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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 1, 1995
DESIGNS, INC.
(Exact name of registrant as specified in charter)
Delaware 0-15898 04-2623104
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
Boylston Street, Chestnut Hill, Massachusetts 02167
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(617) 739-6722
There are 65 pages in this Report, including exhibits.
Page 1 of 65
Item 5 - Other Events
On May 1, 1995, the Board of Directors of the Company adopted a
Shareholder Rights Agreement (the "Rights Agreement"). The following
description of the terms of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement which is attached hereto as an exhibit and is incorporated herein
by reference.
Pursuant to the terms of the Rights Agreement, the Board of Directors
declared a dividend distribution of one Preferred Stock Purchase Right (a
"Right") for each outstanding share of Common Stock of the Company (the
"Common Stock") to stockholders of record as of the close of business on
May 15, 1995 (the "Record Date"). Each Right entitles the registered holder
to purchase from the Company a unit consisting of one one-thousandth of a
share (a "Unit") of Series A Junior Participating Cumulative Preferred Stock,
par value $0.01 per share (the "Preferred Stock"), at a cash exercise price
of $56.00 per Unit (the "Exercise Price"), subject to adjustment.
Initially, the Rights will not be exercisable and will be attached to
all shares of Common Stock outstanding as of, and issued subsequent to, the
Record Date. The Rights will separate from the Common Stock and will become
exercisable upon the earliest of (i) the close of business on the tenth
business day following the first public announcement that a person or group
of affiliated or associated persons has acquired beneficial ownership of 15%
or more of the outstanding shares of Common Stock (an "Acquiring Person")
(the date of said announcement being referred to as the "Stock Acquisition
Date"), (ii) the close of business on the tenth business day (or such other
business day as the Board of Directors may determine) following the
commencement of a tender offer or exchange offer that would result upon its
consummation in a person or group becoming the beneficial owner of 15% or
more of the outstanding shares of Common Stock or (iii) the determination by
the Board of Directors that any person is an "Adverse Person" (the earliest of
such dates being herein referred to as the "Distribution Date").
The Board of Directors may declare a person to be an Adverse Person after
a determination that such person, alone or together with its affiliates and
associates, has become the beneficial owner of 10% or more of the outstanding
shares of Common Stock and a determination by the Board of Directors, after
reasonable inquiry and investigation, including such consultation, if any,
with such persons as the directors shall deem appropriate, that (a) such
beneficial ownership by such person is intended to cause, is reasonably
likely to cause or will cause the Company to repurchase the Common Stock
beneficially owned by such person or to cause pressure on the Company to take
action or enter into a transaction or series of transactions which would
provide such person with short-term financial gain under circumstances where
the Board of Directors determines that the best long-term interests of the
Company and its stockholders, but for the actions and possible actions of
such person, would not be served by taking such action or entering into
such transaction or series of transactions at that time or (b) such
beneficial ownership is causing, or is reasonably likely to cause, a material
adverse impact (including, but not limited to, impairment of relationships
with customers or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of the Company. However,
the Board of Directors may not declare a person to be an Adverse Person if,
prior to the time that the person acquired 10% or more of the outstanding
shares of Common Stock, such person provided to the Board of Directors in
writing a statement of the person's purpose and intentions in connection with
the proposed acquisition of Common Stock, together with any other information
reasonably requested of the person by the Board of Directors, and the Board
of Directors, based on such statement and such reasonable inquiry and
investigation, including such consultation, if any, with such person as the
Board of Directors shall deem appropriate, determines to notify and notifies
such person in writing that it will not declare the person to be an Adverse
Person; provided, however, that the Board of Directors may expressly
condition in any manner a determination not to declare a person an Adverse
Person on such conditions as the Board of Directors may select, including,
without limitation, such person's not acquiring more than a specified amount
of stock and/or on such person's not taking actions inconsistent with the
purposes and intentions disclosed by such person in the statement provided
to the Board of Directors. No delay or failure by the Board of Directors to
declare a Person to be an Adverse Person shall in any way waive or otherwise
affect the power of the Board of Directors subsequently to declare a person
an Adverse Person. In the event that the Board of Directors should at any
time determine, upon reasonable inquiry and investigation, including
consultation with such persons as the Board of Directors shall deem
appropriate, that such person has not met or complied with any condition
specified by the Board of Directors, the Board of Directors may at any
time thereafter declare the person to be an Adverse Person.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), (a) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common
Stock certificates, (b) new Common Stock certificates issued after the Record
Date will contain a notation incorporating the Shareholder Rights Agreement
by reference, and (c) the surrender for transfer of any certificates for
Common Stock will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 1, 2005, unless previously redeemed
or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Right Certificates
will be mailed to holders of record of Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Right
Certificates alone will represent the Rights. Except as otherwise determined
by the Board of Directors, only shares of Common Stock issued prior to
the Distribution Date will be issued with Rights.
In the event that a Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, proper provision
will be made so that each holder of a Right (other than an Acquiring Person,
an Adverse Person or their affiliates or associates, whose Rights shall
become null and void) will thereafter have the right to receive upon exercise
that number of Units of Preferred Stock of the Company having a market value
of two times the exercise price of the Right (such right being referred to
as the "Subscription Right"). In the event that, at any time following the
Stock Acquisition Date, (i) the Company consolidates with, or merges with
and into, any other person, and the Company is not the continuing or
surviving corporation, (ii) any person consolidates with the Company, or
merges with and into the Company and the Company is the continuing or
surviving corporation of such merger and, in connection with such merger, all
or part of the shares of Common Stock are changed into or exchanged for stock
or other securities of any other person or cash or any other property, or
(iii) 50% or more of the Company's assets or earning power is sold,
mortgaged or otherwise transferred, each holder of a Right shall thereafter
have the right to receive, upon exercise, common stock of the acquiring
company having a market value equal to two times the exercise price of the
Right (such right being referred to as the "Merger Right"). The holder of
a Right will continue to have the Merger Right whether or not such holder
has exercised the Subscription Right. Rights that are or were beneficially
owned by an Acquiring Person or an Adverse Person may (under certain
circumstances specified in the Rights Agreement) become null and void.
At any time after a Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, the Board of
Directors may, at its option, exchange all or any part of the then
outstanding and exercisable Rights for shares of Common Stock or Units of
Preferred Stock at an exchange ratio of one share of Common Stock or one
Unit of Preferred Stock per Right. Notwithstanding the foregoing, the Board
of Directors generally will not be empowered to effect such exchange at any
time after any person becomes the beneficial owner of 50% or more of the
Common Stock of the Company.
The Exercise Price payable, and the number of Units of Preferred
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred Stock
or convertible securities at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock 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 Exercise Price will be
required until cumulative adjustments amount to at least 1% of the Exercise
Price. The Company is not obligated to issue fractional Units. If the
Company elects not to issue fractional Units, in lieu thereof an adjustment
in cash will be made based on the fair market value of the Preferred Stock on
the last trading date prior to the date of exercise. Any of the provisions of
the Rights Agreement may be amended by the Board of Directors of the Company
at any time prior to the Distribution Date.
