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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
EMPIRE OF CAROLINA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-2999480
(State of incorporation or organization) (IRS Employer Identification No.)
5150 LINTON BOULEVARD, DELRAY BEACH, FLORIDA 3348
(Address of principal executive offices) (Zip Code)
</TABLE>
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box. / /
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. / /
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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<S> <C>
Preferred Share Purchase Rights American Stock Exchange
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
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ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On September 11, 1996, the Board of Directors of Empire of Carolina,
Inc., a Delaware corporation (the "Company"), declared a dividend of one
preferred share purchase right ("Right") on each outstanding share of the
Company's common stock, $.10 par value per share (the "Common Shares"), payable
to stockholders of record as of the close of business on September 11, 1996
(the "Record Date"). Except as described below, each Right, when exercisable,
entitles the holder thereof to purchase from the Company one one-hundredth of a
share of Series B Junior Participating Preferred Shares, par value $.01 per
share (the "Preferred Shares"), of the Company at an exercise price of $40 per
one one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer & Trust
Company, a New York corporation, as Rights Agent.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group has become an "Acquiring Person" (as
defined below) or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a person or group (other than certain
exempt persons) becoming an Acquiring Person (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced by Common Share
certificates.
An "Acquiring Person" is a person or group of affiliated or associated
persons who have acquired beneficial ownership of 15% or more of the
outstanding Common Shares, other than the Company, any subsidiary of the
Company, any employee benefit plan of the Company or its subsidiaries, or WPG
Corporate Development Associates IV, L.P., WPG Corporate Development Associates
IV (Overseas) L.P., Glenbrook Partners, L.P., Westpool Investment Trust plc,
Steven E. Geller, Marvin Smollar, the Autumn Glory Trust, The Iridium Trust and
certain persons affiliated or associated with or related to the foregoing
persons ("Exempt Persons"). Notwithstanding the foregoing, (i) no person shall
become an Acquiring Person as the result of an acquisition of Common Shares by
the Company which increases the proportionate number of shares beneficially
owned by such person and its affiliates and associates to 15% or more of the
Common Shares then outstanding (provided, however, that if such person becomes
the beneficial owner of 15% or more of the Common Shares then outstanding by
reason of share acquisitions by the Company and, after such share acquisitions,
(A) acquires beneficial ownership of an additional number of Common Shares
which exceeds the lesser of 10,000 Common Shares or 0.25% of the
then-outstanding Common Shares and (B) beneficially owns after such acquisition
15% or more of the aggregate number of Common Shares then outstanding, then
such person shall be deemed to be an Acquiring Person), (ii) no person who,
together with its affiliates and associates, was the beneficial owner of 15% or
more of the aggregate number of Common Shares of the Company outstanding as of
5:00 p.m., New York time, on September 11, 1996 shall be deemed an Acquiring
Person (provided, however, that if such person or any of its affiliates and
associates, after 5:00 p.m., New York time, on September 11, 1996, (A) acquires
beneficial ownership of an additional number of Common Shares which exceeds the
lesser of 10,000 Common Shares or 0.25% of the then-outstanding Common Shares
and (B) beneficially owns after such acquisition 15% or more of the aggregate
number of Common Shares of the Company then outstanding, then such person shall
be deemed to be an Acquiring Person), and (iii) if the Board of Directors of
the Company determines in good faith that a person who would otherwise be an
Acquiring Person has become such inadvertently, and such person divests as
promptly as practicable a sufficient number of Common Shares so that such
person would no longer be an Acquiring Person, then such person shall not be
deemed to be an Acquiring Person for any purposes of the Rights Agreement.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
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the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on September 11, 2001 (the "Final Expiration Date"), unless the Rights
are earlier redeemed or exchanged by the Company, as described below.
