cease to be such officer of the
Corporation before countersignature by the Rights Agent and
issuance and delivery by the Corporation, such Right Certificates
may nevertheless be countersigned by the Rights Agent and issued
and delivered by the Corporation with the same force and effect
as though the person who signed such Right Certificates had not
ceased to be such officer of the Corporation; and any Right
Certificate may be signed on behalf of the Corporation by any
person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Corporation to sign
such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated as the
appropriate place for surrender of such Right Certificate or
transfer, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the certificate number and the date
of each of the Right Certificates.
Section 6. Transfer, Split-up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. Subject to the provisions of Section
4(b), Section 7(e) and Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to
the close of business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of Common Shares
(or, following a Section 13 Event, other securities, as the case
may be) as the Right Certificate or Right Certificates
surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the
Corporation shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate
until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as
so requested. The Corporation may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
Upon receipt by the Corporation and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Corporation's request,
reimbursement to the Corporation and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if
mutilated, the Corporation will make and deliver a new Right
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e) hereof,
the registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office or offices
of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price for the total number of
Common Shares (or other securities, as the case may be) as to
which such surrendered Rights are exercised, at or prior to the
earliest of (i) the close of business on March 3, 2007 (the
"Final Expiration Date"), or (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the "Redemption
Date").
(b) The purchase price (the "Purchase Price") per
whole Common Share at which a holder of Rights may purchase
Common Shares or (subject to Section 14 hereof) fractions thereof
upon exercise of such Rights shall initially be $68.00, shall be
subject to adjustment from time to time as provided in Sections
11 and 13(a) hereof, and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment of the Purchase
Price for the Common Shares (or other securities, as the case may
be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof by certified
check, cashier's check or money order payable to the order of the
Corporation, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased and
the Corporation hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Corporation, in
its sole discretion, shall have elected to deposit the Common
Shares issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary
receipts representing such number of Common Shares as are to be
purchased (in which case certificates for the Common Shares
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Corporation will direct
the depositary agent to comply with such requests, (ii) when
appropriate, requisition from the Corporation the amount of cash
to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver
such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Corporation is
obligated to issue other securities of the Corporation pursuant
to Section 11(a) hereof, the Corporation will make all
arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when
appropriate.
In addition, in the case of an exercise of the Rights
by a holder pursuant to Section 11(a)(ii), the Rights Agent shall
return such Right Certificate to the registered holder thereof
after imprinting, stamping or otherwise indicating thereon that
the rights represented by such Right Certificate no longer
include the rights provided by Section 11(a)(ii) of the Rights
Agreement and if less than all the Rights represented by such
Right Certificate were so exercised, the Rights Agent shall
indicate on the Right Certificate the number of Rights
represented thereby which continue to include the rights provided
by Section 11(a)(ii).
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section
14 hereof, or the Rights Agent shall place an appropriate
notation on the Right Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any Affiliate or Associate thereof) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Corporation shall
use all reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall
have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Corporation shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise (other than an exercise pursuant to Section
11(a)(ii)), transfer, split up, combination or exchange shall, if
surrendered to the Corporation or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Corporation shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or
acquired by the Corporation otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Corporation, or shall, at the written request
of the Corporation, destroy such canceled Right Certificates, and
in such case shall deliver a certificate of destruction thereof
to the Corporation.
Section 9. Reservation and Availability of Common
Shares. The Corporation covenants and agrees that at all times
after the occurrence of a Section 11(a)(ii) Event it will, to the
extent reasonably practicable, cause to be reserved and kept
available out of its authorized and unissued Common Shares
(and/or other securities), or any authorized and issued Common
Shares (and/or other securities) held in its treasury, the number
of Common Shares (and/or other securities, as the case may be)
that will be sufficient to permit the exercise in full of all
outstanding Rights pursuant to this Agreement.
So long as the Common Shares (or other securities, as
the case may be) issuable upon the exercise of the Rights may be
listed on any national securities exchange, or admitted for
quotation on any on a quotation system sponsored by a registrant
national securities association, the Corporation shall use its
best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be
listed on such exchange or admitted for quotation on such system,
as the case may be upon official notice of issuance upon such
exercise.
The Corporation covenants and agrees that it will take
all such action as may be necessary to ensure that all Common
Shares (or other securities, as the case may be) delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and non-assessable shares or
securities.
The Corporation further covenants and agrees that it
will pay when due and payable any and all U.S. federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Common
Shares (or other securities, as the case may be) upon the
exercise of Rights. The Corporation shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or
depositary receipts for the Common Shares (or other securities,
as the case may be) in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for
exercise, or to issue or to deliver any certificates or
depositary receipts for Common Shares (or other securities, as
the case may be) upon the exercise of any Rights, until any such
tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or
until it has been established to the Corporation's reasonable
satisfaction that no such tax is due.