The Rights may be redeemed in whole, but not in part, at a price of
$0.01 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by the Board of Directors only
until the earliest of (i) the date on which a person is declared to be an
Adverse Person, (ii) the close of business on the tenth business day after
the Stock Acquisition Date, or (iii) the expiration date of the Rights
Agreement. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and thereafter the only
right of the holders of Rights will be to receive the redemption price.
The Rights Agreement may be amended by the Board of Directors in its
sole discretion until the Distribution Date. After the Distribution Date,
the Board of Directors may, subject to certain limitations set forth in the
Rights Agreement, amend the Rights Agreement only to cure any ambiguity,
defect or inconsistency, to shorten or lengthen any time period, or to make
changes that do not adversely affect the interests of Rights holders
(excluding the interests of an Acquiring Person, an Adverse Person or their
associates or affiliates). In addition, the Board of Directors may at any
time prior to such time as any person becomes an Acquiring Person amend
the Rights Agreement to lower the threshold at which a person becomes an
Acquiring Person to not less than the greater of (i) the sum of .001% and
the largest percentage of the outstanding Common Stock then owned by any
person and (ii) 10%.
Until a Right is exercised, the holder will have no rights as a
stockholder of the Company (beyond those as an existing stockholder),
including the right to vote or to receive dividends. While the distribution
of the Rights will not be taxable to stockholders or to the Company,
stockholders may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable for Units, other
securities of the Company, other consideration or for common stock of an
acquiring company.
The Rights Agreement between the Company and the Rights Agent, which
sets forth the terms of the Rights and includes as Exhibit B the form of
Right Certificate, is attached hereto as Exhibit 4.1 and is incorporated
herein by reference. The foregoing description of the Rights does not
purport to be complete and is qualified in its entirety by reference
to the Rights Agreement which is incorporated herein by reference.
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 4.1 - Shareholder Rights Agreement, dated as of May 1, 1995,
between Designs, Inc. and The First National Bank of
Boston, as Rights Agent.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DESIGNS, INC.
Date: May 1, 1995 By: /s/ Joel H. Reichman
Joel H. Reichman, President and
Chief Executive Officer
EXHIBIT 4.1
Designs, Inc.
and
The First National Bank of Boston,
as Rights Agent
Shareholder Rights Agreement
Dated as of May 1, 1995
TABLE OF CONTENTS
Section Page
1. Certain Definitions. . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent. . . . . . . . . . . . . . . . 5
3. Issue of Right Certificates. . . . . . . . . . . . . . . . 5
4. Form of Right Certificates . . . . . . . . . . . . . . . . 7
5. Countersignature and Registration. . . . . . . . . . . . . 8
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates . . . . . . . . . . . . . . . . . 9
7. Exercise of Rights; Exercise Price; Expiration Date
of Rights. . . . . . . . . . . . . . . . . . . . . . 10
8. Cancellation and Destruction of Right Certificates . . . . 12
9. Reservation and Availability of Preferred Stock. . . . . . 12
10. Preferred Stock Record Date . . . . . . . . . . . . . . . 14
11. Adjustment of Exercise Price, Number and Kind of
Shares or Number of Rights . . . . . . . . . . . . . 14
12. Certificate of Adjusted Exercise Price or Number
of Shares. . . . . . . . . . . . . . . . . . . . . . 23
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power . . . . . . . . . . . . . . . . . . 23
14. Fractional Rights and Fractional Shares . . . . . . . . . 25
15. Rights of Action. . . . . . . . . . . . . . . . . . . . . 26
16. Agreement of Right Holders. . . . . . . . . . . . . . . . 26
17. Right Certificate Holder Not Deemed a Shareholder . . . . 27
18. Concerning the Rights Agent . . . . . . . . . . . . . . . 27
19. Merger or Consolidation or Change of Name of Rights
Agent. . . . . . . . . . . . . . . . . . . . . . . . 28
20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . 28
21. Change of Rights Agent. . . . . . . . . . . . . . . . . . 31
22. Issuance of New Right Certificates. . . . . . . . . . . . 32
23. Redemption and Termination. . . . . . . . . . . . . . . . 32
24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . 33
25. Notice of Certain Events. . . . . . . . . . . . . . . . . 34
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 35
27. Supplements and Amendments. . . . . . . . . . . . . . . . 36
28. Successors. . . . . . . . . . . . . . . . . . . . . . . . 37
29. Determinations and Actions by the Board of Directors. . . 37
30. Benefits of this Agreement. . . . . . . . . . . . . . . . 37
31. Severability. . . . . . . . . . . . . . . . . . . . . . . 37
32. Governing Law . . . . . . . . . . . . . . . . . . . . . . 38
33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 38
34. Descriptive Headings. . . . . . . . . . . . . . . . . . . 38
Exhibit A -- Certificate of Designation of
Series A Junior Participating
Cumulative Preferred Stock
Exhibit B -- Form of Right Certificate
SHAREHOLDER RIGHTS AGREEMENT
Agreement, dated as of May 1, 1995, between Designs, Inc., a Delaware
corporation (the "Company"), and The First National Bank of Boston, a national
banking association organized under the laws of the United States (the "Rights
Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed
takeover of the Company; and
WHEREAS, on May 1, 1995, the Board of Directors of the Company authorized
and declared a dividend distribution of one Right (as such term is hereinafter
defined) for each outstanding share of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock") outstanding as of the close of
business on May 15, 1995 (the "Record Date"), and contemplates the issuance of
one Right for each share of Common Stock of the Company issued (whether
originally issued or sold from the Company's treasury) between the Record Date
and the earlier of the Distribution Date or the Expiration Date (as such terms
are hereinafter defined), each Right initially representing the right to
purchase one one-thousandth of a share of Series A Junior Participating
Cumulative Preferred Stock of the Company having the rights, powers and
preferences set forth on Exhibit A hereto, upon the terms and subject to
the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the shares of Common Stock then outstanding, but
shall not include (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit plan or
compensation arrangement of the Company or any Subsidiary of the Company or
(iv) any Person holding shares of Common Stock organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant
to the terms of any such employee benefit plan or compensation arrangement
(the Persons described in clauses (i) through (iv) above are referred to
herein as "Exempt Persons").
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Stock by the Company which,
by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the
shares of Common Stock then outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional shares (other than pursuant to a stock
split, stock dividend or similar transaction) of Common Stock of the Company
and immediately thereafter be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding, then such Person shall be deemed to
be an "Acquiring Person."
In addition, notwithstanding the foregoing, a Person shall not be an
"Acquiring Person" if the Board of Directors of the Company determines that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to
the foregoing provisions of this Section 1(a), has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of
shares of Common Stock so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this Section 1(a).
(b) "Adverse Person" shall mean any Person declared to be an
Adverse Person by the Board of Directors upon a determination of the Board of
Directors that the criteria set forth in Section 11(a)(ii)(B) apply to such
Person.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations (the "Rules") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the date of this Agreement;
provided, however, that no Person who is a director or officer of the
Company shall be deemed an Affiliate or an Associate of any other director or
officer of the Company solely as a result of his or her position as director
or officer of the Company.