The Purchase Price payable, and the number of Preferred Shares 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
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness,
assets or capital stock (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above). With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. The Company will not be required to issue fractional Common Shares or
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
may be made based on the market price of the Common Shares or Preferred Shares
on the last trading day prior to the date of exercise.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share. Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to the greater of (1) a
preferential quarterly dividend payment of $1.00 per share, or (2) an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a
preferential liquidation payment of $100 per share, plus an amount equal to 100
times the aggregate amount to be distributed per share of common stock of 100
times the payment made per Common Share. Each Preferred Share will have 100
votes, voting together with the Common Shares except as otherwise required by
law. Finally, in the event of any merger, consolidation or other transaction in
which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
If any person or group becomes an Acquiring Person, then each holder of a
Right (other than Rights beneficially owned by the Acquiring Person, any
Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement), and certain transferees thereof, which will be void) will have the
right to receive upon exercise of such Right that number of Common Shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a market value of two times the exercise price of the Right.
If at any time after the time that any person or group becomes an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right (other than Rights
beneficially owned by the Acquiring Person, any Associate or Affiliate thereof,
and certain transferees thereof, which will be void) will thereafter have the
right to receive, upon the exercise thereof at the then-current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right.
At any time after the time that any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights beneficially owned by such person or
group, any Associate or Affiliate thereof, and certain transferees thereof,
which will be void), in whole or in part, at an exchange ratio of one Common
Share or one one-hundredth of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges) per Right (subject to adjustment).
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At any time prior to the time that any person becomes an Acquiring Person,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right, subject to adjustment (the "Redemption
Price"), which may (at the option of the Company) be paid in cash, Common Shares
or other consideration deemed appropriate by the Board of Directors. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish; PROVIDED, HOWEVER, that no redemption will be permitted or required
after the time that any person becomes an Acquiring Person. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of the Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person becomes an Acquiring Person no such amendment may
make the Rights redeemable if the Rights are not then redeemable in accordance
with the terms of the Rights Agreement or may adversely affect the interests of
the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights will have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors.
The Rights Agreement between the Company and the Rights Agent, which
includes as exhibits thereto the form of Certificate of Designation of the
Series B Junior Participating Preferred Stock, the form of Right certificate
(separate certificates for the Rights will not be issued until after the
Distribution Date) and the Summary of Stockholder Rights Agreement, are
attached hereto as exhibits and are incorporated herein by reference. The
foregoing description of the Rights is qualified by reference to such exhibits.
ITEM 2. EXHIBITS.
1. Rights Agreement, dated as of September 11, 1996, between Empire of
Carolina, Inc. and American Stock Transfer & Trust Company as Rights
Agent, which includes (i) as Exhibit A thereto the form of
Certificate of Designation of the Series B Junior Participating
Preferred Stock, (ii) as Exhibit B thereto the form of Right
certificate (separate certificates for the Rights will not be issued
until after the Distribution Date) and (iii) as Exhibit C thereto the
Summary of Stockholder Rights Agreement.
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: September 12, 1996
EMPIRE OF CAROLINA, INC.
By: /s/ STEVEN GELLER
Name: Steven Geller
Title: Chairman and Chief Executive
Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
1 Rights Agreement, dated as of September 11, 1996, between Empire of Carolina, Inc.
and American Stock Transfer & Trust Company as Rights Agent, which includes (i) as
Exhibit A thereto the form of Certificate of Designation of the Series B Junior
Participating Preferred Stock, (ii) as Exhibit B thereto the form of Right
certificate (separate certificates for the Rights will not be issued until after
the Distribution Date) and (iii) as Exhibit C thereto the Summary of Stockholder
Rights Agreement.
</TABLE>
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EXHIBIT 1
EMPIRE OF CAROLINA, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 11, 1996
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TABLE OF CONTENTS
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PAGE
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Section 1 Certain Definitions........................................................ 1
Section 2. Appointment of Rights Agent................................................ 8
Section 3. Issue of Right Certificates................................................ 8
Section 4. Form of Right Certificates................................................. 11
Section 5. Countersignature and Registration.......................................... 11
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; 12
Mutilated, Destroyed, Lost or Stolen Right Certificates....................