The Corporation shall use its best efforts to (i) file,
as soon as practicable following the Shares Acquisition Date (or,
if required by law, at such earlier time following the
Distribution Date as so required), a registration statement under
the Act, with respect to the securities purchasable upon exercise
of 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 and the rules and regulations thereunder)
until the date of the expiration of the rights provided by
Section 11(a)(ii). The Corporation will also take such action as
may be appropriate under the blue sky laws of the various states.
Section 10. Common Shares Record Date. Each Person
in whose name any certificate for Common Shares (or other
securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder
of record of the Common Shares (or other securities, as the case
may be) represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however,
that, if the date of such surrender and payment is a date upon
which the Common Shares (or other securities, as the case may be)
transfer books of the Corporation are closed, such Person shall
be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day
on which the Common Shares (or other securities, as the case may
be) transfer books of the Corporation are open.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event the Corporation shall at any
time after the date of this Agreement (A) declare a dividend on
the Common Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of Common Shares or (D) issue any
shares of its capital stock in a reclassification of the Common
Shares (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, (x) the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and (y) the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date and
at a time when the Common Shares transfer books of the
Corporation were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the
exercise of any Rights be less than the aggregate par value of
the shares of capital stock of the Corporation issuable upon
exercise of such Rights. Notwithstanding anything to the
contrary in the preceding sentence, in the event that any time
after the date of this Agreement and prior to the Distribution
Date the Corporation shall take any action described in clause
(A), (B) or (C) of the preceding sentence, then in any such case
no adjustment shall be made pursuant to the immediately preceding
sentence and (i) the number of Common Shares receivable after
such event upon exercise of any Right shall be adjusted by
multiplying the number of Common Shares so receivable immediately
prior to such event by a fraction, the numerator of which shall
be the number of Common Shares outstanding immediately prior to
such event and the denominator of which shall be the number of
Common Shares outstanding immediately after such event (except
that in the case of the declaration of a stock dividend the
denominator shall be the number of shares outstanding immediately
after payment of such dividend, excluding any shares issued after
the record date other than in connection with such dividend), and
(ii) each Common Share outstanding immediately after such event
shall have associated with respect to it that number of Rights
that each Common Share outstanding immediately prior to such
event had associated with respect to it. If an event occurs
which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii). If an event
occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together
with its Affiliates and Associates, shall become an Acquiring
Person, then proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e) hereof)
thereafter shall be entitled to receive, upon exercise thereof at
a price equal to the then current Purchase Price for a whole
Common Share, in accordance with the terms of this Agreement,
such number of Common Shares as shall equal the result obtained
by (x) multiplying the then current Purchase Price per whole
Common Share by the number of one-tenths of a Common Share for
which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (e.g., if a Right was
exercisable immediately prior to a Section 11(a)(ii) Event for
two one-tenths of a share of Common Stock and the Purchase Price
per whole Common Share was $[X], the product would be $[2X]), and
dividing that product by (y) 50% of the then current per share
market price of the Common Shares (determined pursuant to Section
11(d) hereof) on the date of such first occurrence (such number
of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction that would otherwise
give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In the event that the number of Common
Shares that are authorized by the Corporation's certificate of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing Section 11(a)(ii), the Corporation
shall (A) determine the excess of (1) the value of the Adjustment
Shares based on the "current per share market price" determined
pursuant to Section 11(d) (the "Current Value") over (2) the
Purchase Price (such excess being hereinafter referred to as the
"Spread"), and (B) in respect of each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) other equity securities of the
Corporation (including, without limitation, shares, or units of
shares, of preferred stock that the Board of Directors of the
Corporation has determined to have the same value as the Common
Shares (such shares of preferred stock being referred to herein
as "common share equivalents")), (4) debt securities of the
Corporation, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board of
Directors of the Corporation based upon the advice of a
nationally recognized investment banking firm selected by the
Board of Directors of the Corporation; provided, however, that if
the Corporation shall not have made adequate provision to deliver
value pursuant to clause (B) above within 30 days following the
first occurrence of a Section 11(a)(ii) Event, then the
Corporation shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available) and, if necessary,
cash, that in the aggregate are equal to the Spread. If the
Board of Directors of the Corporation shall determine in good
faith that it is likely that sufficient additional shares of
Common Shares could be authorized for issuance upon exercise in
full of the Rights, the 30-day period set forth above may be
extended to the extent necessary, but not to more then 120 days
following the first occurrence of a Section 11(a)(ii) Trigger
Date so that Corporation may seek stockholder approval for the
authorization of such additional shares of Common Shares (such
period, as it may be extended, being hereinafter referred to as
the "Substitution Period"). To the extent the Corporation
determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a) (iii), the
Corporation (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights
and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period to seek any authorization
of additional Common Shares and/or to decide the appropriate form
of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such
suspension, the Corporation shall deliver notice to the Rights
Agent and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as notice to the Rights Agent and a public announcement at
such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common
Shares shall be the current market price (as determined pursuant
to Section 11(d) hereof) per Common Share on the date of the
first occurrence of a Section 11(a)(ii) Trigger Date and the
value of any common share equivalent shall be deemed to have the
same value as a Common Share on such date.