(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, directly or indirectly, beneficially owns (as determined
pursuant to Rule 13d-3 of the Rules under the Exchange Act, as in effect
on the date of this Agreement);
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has:
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or upon the
satisfaction of any conditions or both) pursuant to any agreement,
arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) or
upon the exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," (1) 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; (2) securities issuable upon
exercise of these Rights at any time prior to the occurrence of a
Triggering Event; or (3) securities issuable upon exercise of Rights
from and after the occurrence of a Triggering Event, which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Sections
3(a), 11(i) or 22 hereof; or
(B) the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the Rules of the Exchange Act and (2) is not also then
reportable by such person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(C) the right to dispose of pursuant to any
agreement, arrangement or understanding (whether or not in writing)
(other than customary arrangements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities); 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 (whether or not in
writing) (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (B) of Section
1(d)(ii) hereof) or disposing of any securities of the Company;
provided, however, that (1) no Person engaged in business as an underwriter
of securities shall be deemed the Beneficial Owner of any securities acquired
through such Person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition, and (2) no Person who is a director or an officer of the Company
shall be deemed, as a result of his or her position as director or officer of
the Company, the Beneficial Owner of any securities of the Company that are
beneficially owned by any other director or officer of the Company.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00
P.M., Boston, Massachusetts time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Boston,
Massachusetts time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, par value
$0.01 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock
with the greatest voting power, or the equity securities or other equity
interests having power to control or direct the management, of such Person or,
if such Person is a Subsidiary of another Person, the Person which ultimately
controls such first-mentioned Person and which has issued and outstanding such
capital stock, equity securities or equity interests.
(h) "Distribution Date" shall have the meaning defined in
Section 3(a) hereof.
(i) "Exercise Price" shall have the meaning defined in Section
4(a) hereof.
(j) "Expiration Date" and "Final Expiration Date" shall have
the meanings set forth in Section 7(a) hereof.
(k) "Fair Market Value" of any securities or other property
shall be as determined in accordance with Section 11(d) hereof.
(l) "Person" shall mean an individual, a corporation, a
partnership, an association, a joint stock company, a trust, a business trust,
a government or political subdivision, any unincorporated organization, or any
other association or entity.
(m) "Preferred Stock" shall mean shares of Series A Junior
Participating Cumulative Preferred Stock, par value $0.01 per share, of the
Company having the rights and preferences set forth in the form of Certificate
of Designation attached hereto as Exhibit A.
(n) "Principal Party" shall have the meaning defined in
Section 13(b) hereof.
(o) "Redemption Price" shall have the meaning defined in
Section 23 hereof.
(p) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(q) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(r) "Stock Acquisition Date" shall mean the date of the first
public announcement (which for purposes of this definition shall include,
without limitation, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(s) "Subsidiary" shall mean, with respect to any Person, any
other Person of which a majority of the voting power of the voting equity
securities or voting interests is owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(t) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date (as hereinafter defined in Section 3(a)) also be the
holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such Co-Rights Agents as it may deem necessary
or desirable. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and any Co-Rights Agents
shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) From the date hereof until the earlier of (i) the close of
business on the tenth Business Day after the Stock Acquisition Date, (ii) the
close of business on the tenth Business Day (or such other Business Day, if
any, as the Board of Directors may determine in its sole discretion) after the
date of the commencement by any Person, other than an Exempt Person, of a
tender or exchange offer if, upon consummation thereof, such Person would be
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding or (iii) the determination by the Board of Directors of the
Company, pursuant to the criteria set forth in Section 11(a)(ii)(B) hereof,
that a Person is an Adverse Person (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights) (the earliest
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 the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock. As soon as practicable after the Company
has notified the Rights Agent of the occurrence of the Distribution Date, the
Rights Agent will, at the Company's expense send, by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more certificates, in
substantially the form of Exhibit B hereto (the "Right Certificates"),
evidencing one Right for each share of Common Stock so held. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(o) hereof, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
at the time of distribution of the Right Certificates, so that Right
Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after the close of
business on the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) With respect to certificates for the Common Stock issued
prior to the close of business on the Record Date, the Rights will be
evidenced by such certificates for the Common Stock on or until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), and the registered holders of the Common Stock also shall be the
registered holders of the associated Rights. Until the Distribution Date (or
the earlier redemption, expiration or termination of the Rights), the
transfer of any of the certificates for the Common Stock outstanding prior to
the date of this Agreement shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(c) Certificates for the Common Stock issued after the Record
Date, but prior to the earlier of the Distribution Date or the redemption,
expiration or termination of the Rights, shall be deemed also to be
certificates for Rights, and shall bear a legend, substantially in the form
set forth below:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Shareholder
Rights Agreement between Designs, Inc. and The First
National Bank of Boston, as Rights Agent, dated as of
May 1, 1995 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a
copy of which is on file at the principal offices of
Designs, Inc. 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. Designs, Inc. may redeem the Rights at a
redemption price of $0.01 per Right, subject to
adjustment, under the terms of the Rights Agreement.
Designs, Inc. will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written
request therefor. Under certain circumstances, Rights
issued to or held by Acquiring Persons, Adverse Persons
or any Affiliates or Associates thereof (as defined in the
Rights Agreement), and any subsequent holder of such
Rights, may become null and void.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone until the Distribution Date (or the
earlier redemption, expiration or termination of the Rights), and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates. In
the event that the Company purchases or acquires any shares of Common Stock
after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed cancelled and retired so
that the Company shall not be entitled to exercise any Rights associated with
the shares of Common Stock which are no longer outstanding. The failure to
print the foregoing legend on any such Common Stock certificate or any defect
therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment and certificate to be printed on the
reverse thereof) shall each be substantially in the form of Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any applicable law, rule or regulation 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 customary usage. The Rights Certificates
shall be in a machine printable format and in a form reasonably satisfactory
to the Rights Agent. Subject to the provisions of Section 11 and Section 22
hereof, the Right Certificates, whenever distributed, shall be dated as of the
Record Date, shall show the date of countersignature, and on their face shall
entitle the holders thereof to purchase such number of one one-thousandths of
a share of Preferred Stock as shall be set forth therein at the price set
forth therein (the "Exercise Price"), but the number of such shares and the
Exercise Price 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 beneficially owned by (i) an
Acquiring Person, an Adverse Person or any Associate or Affiliate of an
Acquiring Person or an Adverse Person, (ii) a transferee of an Acquiring
Person or an Adverse Person (or of any Associate or Affiliate of an Acquiring
Person or an Adverse Person) who becomes a transferee after the Acquiring
Person or Adverse Person becomes such, or (iii) a transferee of an Acquiring
Person or an Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A)
a transfer (whether or not for consideration) from the Acquiring Person or
Adverse Person to holders of equity interests in such Acquiring Person or
Adverse Person or to any Person with whom the Acquiring Person or Adverse
Person has any continuing agreement, arrangement or understanding (whether or
not in writing) regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) hereof, and any Right Certificate issued pursuant to
Section 6, Section 11 or Section 22 upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
have deleted therefrom the second sentence of the existing legend on such
Right Certificate and in substitution therefor shall contain 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, an Adverse Person or an Affiliate or an Associate of an
Acquiring Person or an Adverse Person (as such terms are
defined in the Rights Agreement). This Right Certificate and the
Rights represented hereby may become null and void under
certain circumstances as specified in Section 7(e) of the Rights
Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or Adverse Person
or any Associate or Affiliate thereof. The Company shall instruct the Rights
Agent in writing of the Rights which should be so legended. The failure to
print the foregoing legend on any such Right Certificate or any defect therein
shall not affect in any manner whatsoever the application or interpretation of
the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, or its President or any Vice President
and by its Treasurer or any Assistant Treasurer, or by its Secretary or any
Assistant Secretary, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested to by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent and shall not be
valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by an authorized signatory of the Rights Agent, and
issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificates may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices designated as the appropriate
place for surrender of Right Certificates upon exercise 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 date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 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 Expiration
Date, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Certificates, entitling
the registered holder to purchase a like number of one one-thousandths of a
share of Preferred Stock (or following a Triggering Event, preferred stock,
cash, property, debt securities, common stock or any combination thereof) as
the Right Certificate or Certificates surrendered then entitled such holder to
purchase and at the same Exercise Price. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Certificates to be transferred, split up, combined or
exchanged, with the form of assignment and certificate duly executed, at the
office or offices of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate 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 Company 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 Certificates, as the case may be, as so requested. The Company
may require payment by the registered holder of a Right Certificate, 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.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right
Certificate, if mutilated, the Company will execute and deliver a new Right
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise 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 office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Exercise
Price for the total number of one one-thousandths of a share of Preferred
Stock (or other securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercised, at or prior to the earlier
of (i) the close of business on May 1, 2005 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof (the earlier of (i), (ii) or (iii) being herein referred to
as the "Expiration Date"). Except as set forth in Section 7(e) hereof and
notwithstanding any other provision of this Agreement, any Person who prior
to the Distribution Date becomes a record holder of shares of Common Stock
may exercise all of the rights of a registered holder of a Right Certificate
with respect to the Rights associated with such shares of Common Stock in
accordance with the provisions of this Agreement, as of the date such Person
becomes a record holder of shares of Common Stock.