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............. 14
Section 8. Cancellation and Destruction of Right Certificates......................... 16
Section 9. Reservation and Availability of Shares..................................... 16
Section 10. Preferred Shares Record Date............................................... 18
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights......... 19
Section 12. Certificate of Adjusted Purchase Price or Number of Shares................. 31
Section 13. Consolidation, Merger, Sale or Transfer of Assets or Earning Power......... 31
Section 14. Fractional Rights and Fractional Shares.................................... 34
Section 15. Rights of Action........................................................... 36
Section 16. Agreement of Right Holders................................................. 37
Section 17. Right Certificate Holder Not Deemed a Stockholder.......................... 38
Section 18. Concerning the Rights Agent................................................ 38
Section 19. Merger or Consolidation or Change of Name of Rights Agent.................. 39
Section 20. Duties of Rights Agent..................................................... 40
Section 21. Change of Rights Agent..................................................... 43
Section 22. Issuance of New Right Certificates......................................... 44
Section 23. Redemption................................................................. 44
Section 24. Exchange................................................................... 45
Section 25. Notice of Certain Events................................................... 47
Section 26. Notices.................................................................... 49
Section 27. Supplements and Amendments................................................. 49
Section 28. Successors................................................................. 50
Section 29. Determinations and Actions by the Board of Directors....................... 50
Section 30. Benefits of this Agreement................................................. 51
Section 31. Severability............................................................... 51
Section 32. Governing Law.............................................................. 51
Section 33. Counterparts............................................................... 51
Section 34. Descriptive Headings....................................................... 52
Exhibit A Form of Certificate of Designation.........................................
Exhibit B Form of Right Certificate..................................................
Exhibit C Summary of Stockholder Rights Agreement....................................
</TABLE>
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RIGHTS AGREEMENT
Rights Agreement, dated as of September 11, 1996 (the "Agreement"), between
Empire of Carolina, Inc., a Delaware corporation (the "Company"), and American
Stock Transfer & Trust Company, a New York corporation (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Preferred Share Purchase Right (a "Right") for each Common Share
(as defined in Section 1 hereof) of the Company outstanding on the Record Date
(as defined in Section 1 hereof), each Right representing the right to purchase
one one-hundredth of a Preferred Share (as defined in Section 1 hereof) of the
Company, upon the terms and subject to the conditions set forth in this
Agreement, and has further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each Common Share
that shall become outstanding (i) between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are defined in Sections 3 and 7 hereof) or (ii) between the
Distribution Date and the earlier of the Redemption Date and the Final
Expiration Date as a result of the conversion into Common Shares of any
convertible securities of the Company or any of its Subsidiaries or as a result
of the exercise of any options, warrants or other rights to purchase Common
Shares of the Company, which convertible securities, options, warrants or other
rights were outstanding on the Distribution Date.
Accordingly, in consideration of the mutual agreements set forth in this
Agreement, 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" means any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the aggregate number of Common Shares of the
Company then outstanding, but shall in no event include any Exempt Person.
Notwithstanding the foregoing, (i) no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the Company
which, by reducing the number of the Company's Common Shares outstanding,
increases the proportionate number of shares beneficially owned by such
Person to 15% or more of the Common Shares then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial Owner of 15% or more
of the Common Shares of the Company then outstanding by reason of share
acquisitions by the Company and shall, after such share acquisitions by
the Company, (A) acquire, in one or more transactions, beneficial
ownership of an additional number of Common Shares which exceeds the
LESSER of 10,000 Common Shares or 0.25% of the then-outstanding Common
Shares and (B) beneficially own after such acquisition 15% or more of the
aggregate number of Common Shares of the Company then outstanding, then
such Person shall be deemed to be an "Acquiring Person," (ii) no Person
who or which, together with all Affiliates and Associates of such Person,
was the Beneficial Owner of 15% or more of the aggregate number of Common
Shares of the Company issued and outstanding as of 5:00 p.m., New York
time, on September 11, 1996 shall be deemed to be an "Acquiring Person"
for purposes of this Agreement; PROVIDED, HOWEVER, that if such Person or
any of its Affiliates and Associates, after 5:00 p.m., New York time, on
September 11, 1996, (A) acquires, in one or more transactions, beneficial
ownership of an additional number of Common Shares which exceeds the
lesser of 10,000 Common Shares or 0.25% of the then-outstanding Common
Shares and (B) beneficially owns after such acquisition 15% or more of the
aggregate number of Common Shares of the Company then outstanding, then