(b) In case the Corporation shall fix a record date
for the issuance of rights (other than the Rights), options or
warrants to all holders of Common Shares entitling them (for a
period expiring within 45 calendar days after such record date)
to subscribe for or purchase Common Shares (or shares having the
same rights and privileges as the Common Shares ("equivalent
common shares")) or securities convertible into Common Shares or
equivalent common shares at a price per Common Share or
equivalent common share (or having a conversion price per share,
if a security convertible into Common Shares or equivalent common
shares) less than the then current per share market price of the
Common Shares (as determined pursuant to Section 11(d) hereof) on
such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares
which the aggregate offering price of the total number of Common
Shares and/or equivalent common shares so to be offered (and/or
the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per
share market price, and the denominator of which shall be the
number of Common Shares outstanding on such record date plus the
number of additional Common Shares and/or equivalent common
shares to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of Rights be less than
the aggregate par value of the shares of capital stock of the
Corporation issuable upon exercise of such Rights. In case such
subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent. Common Shares owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Corporation shall fix a record date
for the making of a distribution to all holders of the Common
Shares (including any such distribution made in connection with a
consolidation or merger in which the Corporation is the
continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a
dividend payable in Common Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof),
the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market
price (as determined pursuant to Section 11(d) hereof) of the
Common Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable
to one Common Share and the denominator of which shall be such
current per share market price of the Common Shares; provided,
however, that in no event shall the consideration to be paid upon
the exercise of any Rights be less than the aggregate par value
of the shares of capital stock of the Corporation to be issued
upon exercise of such Rights. Such adjustments shall be made
successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security"
for the purpose of this Section 11(d)), including, without
limitation the Common Shares, on any date shall be deemed to be
the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share
market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B)
any subdivision, combination or reclassification of such Security
and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price shall
be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such
date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security
selected by the Board of Directors. If on any such date no such
market maker is making a market in the Security, the fair value
of the Security on such date as determined in good faith by the
Board of Directors shall be used. The term "Trading Day" shall
mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for
the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a
Business Day.
(e) Notwithstanding anything herein to the contrary
(except the last sentence of this Section 11(e)), no adjustment
in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a Common
Share or any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment or (ii) the Final
Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(i) or 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock of the Corporation other than Common Shares,
thereafter the number of other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in Section
11(a) through (c), inclusive, and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Common Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Corporation
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of Common Shares purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Corporation shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price that number of
Common Shares (calculated to the nearest ten-thousandth of a
Common Share) obtained by (i) multiplying (x) the number of
Common Shares covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Corporation may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of Common Shares
purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall
be exercisable for the number of Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to the adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Corporation shall make a public announcement
of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section
11(i), the Corporation shall, as promptly as practicable, cause
to be distributed to holders of record of Right Certificates on
such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the
option of the Corporation, shall cause to be distributed to such
holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Corporation, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Common Shares issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and
the number of Common Shares which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the aggregate par
value, if any, of the number of Common Shares or other securities
issuable in respect of the Purchase Price upon exercise of a
Right, the Corporation shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue such number of fully
paid and non-assessable Common Shares or other securities at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Corporation may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the Common
Shares or other securities of the Corporation, if any, issuable
upon such exercise over and above the Common Shares or other
securities of the Corporation, if any, issuable upon exercise on
the basis of the Purchase Price in effect prior to such
adjustment; provided, however, the Corporation shall deliver to
such holder a due ▇▇▇▇ or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the
contrary, the Corporation shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that (i) any consolidation or subdivision of
the Common Shares, (ii) issuance wholly for cash of Common Shares
at less than the current market price, (iii) issuance wholly for
cash of Common Shares or securities which by their terms are
convertible into or exchangeable for Common Shares, (iv) stock
dividends, or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Corporation
to holders of its Common Shares shall not be taxable to such
shareholders.
(n) The Corporation covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Qualified Person or a
Subsidiary of the Corporation in a transaction which does not
violate Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Qualified Person or a Subsidiary of the
Corporation in a transaction which does not violate Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Corporation and/or its Subsidiaries and/or a
Qualified Person in one or more transactions each of which does
not violate Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights,
warrants or other instruments or securities outstanding or
agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with
or immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Corporation and such other
Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section
11(n).