(b) The Exercise Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$56.00, shall be subject to adjustment from time to time as provided in
Section 11 and Section 13 hereof and shall be payable in lawful money of the
United States of America in accordance with Section 7(c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, accompanied by payment of the
Exercise Price for the shares to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) in cash, or by
certified check or bank draft payable to the order of the Company, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of Preferred Stock (or make available, if
the Rights Agent is the transfer agent therefor) certificates for the number
of one one-thousandths of a share of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section 14
hereof, (iii) promptly 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
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate. In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay cash or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(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, an Adverse Person
or any Associate or Affiliate of an Acquiring Person or an Adverse Person,
(ii) a transferee of an Acquiring Person or an Adverse Person (or of any
Associate or Affiliate of an Acquiring Person or an Adverse Person) who
becomes a transferee after the Acquiring Person or Adverse Person becomes such
or (iii) a transferee of an Acquiring Person or an Adverse Person (or of any
Associate or Affiliate of an Acquiring Person or an Adverse Person) who
becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A)
a transfer (whether or not for consideration) from the Acquiring Person or
Adverse Person to holders of equity interests in such Acquiring Person or
Adverse Person or to any Person with whom the Acquiring Person or Adverse
Person has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, 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 Company shall use all
reasonable efforts to ensure 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 Adverse Person
or any Affiliates or Associates of an Acquiring Person or an Adverse Person or
any transferee of any of them hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights 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 Company shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and
no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient
to permit the exercise in full of all outstanding and exercisable Rights.
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred
Stock issued or reserved for issuance to be listed, upon official notice of
issuance, upon the principal national securities exchange, if any, upon which
the Common Stock is listed or, if the principal market for the Common Stock
is not on any national securities exchange, to be eligible for quotation on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or any successor thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement to
remain effective (with a prospectus that at all times meets the requirements
of the Securities Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities or (B) the Expiration
Date. The Company will also take such action as may be appropriate under, and
which will ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date determined in accordance with the provisions of the
first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect, in each case with prompt written notice to
the Rights Agent. Notwithstanding any such provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon the exercise of the Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Exercise Price),
be duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all 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 certificates for shares of Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or in respect of the issuance or
delivery of securities in a name other than that of, the registered holder of
the Right Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for securities in a name other than that of the
registered holder upon the exercise of any Rights until 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 Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the shares
of Preferred Stock 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 Exercise Price (and any applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock transfer books
of the Company are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Company are open. Prior to the exercise of the Right evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller number
of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Exercise Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of 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 Preferred Stock transfer books of the Company were open, he
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 a Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of a Right. If an
event occurs which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to the provisions of Section 24 hereof, in the
event
(A) any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person, or
(B) the Board of Directors of the Company, by majority
vote, shall declare any Person to be an Adverse Person, after (x) a
determination that such Person, alone or together with its Affiliates
and Associates, has become the Beneficial Owner of 10% or more of the
outstanding shares of Common Stock and (y) a determination by the
Board of Directors, after reasonable inquiry and investigation,
including such consultation, if any, with such persons as such
directors shall deem appropriate, that (a) such Beneficial Ownership
by such Person is intended to cause, is reasonably likely to cause or
will cause the Company to repurchase the Common Stock beneficially
owned by such Person or to cause pressure on the Company to take
action or enter into a transaction or series of transactions which
would provide such Person with short-term financial gain under
circumstances where the Board of Directors determines that the best
long-term interests of the Company and its shareholders, but for the
actions and possible actions of such Person, would not be served by
taking such action or entering into such transactions or series of
transactions at that time or (b) such Beneficial Ownership is causing
or reasonably likely to cause a material adverse impact (including,
but not limited to, impairment of relationships with customers or
impairment of the Company's ability to maintain its competitive
position) on the business or prospects of the Company; provided,
however, that the Board of Directors of the Company may not declare
a Person to be an Adverse Person if, prior to the time that such
Person acquired 10% or more of the shares of Common Stock then
outstanding, such Person provided to the Board of Directors in
writing a statement of such Person's purpose and intentions in
connection with the proposed acquisition of Common Stock, together
with any other information reasonably requested of such Person by
the Board of Directors, and the Board of Directors, based on such
statement and reasonable inquiry and investigation, including such
consultation, if any, with such Person as the Board of Directors
shall deem appropriate, determines to notify and notifies such
Person in writing that it will not declare such Person to be an
Adverse Person; provided further, that the Board of Directors may
expressly condition in any manner a determination not to declare a
Person an Adverse Person on such conditions as the Board of Directors
may select, including without limitation, such Person's not acquiring
more than a specified amount of stock and/or on such Person's not
taking actions inconsistent with the purposes and intentions
disclosed by such Person in the statement provided to the Board of
Directors. No delay or failure by the Board of Directors to declare
a Person to be an Adverse Person shall in any way waive or otherwise
affect the power of the Board of Directors subsequently to declare a
Person to be an Adverse Person. In the event that the Board of
Directors should at any time determine, upon reasonable inquiry and
investigation, including consultation with such Persons as the Board
of Directors shall deem appropriate, that such Person has not met or
complied with any condition specified by the Board of Directors, the
Board of Directors may at any time thereafter declare such Person to
be an Adverse Person pursuant to the provisions of this Section
11(a)(ii)(B),
then, and in each such case, promptly following any such occurrence,
proper provision shall be made so that each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have a right to receive,