such Person shall be deemed to be an "Acquiring Person," and (iii) if the
Board of Directors determines in good faith that a Person who would
otherwise be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
of the SEC under the Exchange Act, as in effect on the date of this
Agreement, PROVIDED that, notwithstanding any provision of such Rule 12b-2
to the contrary,
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neither the Company nor any Subsidiary of the Company shall be deemed, and
none of their respective directors, officers and agents shall be deemed
solely by virtue of their relationship with the Company or a Subsidiary of
the Company, to be an "Affiliate" or an "Associate" of any stockholder of
the Company for purposes of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group members with
respect to a bona fide public offering of securities), whether or not in
writing, or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; PROVIDED, HOWEVER, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given
to such Person or any of such Person's Affiliates or Associates in
response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations of the SEC
promulgated under the Exchange Act and (2) is not then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group members with
respect to a bona fide public offering of securities), whether or not in
writing, for the purpose of acquiring, holding, voting (other than
pursuant to a revocable proxy or consent as described in the proviso to
Section 1(c)(ii)(B) hereof) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of "Beneficial Ownership" to
the contrary, the phrases "then outstanding" or "issued and outstanding," when
used with reference to a Person's Beneficial Ownership of securities of the
Company, means the number of such securities then issued and outstanding
together with the number of such securities not then issued and outstanding
which such Person would be deemed to beneficially own hereunder.
(d) "Board of Directors" means the Board of Directors of the Company.
(e) "Business Day" means any day other than a Saturday, a Sunday, or
a day on which banking institutions in the City of New York are authorized
or obligated by law or executive order to close.
(f) "Close of Business" on any given date means 5:00 p.m., New York
time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., New York time, on the next succeeding Business
Day.
(g) "Common Shares", when used with reference to the Company, means
the common stock, $.10 par value, of the Company or, when used with
reference to any Person other than the Company, means the capital stock (or
other equity interest) with the greatest voting power of such other Person
or, if such Person is a Subsidiary of another Person, of the Person or
Persons which ultimately controls or control such first-mentioned Person.
(h) "Company" means Empire of Carolina, Inc., a Delaware corporation.
(i) "Distribution Date" is defined in Section 3.
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(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Exempt Person" means (i) the Company; (ii) any Subsidiary of the
Company; (iii) any employee benefit plan of the Company or any Subsidiary
of the Company, or any entity holding Common Shares of the Company for or
pursuant to the terms of any such plan or related trust; (iv) Steven E.
Geller ("Geller"), Marvin Smollar ("Smollar"), the Autumn Glory Trust, a
Cook Islands trust and the Iridium Trust, a Bahamian trust (collectively,
the "Trusts") (the discretionary beneficiaries of which Trusts are
currently Champ Enterprises Limited partnership, an Illinois limited
partnership ("Champ") of which Smollar is a general partner, as well as
the limited partners of Champ individually, including Smollar and members
of his family), WPG Corporate Development Associates IV, L.P., a Delaware
limited partnership, WPG Corporate Development Associates IV (Overseas),
L.P., a Cayman Islands limited partnership, Westpool Investment Trust plc,
Glenbrook Partners, L.P. and any Affiliate of any of the foregoing
Persons; (v) Geller and any descendant of Geller, or any spouse, widow or
widower of Geller or of any such descendant (Geller and any such
descendants, spouses, widows and widowers collectively defined as the
"Geller Family Members"); (vi) Smollar and any descendant of Smollar, or
any spouse, widow or widower of Smollar or of any such descendant (Smollar
and any such descendants, spouses, widows and widowers collectively
defined as the "Smollar Family Members" and with the Geller Family
Members, collectively defined as the "Family Members"); (vii) any trust of
which Geller or Smollar is a trustee; (viii) any estate of a Family
Member, or any trust established by or for the benefit directly or
indirectly of one or more Family Members provided that one or more Family
Members or charitable organizations which qualify as exempt organizations
under Section 501(c) of the Internal Revenue Code of 1986, as amended
("Charitable Organizations") collectively are the beneficiaries of at
least 50% of the actuarially-determined beneficial interest in such estate
or trust; (ix) any Charitable Organization which is established by one or
more Family Members (a "Family Charitable Organization"); (x) any
corporation of which a majority of the voting power or a majority of the
equity interest is held, directly or indirectly, by or for the benefit of
one or more Family Members, estates or trusts described in clause (viii)
above, or Family Charitable Organizations; (xi) any partnership, limited
liability company or other entity or arrangement of which a majority of
the voting interest or a majority of the economic interest is held,
directly or indirectly, by or for the benefit of one or more Family
Members, estates or trusts described in clause (viii) above, or Family
Charitable Organizations; and (xii) any trustee, excutor, direct or
indirect managing or general partner or other Person who has or shares
voting and/or investment power over Common Shares beneficially owned by
any of the foregoing Persons solely in their capacities as such.