(o) The Corporation covenants and agrees that, after
the Distribution Date, it will not, except as permitted by
Section 23 or Section 27 hereof, take (or permit any Subsidiary
to take) any action the purpose of which is to, or if at the time
such action is taken it is reasonably foreseeable that the effect
of such action is to materially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii)
shall only result in the loss of rights under Section 11(a)(ii)
to the extent so exercised and shall not otherwise affect the
rights represented by the Rights under this Rights Agreement,
including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as provided
in Section 11 or 13 hereof, the Corporation shall promptly (a)
prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with
Section 26 hereof, provided, however, that in the event that at
any time prior to the Distribution Date the Company shall take
any action described in clause (A), (B) or (C) of Section
11(a)(i), then the Company shall not be required to satisfy the
obligations set forth in clauses (a), (b) and (c) above. The
Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not
be deemed to have knowledge of such adjustment unless and until
it shall have received such certificate. Notwithstanding
anything in the foregoing to the contrary, prior to the earlier
to occur of the Distribution Date and the Share Acquisition Date,
the Company may, in its discretion, satisfy the obligation set
forth in clause (c) above by including such summary in its next
regular report to shareholders.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. (a) In the event that, on
or following the Shares Acquisition Date, directly or indirectly,
(x) the Corporation shall consolidate with, or merge with and
into, any Person, (y) the Corporation shall consolidate with, or
merge with, any Person, and the Corporation shall be the
continuing or surviving corporation of such consolidation or
merger (other than, in a case of any transaction described in (x)
or (y), a merger or consolidation which would result in all of
the securities generally entitled to vote in the election of
directors ("voting securities") of the Corporation outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of
the surviving entity) all of the voting securities of the
Corporation or such surviving entity outstanding immediately
after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or
consolidation), or (z) the Corporation shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any Person (other than the
Corporation or any Subsidiary of the Corporation in one or more
transactions each of which does not violate Section 11(o)
hereof), then, and in each such case, proper provision shall be
made so that (i) each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at a price equal to the then current
Purchase Price for a whole Common Share, in accordance with the
terms of this Agreement and in lieu of Common Shares, such number
of freely tradeable Common Shares of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall equal
the result obtained by (A) multiplying the then current Purchase
Price for a whole Common Share by the number of one-tenths of a
Common Share for which a Right is then exercisable (without
taking into account any adjustment previously made pursuant to
Section 11(a)(ii)) and dividing that product by (B) 50% of the
then current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d) hereof) on
the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume,
by virtue of such Section 13 Event, all the obligations and
duties of the Corporation pursuant to this Agreement; (iii) the
term "Corporation" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its Common Shares) in connection with the consummation
of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which Common
Shares of the Corporation are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation
(including, if applicable, the Corporation if it is the surviving
corporation); and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions; provided, however, that in any of the foregoing
cases, (1) if the Common Shares of such Person are not at such
time and have not been continuously over the preceding twelve
(12) month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person;
(2) in case such Person is a Subsidiary, directly or indirectly,
of more than one Person, the Common Shares of two or more of
which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common
Shares having the greatest aggregate market value; and (3) in
case such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth
in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized Common
Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Corporation and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense
shall:
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
and use its best efforts to cause such registration statement to
(A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register
the rights and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as may be
necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party which
comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other
transfers. The rights under this Section 13 shall be in addition
to the rights to exercise Rights and adjustments under Section
11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraph (x) or (y) of Section 13(a) if: (A)(i)
such transaction is consummated with a Person or Persons which
acquired Common Shares pursuant to a Permitted Offer (or a wholly
owned Subsidiary of any such Person or Persons); (ii) the price
per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose
shares were purchased pursuant to such Permitted Offer; and (iii)
the form of consideration offered in such transaction is the same
as the form of consideration paid pursuant to such Permitted
Offer; or (B) such transaction is consummated with a Qualified
Person. Upon consummation of any such transaction contemplated
by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the
rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors.
If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors shall be used.
(b) The Corporation shall not be required to issue
fractions of Common Shares upon exercise of the Rights or to
distribute certificates which evidence fractional Common Shares.
In lieu of fractional Common Shares, the Corporation shall pay to
the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one Common
Share. For the purposes of this Section 14(b), the current
market value of a Common Share shall be the closing price of a
Common Share (as determined pursuant to Section 11(d) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional Rights
or any fractional share upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action
in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in
the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Corporation to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holder of Rights would
not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject
to, this Agreement.
Section 16. Agreement of Right Holders. Every
holder of a Right, by accepting the same, consents and agrees
with the Corporation and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the
Corporation and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Shares certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate
made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the
Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Corporation nor the Rights Agent shall have
any liability to any holder of a Right or a beneficial interest
in a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided,
however, the Corporation must use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as
soon as possible.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Common Shares or any other securities
of the Corporation 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 Corporation or any right to
vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or other
distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent. The
Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of it duties hereunder. The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim of liability in the premises. In no event shall the
Rights Agent be liable for special, indirect or consequential
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 and regardless of the form
of action. The indemnity provided for herein shall survive the
expiration of the Rights, the resignation or removal of the
Rights Agent and the termination of this Agreement.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of, any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate delivered to the
Rights Agent pursuant to Sections 6 and 7 of this certificate for
Common Shares or for other securities of the Corporation,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or all or substantially all of
the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in
the name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Right Certificates shall
have the full force provided in the Right Certificates and in
this Agreement.