upon exercise thereof at the then current Exercise Price in accordance
with the terms of this Agreement, such number of shares of Preferred
Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Exercise Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event and dividing that product by (y) 50% of the Fair Market
Value per one one-thousandth of a share of the Preferred Stock
(determined pursuant to Section 11(d)) on the date of the occurrence of
any one of the events listed above in this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient
authorized but unissued shares of Preferred Stock to permit the
exercise in full of the Rights in accordance with the foregoing
Section 11(a)(ii), the Company shall take all action as may be
necessary to authorize and reserve for issuance such number of
additional shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all Rights
outstanding and, if necessary, shall use its best efforts to obtain
shareholder approval thereof. Notwithstanding the foregoing
provisions of this Section 11(a)(iii), in lieu of issuing shares of
Preferred Stock in accordance with Section 11(a)(ii) hereof, if a
majority of the Directors then in office determines that such action
is necessary or appropriate and is not contrary to the interests of
the holders of the Rights, they may elect to cause the Company to pay,
and if sufficient shares of Preferred Stock cannot be issued for such
purpose in accordance with the provisions hereof, the Company shall
issue or pay upon the exercise of the Rights, cash, property, debt
securities, shares of preferred stock or common stock, or any
combination thereof, having an aggregate Fair Market Value equal to
the Fair Market Value of the shares of Preferred Stock which otherwise
would have been issuable pursuant to Section 11(a)(ii). Any such
election by a majority of the Directors of the Company must be made
and publicly announced within 30 days of the date on which any Section
11(a)(ii) Event first occurs following the Stock Acquisition Date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or securities having the same or
more favorable rights, privileges and preferences as the shares of Preferred
Stock ("preferred stock equivalents")) or securities convertible into
Preferred Stock or preferred stock equivalents at a price per share of
Preferred Stock or per share of preferred stock equivalents (or having a
conversion price per share, if a security convertible into Preferred Stock or
preferred stock equivalents) less than the Fair Market Value (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock on such record
date, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the number of
shares of Preferred Stock which the aggregate offering price of the total
number of shares of Preferred Stock to be offered (and the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such Fair Market Value and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and preferred stock
equivalents 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 a Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of a Right. 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 the Fair Market
Value thereof determined in accordance with Section 11(d) hereof. Shares of
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Exercise Price shall
be adjusted to be the Exercise Price which would then be in effect if such
record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or convertible securities, subscription rights or
warrants (excluding those referred to in Section 11(b)), the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Fair Market Value (as determined pursuant
to Section 11(d) hereof) per one one-thousandth of a share of Preferred Stock
on such record date, less the Fair Market Value (as determined pursuant to
Section 11(d) hereof) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such convertible securities,
subscription rights or warrants applicable to one one-thousandth of a share of
Preferred Stock and the denominator of which shall be the Fair Market Value
(as determined pursuant to Section 11(d) hereof) per one one-thousandth of a
share of Preferred Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of a Right. 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 Exercise Price shall again be adjusted to be the Exercise
Price which would be in effect if such record date had not been fixed.
(d) For the purpose of this Agreement, the "Fair Market Value" of
any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property shall be determined as provided in this
Section 11(d).
(i) In the case of a publicly-traded stock or other security,
the Fair Market Value on any date shall be deemed to be the average
of the daily closing prices per share of such stock or per unit of
such other security for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the Fair Market Value per share of
any share of stock is determined during a period following the
announcement by the issuer of such stock of (x) a dividend or
distribution on such stock payable in shares of such stock or
securities convertible into shares of such stock or (y) any
subdivision, combination or reclassification of such stock, and
prior to the expiration of the 30 Trading Day period 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 Fair Market Value shall be properly
adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if
the securities 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 such security is listed or
admitted to trading; or, if not listed or admitted to trading on any
national securities exchange, the last quoted price (or, if not so
quoted, the average of the last quoted 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 no bids for such security
are quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a
market in such security selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in
such security, the Fair Market Value of such security on such date
shall be determined reasonably and with utmost good faith to the
holders of the Rights by the Board of Directors of the Company,
provided, however, that if at the time of such determination there is
an Acquiring Person or an Adverse Person, the Fair Market Value of
such security on such date shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors,
which determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which such security is
listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) If a security is not publicly held or not so listed or
traded, "Fair Market Value" shall mean the fair value per share of
stock or per other unit of such security, determined reasonably and
with utmost good faith to the holders of the Rights by the Board of
Directors of the Company, provided, however, that if at the time of
such determination there is an Acquiring Person or an Adverse Person,
the Fair Market Value of such security on such date shall be
determined by a nationally recognized investment banking firm
selected by the Board of Directors, which determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights; provided,
however, that for the purposes of making any adjustment provided for
by Section 11(a)(ii) hereof, the Fair Market Value of a share of
Preferred Stock shall not be less than the product of the then Fair
Market Value of a share of Common Stock multiplied by the higher of
the then Dividend Multiple or Vote Multiple (as both of such terms
are defined in the Certificate of Designation attached as Exhibit A
hereto) applicable to the Preferred Stock and shall not exceed 105%
of the product of the then Fair Market Value of a share of Common
Stock multiplied by the higher of the then Dividend Multiple or Vote
Multiple applicable to the Preferred Stock.
(iii) In the case of property other than securities, the Fair
Market Value thereof shall be determined reasonably and with utmost
good faith to the holders of Rights by the Board of Directors of the
Company, provided, however, that if at the time of such determination
there is an Acquiring Person or an Adverse Person, the Fair Market
Value of such property on such date shall be determined by a
nationally recognized investment banking firm selected by the Board
of Directors, which determination shall be described in a statement
filed with the Rights Agent and shall be binding upon the Rights
Agent and the holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Exercise 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 hundred-thousandth of a share of Common
Stock or ten-millionth of a share of Preferred Stock, as the case may be, or
to such other figure as the Board of Directors may deem appropriate.
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 Expiration Date.
(f) If as a result of any provision of Section 11(a) hereof, the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Section 11(a), (b), (c), (e), (g) through (k) and (m),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 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 Exercise Price,
that number of one one-thousandths of a share of Preferred Stock (calculated
to the nearest one ten-millionth) obtained by (i) multiplying (x) the number
of one one-thousandths of a share of Preferred Stock for which a Right may be
exercisable immediately prior to this adjustment by (y) the Exercise Price in
effect immediately prior to such adjustment of the Exercise Price and (ii)
dividing the product so obtained by the Exercise Price in effect immediately
after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment of
the Exercise Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one one-hundred-thousandth) obtained by
dividing the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment
of the Exercise Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Exercise 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 Company shall,
as promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
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 may bear, at the option of the Company, the
adjusted Exercise Price) and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Exercise Price
or the number of one one-thousandths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price per share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then stated value, if any, of the
number of one one-thousandths of a share of Preferred Stock issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred
Stock at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock or other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-thousandths of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Exercise Price,
in addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the Preferred Stock,
issuance wholly for cash of any shares of Preferred Stock at less than the
Fair Market Value, issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock, stock dividends or issuance of rights, options or
warrants referred to hereinabove in this Section 11, hereafter made by the
Company to holders of its Preferred Stock, shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with, (ii) merge with or into, 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 50% or
more of the assets or earning power of the Company and its Subsidiaries taken
as a whole, to any other Person or Persons if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments outstanding or agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale the shareholders of a
Person who constitutes, or would constitute, the "Principal Party" for the
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
Company further 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 if at the time such action is taken it is
reasonably foreseeable that such action will substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) In the event the Company shall at any time after the date of
this Agreement and prior to the Distribution Date (i) declare or pay any
dividend on the outstanding Common Stock payable in shares of Common Stock or
(ii) effect a subdivision, combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
dividends in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in any such case (A) the number of one one-thousandths
of a share of Preferred Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-thousandths of a share of Preferred Stock so purchasable immediately prior
to such event by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately prior to such event and the denominator
of which is the number of shares of Common Stock outstanding immediately
after such event, and (B) each share of Common Stock outstanding immediately
after such event shall have issued with respect to it that number of Rights
which each share of Common Stock outstanding immediately prior to such event
had issued with respect to it. The adjustments provided for in this Section
11(o) shall be made successively whenever such a dividend is declared or paid
or such a subdivision, combination or consolidation is effected.
(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 of holders of Right
Certificates under this Rights Agreement, including rights to purchase
securities of the Principal Party following a Section 13 Event which has
occurred or may thereafter occur, as set forth in Section 13 hereof. Upon
exercise of a Right Certificate under Section 11(a)(ii), the Rights Agent
shall return such Right Certificate duly marked to indicate that such
exercise has occurred.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock 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. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment contained therein and shall not
be deemed to have knowledge of any such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11(n) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11(n) hereof) shall consolidate
with the Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in connection with
such merger, all or part of the shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other Person or cash or any
other property, or (z) the Company shall sell, mortgage or otherwise transfer
(or one or more of its Subsidiaries shall sell, mortgage or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions, each of which is not prohibited by Section 11(n) 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 have the
right to receive, upon the exercise thereof at the then current Exercise Price
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid and nonassessable shares of freely
tradeable Common Stock of the Principal Party (as hereinafter defined in
Section 13(b)), free and clear of rights of call or first refusal, liens,
encumbrances or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Exercise Price by the number of
one one-thousandths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event,
and dividing that product by (2) 50% of the Fair Market Value (determined
pursuant to Section 11(d) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such consolidation, merger,
sale or transfer; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale, mortgage or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply to such Principal Party; and (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock to permit
exercise of all outstanding Rights in accordance with this Section 13(a) and
the making of payments in cash and/or other securities in accordance with
Section 11(a)(iii) hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights.
(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 shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to the merger or consolidation;
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 such case, (x) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary or Affiliate of another Person the
Common Stock of which is and has been so registered, "Principal Party" shall
refer to such other Person; (y) in case such Person is a direct or indirect
Subsidiary or Affiliate of more than one Person, the Common Stocks 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 Stock having the
greatest aggregate market value of shares outstanding; and (z) 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 (x) and (y) 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 Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto (x) the Principal Party shall
have a sufficient number of authorized shares of its Common Stock, 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 (y) the Company
and each Principal Party and each other Person who may become a Principal
Party as a result of such consolidation, merger, sale or transfer shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in Section 13(a) and (b) and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer of assets mentioned in Section 13(a), the Principal
Party at its own expense will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus that at all
times meets the requirements of the Securities Act) until the 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;
(iii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on NASDAQ; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all material 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.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(o) hereof, or
to distribute Right Certificates which evidence fractional Rights. If the
Company elects not to issue such fractional Rights, the Company shall pay, in
lieu of such fractional Rights, 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 Fair Market
Value of a whole Right, as determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share of Preferred
Stock, the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the Fair Market Value of one one-thousandth of a share
of Preferred Stock. For purposes of this Section 14(b), the Fair Market Value
of one one-thousandth of a share of Preferred Stock shall be 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 Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Right Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, on his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Right evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement. Holders of Rights shall be
entitled to recover the reasonable costs and expenses, including attorneys'
fees, incurred by them in any action to enforce the provisions of this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be transferable
only simultaneously and together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as the 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 obligations; provided, however, that the
Company 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 Shareholder. 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 shares of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a 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 Section 25
hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such compensation
as shall be agreed to in writing between the Company and the Rights Agent 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 disbursements
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without 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 arising therefrom, directly or
indirectly. The provisions of this Section 18(a) shall survive the expiration
of the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Common Stock, Preferred Stock, or other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed and executed by the proper Person or Persons.
(c) The Rights Agent shall not be liable for consequential damages
under any provision of this Agreement or for any consequential damages arising
out of any act or failure to act hereunder.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any 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 the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and
in all such cases such Right Certificates shall have the full force provided
in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at 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 the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by
it (who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or
Adverse Person and the determination of "Fair Market Value") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof shall be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent
to be the Chairman of the Board, a Vice Chairman of the Board, the President,
a Vice President, the Treasurer, any Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company and delivered to the Rights Agent. Any
such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(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 thereof) or be required to verify
the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any 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 Sections 11, 13 or 23(c) hereof
or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12 hereof), nor shall it be responsible for any
determination by the Board of Directors of the Company of the Fair Market
Value of the Rights or Preferred Stock pursuant to the provisions of Section
14 hereof; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Common
Stock or Preferred Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person
believed by the Rights Agent to be the Chairman of the Board, any Vice
Chairman of the Board, the President, a Vice President, the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer of the Company,
and is authorized to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
of any such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set
forth in writing any action proposed to be taken or omitted by the Rights
Agent under this 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 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 Company actually receives
such application, unless any such officer shall have consented in writing
to an earlier date) unless, prior to taking any such action (or the effective
date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action
to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or
to the holders of the Rights resulting from any such act, omission, 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 there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause (1) or clause
(2) thereof, the Rights Agent shall not take any further action with respect
to such requested exercise or transfer without first consulting with the
Company.
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 Company by first class
mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause) upon thirty (30) days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a
period of 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 Company), then the incumbent Rights Agent or the
registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of the Commonwealth of Massachusetts or 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 Commonwealth of
Massachusetts or the State of New York), in good standing, which is
authorized under such laws to exercise stock transfer or corporate trust
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 or (b) an Affiliate of
a corporation described in clause (a) of this sentence. After appointment,
the successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent
of the Common Stock and the Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to
give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment
or change in the Exercise Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of
securities hereafter issued by the Company, and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of the Company,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Right Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the person to
whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.01 per Right, appropriately adjusted to reflect any
dividend declared or paid on the Common Stock in shares of Common Stock or
any subdivision or combination of the outstanding shares of Common Stock or
similar event occurring after the date of this Agreement (such redemption
price, as adjusted from time to time, being hereinafter referred to as the
"Redemption Price"). The Rights may be redeemed only until the earliest to
occur of (i) 5:00 P.M., Boston, Massachusetts time, on the tenth Business Day
after the Stock Acquisition Date, (ii) the declaration by the Board of
Directors that any Person is an Adverse Person or (iii) the Final Expiration
Date.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to the Rights Agent and to all
such holders at their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
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 or Section 24 hereof or in connection with the
purchase of shares of Common Stock prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price in
cash, shares of Common Stock (based on the Fair Market Value of the Common
Stock as of the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at
any time on or after the occurrence of a Section 11(a)(ii) Event, exchange all
or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered
to effect such exchange at any time after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Stock of the Company.