In case at any time the name of the Rights Agent shall
be changed at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights
Agent undertakes only those duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of
which the Corporation 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 Corporation), and the opinion
of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of an Acquiring Person and the determination of the
current market price of any Security) be proved or established by
the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its
countersignature on such Right Certificates) or be required to
verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Corporation of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e)
hereof) or any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of the certificate described in
Section 12 hereof); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Common
Shares will, when issued, be validly authorized and issued, fully
paid and non-assessable.
(f) The Corporation agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Corporation, and to apply to
such officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered
by it in good faith or lack of action in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights
Agent for written instructions from the Corporation may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this
Rights Agreement and the date on or after which such action shall
be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application
(which date shall not be less than five Business Days after the
date any officer of the Corporation actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the
Rights Agent shall have received written instruction in response
to such application specifying the action to be taken or omitted.
(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 Corporation or
become pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money to
the Corporation or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if it believes in good
faith that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has not been completed,
the Rights Agent shall not take any further action with respect
to such requested exercise of transfer without first consulting
with the Corporation.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon thirty (30) days'
notice in writing mailed to the Corporation and to the transfer
agent of the Common Shares by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right
Certificates by first-class mail. The Corporation may remove the
Rights Agent or any successor Rights Agent upon sixty (60) days'
notice in writing, mailed to the Rights Agent or any successor
Rights Agent, as the case may be, and to the transfer agent of
the Common Shares by registered or certified mail, and,
subsequent to the Distribution Date, to holders of the Right
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Corporation shall appoint a successor to the Rights
Agent. If the Corporation shall fail to make such appointment
within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by
the Corporation), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court,
shall be a corporation organized and doing business under the
laws of the United States or of the State of New York (or of any
other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State
of New York), in good standing, having an office in the State of
New York, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. 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 Corporation
shall file notice thereof in writing with the predecessor Rights
Agent and the transfer agent of the Common Shares, and,
subsequent to the Distribution Date, 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 successor Rights
Agent or the appointment of the Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue
new Right Certificates evidencing Rights in such form as may be
approved by the Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable upon exercise
of the Rights made in accordance with the provisions of this
Agreement.
In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date, the
Corporation (a) shall with respect to Common Shares so issued or
sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the
Corporation, and (b) may, in any other case, if deemed necessary
or appropriate by the Board of Directors, issue Right
Certificates representing the appropriate number of Rights in
connection with such issuance of sale, provided, however, that
(i) the Corporation shall not be obligated to issue any such
Right Certificates if, and to the extent that, the Corporation
shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the
Corporation or the Person to whom such Right Certificate would be
issued, and (ii) no Right Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The
Board of Directors may, at its option, redeem all but not less
than all the then outstanding Rights at a redemption price of
$0.01 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), at any time
prior to the earlier of (x) the time that any Person becomes an
Acquiring Person, or (y) the Final Expiration Date. The
Corporation may, at its option, pay the Redemption Price either
in Common Shares (based on the "current per share market price,"
as defined in Section 11(d) hereof, of the Common Shares at the
time of redemption) or cash; provided that if the Corporation
elects to pay the Redemption Price in Common Shares, the
Corporation shall not be required to issue any fractional Common
Shares and the number of Common Shares issuable to each holder of
Rights shall be rounded down to the next whole share. The
redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for
each Right so held. The Corporation shall promptly give notice
of any such redemption to the Rights Agent and the holders of
Rights in the manner set forth in Section 26, provided, however,
that the failure to give, or any defect in, any such notice shall
not affect the validity of such redemption. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Corporation nor any
of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and other than in
connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Exchange. (a) Subject to Section
24(d), the Board of Directors may, at its option, at any time
after the time that any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) and Section 11(a)(ii)
hereof) for Common Shares of the Corporation at an exchange ratio
of one Common Share (or a lesser ratio as determined by the Board
of Directors, if the Corporation does not have sufficient
authorized and unreserved Common Shares) 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 the Corporation, any Subsidiary of the Corporation,
any Qualified Person, any employee benefit plan of the
Corporation or any such Subsidiary, any entity holding Common
Shares for or pursuant to the terms of any such plan or any
trustee, administrator or fiduciary of such a plan), together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of
Directors of the Corporation ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares
equal to the number of such rights held by such holder multiplied
by the Exchange Ratio. The Corporation 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 Corporation 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 Common Shares for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e)) held by each holder of Rights.