(b) Immediately upon the action of the Company 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 shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give notice of any such exchange in
accordance with Section 26 hereof; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Stock (or preferred stock equivalent,
as such term is defined in Section 11(b) hereof) for Common Stock exchangeable
for Rights, at the initial rate of one one-thousandth of a share of Preferred
Stock (or preferred stock equivalent) for each share of Common Stock, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, so that the fraction of a share
of Preferred Stock delivered in lieu of each share of Common Stock shall have
the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock (or preferred stock equivalent) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
or Preferred Stock (or preferred stock equivalent) for issuance upon exchange
of the Rights.
(e) The Company shall not be required to issue fractions of Common
Stock or to distribute certificates which evidence fractional shares of Common
Stock. If the Company elects not to issue such fractional shares of Common
Stock, the Company shall pay, in lieu of such fractional shares of Common
Stock, to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the Fair Market Value of a whole
share of Common Stock. For the purposes of this paragraph (e), the Fair
Market Value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular periodic cash dividend out
of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock),
or (iv) to effect any consolidation or merger into or with, or to effect
any sale, mortgage or other transfer (or to permit one or more of its
Subsidiaries to effect any sale, mortgage or other transfer), in one
transaction or a series of related transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person (other than a Subsidiary of the Company in one
or more transactions each of which is not prohibited by Section 11(n) hereof),
or (v) to effect the liquidation, dissolution or winding up of the Company,
(vi) to declare or pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in
Common Stock) then in each such case, the Company shall give to each holder
of a Right Certificate and to the Rights Agent, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the shares of
Common Stock and/or Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 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 shares of Common Stock and/or
Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
registered holder of a Right Certificate and to the Rights Agent, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) hereof.
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 Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Designs, Inc.
1244 Boylston Street
Chestnut Hill, MA 02167
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The First National Bank of Boston
150 Royall Street, Mail Stop 45-02-16
Canton, MA 02021
Attention: Shareholder Services Division
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior
to the Distribution Date, to the holder of any certificate representing shares
of Common Stock) shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement as the Company may deem necessary or
desirable without the approval of any holders of certificates representing
shares of Common Stock. From and after the Distribution Date, the Company
and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holder 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 hereof in any manner which the
Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Right Certificates (other than an Acquiring
Person, Adverse Person or any Affiliate or Associate of an Acquiring Person
or Adverse Person); provided, however, that from and after the Distribution
Date 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 the benefits to, the
holders of Rights. Without limiting the foregoing, the Company may at any
time prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the threshold set forth in Section 1(a) to not less than
the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Stock then known by the Company to be beneficially owned
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company, or any
entity holding Common Stock for or pursuant to the terms of any such plan)
and (ii) 10%. Upon the delivery of such certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock. Notwithstanding any other provision
hereof, the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 27 which alters the Rights Agent's rights
or duties.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the Rules under the Exchange
Act as in effect on the date hereof. The Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement and
to exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the 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 Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject any member of the Board
of Directors to any liability to the holders of the Rights or to any other
person.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
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; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from the Agreement
would adversely affect the purpose or effect of the Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of
such determination by the Board of Directors.
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 to be 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.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ATTEST: DESIGNS, INC.
By: By: /s/ Joel H. Reichman
Name: Joel H. Reichman
Title: President and Chief Executive
Officer
ATTEST: THE FIRST NATIONAL BANK OF
BOSTON, as Rights Agent
By: By: /s/ Lori L. Chamoun
Name: Lori L. Chamoun
Title: Administration Manager
Exhibit A
VOTE OF DIRECTORS ESTABLISHING
SERIES A JUNIOR PARTICIPATING CUMULATIVE
PREFERRED STOCK
of
DESIGNS, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
VOTED, that pursuant to authority conferred upon and vested in the Board
of Directors by the Restated Certificate of Incorporation, as amended as of
the date hereof (the "Certificate of Incorporation"), of Designs, Inc. (the
"Corporation"), the Board of Directors hereby establishes and designates a
series of Preferred Stock of the Corporation, and hereby fixes and determines
the relative rights and preferences of the shares of such series, in addition
to those set forth in the Certificate of Incorporation, as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares initially constituting
such series shall be 300,000; provided, however, that if more than a total of
300,000 shares of Series A Preferred Stock shall be issuable upon the exercise
of Rights (the "Rights") issued pursuant to the Shareholder Rights Agreement
dated as of May 1, 1995, between the Corporation and The First National Bank
of Boston, as Rights Agent (the "Rights Agreement"), the Board of Directors of
the Corporation, pursuant to Section 151(g) of the General Corporation Law of
the State of Delaware, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged, filed and recorded, in
accordance with the provisions of Section 103 thereof, providing for the total
number of shares of Series A Preferred Stock authorized to be issued to be
increased (to the extent that the Certificate of Incorporation then permits)
to the largest number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of such Rights.
Section 2. Dividends and Distributions.
(A) (i) Subject to the rights of the holders of any shares of any series
of preferred stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of shares of common
stock and of any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provisions for adjustment hereinafter set forth, 1000 times
the aggregate per share amount of all cash dividends, and 1000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of common stock
or a subdivision of the outstanding shares of common stock (by
reclassification or otherwise), declared on the common stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. The multiple of
cash and non-cash dividends declared on the common stock to which holders
of the Series A Preferred Stock are entitled, which shall be 1000 initially
but which shall be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Dividend Multiple." In the event the
Corporation shall at any time after May 1, 1995 (the "Rights Declaration
Date") (i) declare or pay any dividend on common stock payable in shares
of common stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by reclassification
or otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case
the Dividend Multiple thereafter applicable to the determination of the
amount of dividends which holders of shares of Series A Preferred Stock
shall be entitled to receive shall be the Dividend Multiple applicable
immediately prior to such event multiplied by a fraction, the numerator of
which is the number of shares of common stock outstanding immediately after
such event and the denominator of which is the number of shares of common
stock that were outstanding immediately prior to such event.