(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued (and not reserved for issuance other than upon exercise
of the Rights) to permit any exchange of Rights as contemplated
in accordance with this Section 24, the (i) Corporation shall
take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights, or (ii)
the Board of Directors may determine to exchange Common Shares
for then outstanding and exercisable Rights at such exchange
ratio of less than one Common Share per Right, appropriately
adjusted as set forth in Section 24(a) above, so that all (and
not less than all) Common Shares issued but not outstanding or
authorized but unissued (and not reserved for issuance other than
upon exercise of the Rights) are issued in the exchange
contemplated by this Section 24.
(d) In any exchange pursuant to this Section 24, the
Corporation, at its option, may substitute common stock
equivalents (as defined in Section 11(a)(iii)) for shares of
Common Stock exchangeable for Rights, at the initial rate of one
common stock equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in dividend
liquidation and voting rights of common stock equivalents
pursuant to the terms thereof, so that each common stock
equivalent delivered in lieu of each share of Common Stock shall
have essentially the same dividend, liquidation and voting rights
as one share of Common Stock.
Section 25. Notice of Certain Events. (a) In case
the Corporation shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to
the holders of its Common Shares or to make any other
distribution to the holders of its Common Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of
its Common Shares rights or warrants to subscribe for or to
purchase any additional Common Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect
any reclassification of its Common Shares (other than a
reclassification involving only the subdivision of outstanding
Common Shares), (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the
Corporation in a transaction which does not violate Section 11(o)
hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other
transfer) in one or more transactions, of 50% or more of the
assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than
the Corporation and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation
shall give to each holder of the Right Certificate, in accordance
with Section 26 hereof, a notice of such proposed action to the
extent feasible and file a certificate with the Rights Agent to
that effect, which shall specify the record date for the purposes
of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of the
Common Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i)
or (ii) above at least twenty (20) days prior to the record date
for determining holders of the Common Shares for purposes of such
action, and in the case of any such other action, at least twenty
(20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common
Shares, whichever shall be the earlier.
(b) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a filing by the
Corporation with the Securities and Exchange Commission shall
constitute sufficient notice to the holders of the securities of
the Corporation, including the Rights, for purposes of this
Agreement and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then (i) the
Corporation shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) or Section 13 hereof,
as the case may be, and (ii) all references in the preceding
paragraph (a) to Common Shares shall be deemed thereafter to
refer also, if appropriate, to capital stock equivalents, as
provided for in Section 11(a)(iii).
Section 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or by
the holder of any Right Certificate to or on the Corporation
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:
Quaker Fabric Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given or made
by the Corporation or by the holder of any Right Certificate to
or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Corporation) as
follows:
The First National Bank of Boston
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Notices or demands authorized by this Agreement to be given or
made by the Corporation or the Rights Agent to the holder of any
Right Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Shares, shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Corporation.
Section 27. Supplements and Amendments. Prior to
the Distribution Date, the Corporation and the Rights Agent
shall, if the Board of Directors so directs, supplement or amend
any provision of this Agreement without the approval of any
holders of certificates representing Common Shares. From and
after the Distribution Date, the Corporation and the Rights Agent
shall, if the Board of Directors so directs, supplement or amend
this Agreement without the approval of any holders of Right
Certificates in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder in any manner which
the Board of Directors may deem necessary or desirable and which
shall not adversely effect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this
Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable; or (B) any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Corporation which states that the
proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such
supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Section 18 or Section 20 of this
Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares.
Section 28. Determination and Actions by the Board
of Directors of the Corporation, etc. The Board of Directors
shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically
granted to the Board of Directors, or the Corporation, or as may
be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation,
a determination to redeem or not redeem the Rights or to amend
the Agreement and whether any proposed amendment adversely
affects the interests of the holders of Right Certificates). For
all purposes of this Agreement, any calculation of the number of
Common Shares or other securities outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding Common Shares or any other
securities of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in
good faith, shall (x) be final, conclusive and binding on the
Corporation, the Rights Agent, the holders of the Right
Certificates and all other parties, and (y) not subject the Board
to any liability to the holders of the Right Certificates.
Section 29. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Corporation or the Rights Agents shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Corporation, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each
Right and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and performed entirely within such State.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
QUAKER FABRIC CORPORATION
By: _____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President And
Chief Executive Officer
THE FIRST NATIONAL BANK OF BOSTON
By: ____________________________________
Name:
Title:
Exhibit A
[Form of Right Certificate]
No. R- _____________Rights
NOT EXERCISABLE AFTER THE EARLIER OF MARCH 3, 2007 AND THE DATE
ON WHICH THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY
THE COMPANY AS SET FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH
IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON
WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON
OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]*
RIGHT CERTIFICATE
QUAKER FABRIC CORPORATION
This Right Certificate certifies that
, or registered assigns, is the registered holder of the number
of Rights set forth above, each of which entitles the holder
(upon the terms and subject to the conditions set forth in the
Rights Agreement dated as of March 4, 1997 (the "Rights
Agreement") between Quaker Fabric Corporation, a Delaware
corporation (the "Company"), and The First National Bank of
Boston (the "Rights Agent")) to purchase from the Company, at any
time after the Distribution Date and prior to the Expiration
Date, one one-tenth of a fully paid, nonassessable share of the
Common Stock, par value $0.01 (the "Common Shares"), of the
Company at a purchase price of $68.00 per whole Common Share (the
"Purchase Price"), payable in lawful money of the United States
of America, upon surrender of this Right Certificate, with the
form of election to purchase and related certificate duly
executed, and payment of the Purchase Price at an office of the
Rights Agent designated for such purpose.