(ii) Notwithstanding anything else contained in this paragraph (A),
the Corporation shall, out of funds legally available for that purpose,
declare a dividend or distribution on the Series A Preferred Stock as
provided in this paragraph (A) immediately after it declares a dividend or
distribution on the common stock (other than a dividend payable in shares of
common stock); provided that, in the event no dividend or distribution shall
have been declared on the common stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix in accordance with
applicable law a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than such
number of days prior to the date fixed for the payment thereof as may be
allowed by applicable law.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1000
votes on all matters submitted to a vote of the stockholders of the
Corporation. The number of votes which a holder of a share of Series A
Preferred Stock is entitled to cast, which shall initially be 1000 but which
may be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the "Vote Multiple." In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare or pay any dividend on
common stock payable in shares of common stock, or (ii) effect a subdivision
or combination or consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in shares of
common stock) into a greater or lesser number of shares of common stock,
then in each such case the Vote Multiple thereafter applicable to the
determination of the number of votes per share to which holders of shares of
Series A Preferred Stock shall be entitled shall be the Vote Multiple
immediately prior to such event multiplied by a fraction, the numerator of
which is the number of shares of common stock outstanding immediately after
such event and the denominator of which is the number of shares of common
stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of common stock and the
holders of shares of any other capital stock of this Corporation having
general voting rights, shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) Except as otherwise required by applicable law or as set forth
herein, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of common stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series A Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred
Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) except as permitted in subsection 4(A)(iv) below, redeem, purchase or
otherwise acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of any stock ranking on
a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under subsection (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of preferred stock and may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (x) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock unless, prior thereto, the holders of
shares of Series A Preferred Stock shall have received an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, plus an amount equal to the greater
of (1) $1000.00 per share or (2) an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 1000 times the
aggregate amount to be distributed per share to holders of common stock, or
(y) to the holders of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock
and all other such parity stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare or pay any dividend on common
stock payable in shares of common stock, or (ii) effect a subdivision or
combination or consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in shares of
common stock) into a greater or lesser number of shares of common stock, then
in each such case the aggregate amount per share to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event
under clause (x) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
common stock outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were outstanding
immediately prior to such event.
Neither the consolidation of nor merging of the Corporation with or into
any other corporation or corporations, nor the sale or other transfer of all
or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of common stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series A Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of common stock is
changed or exchanged, plus accrued and unpaid dividends, if any, payable
with respect to the Series A Preferred Stock. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare or pay any
dividend on common stock payable in shares of common stock, or (ii) effect a
subdivision or combination or consolidation of the outstanding shares of
common stock (by reclassification or otherwise than by payment of a dividend
in shares of common stock) into a greater or lesser number of shares of
common stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of common stock outstanding
immediately after such event and the denominator of which is the number of
shares of common stock that were outstanding immediately prior to such event.
Section 8. Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
Section 9. Ranking. Unless otherwise provided in the Certificate of
Incorporation or a Certificate of Vote of Directors Establishing a Class of
Stock relating to a subsequently-designated series of preferred stock of the
Corporation, the Series A Preferred Stock shall rank junior to any other
series of the Corporation's preferred stock subsequently issued, as to the
payment of dividends and the distribution of assets on liquidation,
dissolution or winding up and shall rank senior to the common stock.
Section 10. Amendment. The Certificate of Incorporation and this
Certificate of Vote of Directors shall not be amended in any manner which
would materially alter or change the powers, preferences or special rights
of the Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued
in whole shares or in any fraction of a share that is one one-thousandth
(1/1000th) of a share or any integral multiple of such fraction, which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and
to have the benefit of all other rights of holders of Series A Preferred
Stock. In lieu of fractional shares, the Corporation may elect to make a
cash payment as provided in the Rights Agreement for fractions of a share
other than one one-thousandth (1/1000th) of a share or any integral multiple
thereof.
Exhibit B
[Form of Right Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER MAY 1, 2005 OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF DESIGNS, INC., AT $0.01
PER RIGHT ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT BETWEEN
DESIGNS, INC. AND THE FIRST NATIONAL BANK OF BOSTON, AS RIGHTS AGENT, DATED AS
OF MAY 1, 1995 (THE "RIGHTS AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON, AN ADVERSE PERSON OR AN ASSOCIATE OR AFFILIATE OF AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID.
Right Certificate
DESIGNS, INC.
This certifies that _________________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Shareholder Rights Agreement dated as of May 1, 1995 (the "Rights
Agreement") between Designs, Inc. (the "Company") and The First National
Bank of Boston, as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to the close of business on May 1, 2005 at
the office or offices of the Rights Agent designated for such purpose, or
its successors as Rights Agent, one one-thousandth of a fully paid,
non-assessable share of the Series A Junior Participating Cumulative
Preferred Stock (the "Preferred Stock") of the Company, at a purchase price
of $______ per one one-thousandth of a share (the "Exercise Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase and the related Certificate duly executed. The number
of Rights evidenced by this Right Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the
Exercise Price per share set forth above, are the number and Exercise Price
as of _________, based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate
are beneficially owned by (i) an Acquiring Person, an Adverse Person or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Adverse
Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a Person who, after such
transfer, became an Acquiring Person or an Adverse Person, or an Affiliate
or Associate of an Acquiring Person or an Adverse Person, such Rights shall
become null and void and no holder hereof shall have any right with respect
to such Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates, which limitations of rights include the temporary suspension
of the exercisability of such Rights under the specific circumstances set
forth in the Rights Agreement. Copies of the Rights Agreement are on file
at the principal office of the Company and the designated office of the
Rights Agent and are also available upon written request to the Company or
the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Right Certificate
or Certificates for the number of whole Rights not exercised. If this Right
Certificate shall be exercised in whole or in part pursuant to Section
11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive
this Right Certificate duly marked to indicate that such exercise has
occurred as set forth in the Rights Agreement.
Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors of the Company at its option may exchange
all or any part of the Rights evidenced by this Certificate for shares of the
Company's Common Stock or Preferred Stock at an exchange ratio (subject to
adjustment) of one share of Common Stock or one one-thousandth of a share of
Preferred Stock per Right.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company
at its option at a redemption price of $0.01 per Right (payable in cash,
Common Stock or other consideration deemed appropriate by the Board of
Directors).
The Company is not obligated to issue fractional shares of stock upon
the exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred
Stock, which may, at the election of the Company, be evidenced by depositary
receipts). If the Company elects not to issue such fractional shares, in
lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock, Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to
any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the
Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
[Corporate Seal] DESIGNS, INC.
Attested:
By ________________________
Name:
By _____________________ Title: [Chairman, Vice
[Secretary or Assistant Secretary] Chairman, President or
Vice President]
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON,
as Rights Agent
________________________
Authorized Signatory
Date of countersignature:
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________________ (Please print name and
address of transferee) _________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _____________ Attorney, to transfer
the within Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: _______________,_______
__________________________
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 transferred by or on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person (as
such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ___ did ___ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person.
Dated: _______________,_______ ____________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To DESIGNS, INC.:
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of
the Company or of any other person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the
name of:
Please insert social security
or other identifying taxpayer number: ________________
_________________________________________________________________________
(Please print name and address)
__________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section
11(a)(ii) of the Rights Agreement, 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 taxpayer number: ________________
__________________________________________________________________________
(Please print name and address)
__________________________________________________________________________
__________________________________________________________________________
Dated: __________________,_______
_________________________
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, an Adverse Person or an Affiliate or Associate of any such Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ___ did ___ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person.
Dated: __________________,_______ ________________________
Signature
NOTICE
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.