Terms used herein and not otherwise defined herein have
the meanings assigned to them in the Rights Agreement.
__________________
* If applicable, insert this portion of the legend and delete
the preceding sentence
The number of Rights evidenced by this Right
Certificate (and the number and kind of shares issuable upon
exercise of each Right) and the Purchase Price set forth above
are as of March __, 1997, and may have been or in the future be
adjusted as a result of the occurrence of certain events, as more
fully provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if
the Rights evidenced by this Right Certificate are beneficially
owned by (a) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (b) a transferee of a Acquiring Person (or
any such Associate or Affiliate thereof) who becomes a transferee
after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of
an Acquiring Person (or any such Associate or Affiliate thereof)
who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such, such Rights shall become null and
void without any further action, and no holder hereof shall have
any rights whatsoever with respect to such Rights, whether under
any provision of the Rights Agreement or otherwise.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of
the Rights Agent designated for such purpose and subject to the
terms and conditions set forth in the Rights Agreement, any
Rights Certificate or Certificates may be transferred or
exchanged for another Rights Certificate or Certificates
evidencing a like number of Rights as the Rights Certificate or
Certificates surrendered.
Subject to the provisions of the Rights Agreement, the
Board of Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the
time that any Person becomes an Acquiring Person or
(ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption
price of $.01 per Right (subject to adjustment); or
(b) at any time after the time that any Person
becomes an Acquiring Person (but before such Person,
together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of
the Common Shares then outstanding), exchange all or
part of the then outstanding Rights (other than Rights
held by the Acquiring Person and certain related
Persons) for Common Shares at an exchange ratio of one
Common Share per Right (subject to adjustment).
No fractional Common Shares will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Certificates for the number of whole
Rights not exercised, or the Rights Agent shall place an
appropriate notation on this Right Certificate with respect to
those Rights exercised.
No holder of this Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the
holder of the shares of capital stock 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 shareholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or 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.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal by its
authorized officers.
Dated as of _________, 199_ QUAKER FABRIC CORPORATION
By:___________________________
President and Chief
Executive Officer
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
By:_____________________________
Authorized Signature
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED_______________________________________________
hereby sells, assigns and transfers unto_________________________
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint __________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full
power of substitution.
Dated: _________________, 19__
________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ___
are ___ are not being assigned by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it __ did __ did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person;
(3) the action requested by the undersigned is not
prohibited by the provisions of the Rights Agreement, including,
without limitation, the provisions relating to the (i) transfer,
split-up, combination and exchange of rights which are null and
void or (ii) exercise by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person of any Right which by its terms
is null and void.
Dated: _______________, 19__
_________________________
Signature
_________________________
The signatures to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
_________________________
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Right Certificate.)
To: QUAKER FABRIC CORPORATION
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Right Certificate to
purchase shares of Common Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other
person which may be issuable upon the exercise of the Rights) and
requests that certificates for such securities be issued in the
name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
If such number of Rights specified above shall not be
all the Rights evidenced by this Right Certificate, the Rights
Agent shall place an appropriate notation on this Right
Certificate with respect to those Rights exercised or a new Right
Certificate for the balance of such Rights shall be registered in
the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
Dated: ______________, 19__
________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
are are not being exercised by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it did did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person;
(3) the exercise of the Rights evidenced by this Right
Certificate is not prohibited by the terms of the Rights
Agreement, including, without limitation, the provisions relating
to the exercise by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person of any Right which by its terms
is null and void.
Dated: _______________, 19__
________________________________
Signature
_________________________
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
_________________________
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE SHARES
On February 24, 1997, the Board of Directors of Quaker
Fabric Corporation (the "Corporation") declared a dividend
distribution of one right (a "Right") to purchase one one-tenth
of a share of the Common Stock, $.01 par value, of the
Corporation (the "Common Shares") for each outstanding share of
Common Stock, payable to the stockholders of record on March 14,
1997 (the "Record Date"). The Board of Directors also authorized
and directed the issuance of one Right with respect to each
Common Share issued thereafter until the Distribution Date (as
defined below) and, in certain circumstances, with respect to
Common Shares issued after the Distribution Date. Except as set
forth below, each Right, when it becomes exercisable, entitles
the registered holder to purchase from the Corporation one
one-tenth of a Common Share at a price of $68.00 per whole Common
Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Corporation and
The First National Bank of Boston, as Rights Agent (the "Rights
Agent"), dated as of March 4, 1997.
Initially, the Rights will be attached to all
certificates representing Common Shares then outstanding, and no
separate Right Certificates will be distributed. The Rights will
separate from the Common Shares upon the earliest to occur of (i)
a person or group of affiliated or associated persons having
acquired beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined) other than any Person who, as of the date
hereof, beneficially owns 20% or more of the outstanding Common
Shares or any Person (other than a Person who is then an
Acquiring Person) who acquires 15% or more of the outstanding
Common Shares from such a Person who, immediately prior to such
acquisition, continues to be a Person who beneficially owns 20%
or more of the outstanding Common Shares ("Qualified Persons");
provided that a Qualified Person shall cease to be a Qualified
Person if such Person ceases to beneficially own at least 5% of
the outstanding Common Shares; or (ii) commencement of, or
announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in a person (other
than a Qualified Person) or group becoming an Acquiring Person
(as hereinafter defined) (the earliest of such dates being called
the "Distribution Date"). A person or group whose acquisition of
Common Shares causes a Distribution Date pursuant to clause (i)
above is an "Acquiring Person." The date that a person or group
becomes an Acquiring Person is the "Shares Acquisition Date." A
person who acquires Common Shares pursuant to a tender or
exchange offer which is for all outstanding Common Shares at a
price and on terms which a majority of the Board of Directors
determines (prior to acquisition) to be adequate and in the best
interests of the Corporation and its stockholders (other than
such person, its affiliates and associates) (a "Permitted Offer")
will not be deemed to be an Acquiring Person and such person's
ownership will not constitute a Distribution Date.
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon the transfer or
new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without
such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date (and
to each initial record holder of certain Common Shares issued
after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date, and will expire at the close of business on March 3, 2007,
unless earlier redeemed by the Corporation as described below.
In the event that any person becomes an Acquiring
Person, each holder of Rights (other than Rights that have become
void as described below) will thereafter have the right (the
"Flip-In Right") to receive, upon exercise of such Rights, the
number of Common Shares (or, in certain circumstances, other
securities of the Corporation) having a value (immediately prior
to such triggering event) equal to two times the aggregate
exercise price of such Rights. The Board, at its option, may
exchange each Right (other than those that have become void as
described below) for one Common Share in lieu of the Flip-In
Right, provided no person is the beneficial owner of 50% or more
of the Common Shares at the time of such exchange.
Notwithstanding the foregoing, following the occurrence of the
event described above, all Rights that are or (under certain
circumstances specified in the Rights Agreement) were
beneficially owned by any Acquiring Person or any affiliate or
associate thereof will be null and void.
In the event that, at any time following the Shares
Acquisition Date, (i) the Corporation is acquired in a merger or
other business combination transaction in which the holders of
all of the outstanding Common Shares immediately prior to the
consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of
the Corporation's assets or earning power is sold or transferred,
then each holder of Rights (except Rights which previously have
been voided as set forth above) shall thereafter have the right
(the "Flip-Over Right") to receive, upon exercise of such Rights,
common shares of the acquiring company having a value equal to
two times the aggregate exercise price of the Rights; provided,
however, that the Flip Over Right shall not apply to (A) any
transaction described in clause (i) if (x) such transaction is
with a person or persons (or a wholly owned subsidiary of any
such person or persons) that acquired Common Shares pursuant to a
Permitted Offer and (y) the price and form of consideration
offered in such transaction is the same as that paid to all
holders of Common Shares whose shares were purchased to the
Permitted Offer or (B) any transaction described in clause (i) or
clause (ii) if such transaction is with a Qualified Person. The
holder of a Right will continue to have the Flip-Over Right
whether or not such holder exercises or surrenders the Flip-In
Right.
The Purchase Price payable, and the number of Common
Shares or other securities issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price,
or securities convertible into Common Shares with a conversion
price, less than the then current market price of the Common
Shares, or (iii) upon the distribution to holders of the Common
Shares of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Common Shares will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Common
Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, the Corporation may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (the "Redemption Price"),
which redemption shall be effective at such time, on such basis
and with such conditions as the Board of Directors may establish
in its sole discretion. The Corporation may, at its option, pay
the Redemption Price in Common Shares.
All of the provisions of the Rights Agreement may be
amended by the Board of Directors prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any
ambiguity, defect or inconsistency, to make changes which do not
adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), or, subject to certain
limitations, to shorten or lengthen any time period under the
Rights Agreement.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Corporation,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to stockholders of the Corporation, stockholders may,
depending upon the circumstances, recognize taxable income should
the Rights become exercisable or upon the occurrence of certain
events thereafter.