(l) "Final Expiration Date" is defined in Section 7.
(m) "Person" means any individual, firm, corporation, limited
liability company, partnership or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(n) "Preferred Shares" means the Series B Junior Participating
Preferred Stock, par value $.01, of the Company having the rights,
preferences and limitations thereof set forth in the Form of Certificate of
Designation attached to this Agreement as Exhibit A.
(o) "Purchase Price" is defined in Section 4.
(p) "Record Date" means the Close of Business on September 11, 1996.
(q) "Redemption Date" is defined in Section 7.
(r) "Redemption Price" is defined in Section 23.
(s) "Right Certificate" is defined in Section 3(a).
(t) "Rights Agent" means American Stock Transfer & Trust Company, a
New York corporation.
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(u) "SEC" means the Securities and Exchange Commission.
(v) "Securities Act" means the Securities Act of 1933, as amended.
(w) "Shares Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a filing with the SEC pursuant to Section 13(d) or
13(g) under the Exchange Act) by the Company or an Acquiring Person (or any
Affiliate or Associate of such Acquiring Person) that an Acquiring Person
has become such.
(x) "Subsidiary" of any Person means any corporation or other entity
of which a majority of either the voting power of the voting equity
securities or the equity interest is owned, directly or indirectly, by such
Person.
(y) "Summary of Rights" is defined in Section 3(b).
(z) The term "Trading Day" means a day on which the principal
national securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if the
Common Shares are not listed or admitted to trading on any national
securities exchange, a day on which the Common Shares are quoted on the
Nasdaq Stock Market ("Nasdaq") or such other system then in use or, if the
Common Shares are not quoted by any such system, a Business Day.
(y) "Triggering Event" means any event described in Section 11(a)(ii)
or Section 13(a) of this Agreement.
Any determination or interpretation required in connection with any of the
definitions contained in this Section 1 shall be made by the Board of Directors
in its good faith judgment, which determination shall be final and binding.
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 also
be the holders of the Common Shares of the Company) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Shares Acquisition Date or (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by action of
the Board of Directors taken before any Person becomes an Acquiring Person)
after the date of the commencement of, or the first public announcement of
the intent to commence, a tender or exchange offer by any Person (other
than any Exempt Person), the consummation of which would result in any
Person becoming an Acquiring Person (including with respect to both clauses
(i) and (ii) any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the Close of Business on the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y) the
Rights will be transferable only in connection with and will be transferred
by the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested by the Company, send) by first-class,
postage prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially
the form of Exhibit B hereto (a "Right Certificate"), evidencing one Right
for each Common Share so held, subject to adjustment as provided in this
Agreement. As of and after the Close of Business on the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Stockholder Rights Agreement, in
substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Record
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Date, until the Distribution Date, the Rights will be evidenced by such
certificates for Common Shares registered in the names of the holders
thereof together with a copy of the Summary of Rights. Until the Close of
Business on the Distribution Date (or, if earlier than the Distribution
Date, the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Certificates issued for Common Shares (including, without
limitation, certificates issued in respect of reacquired Common Shares
referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Empire of Carolina, Inc.,
a Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company, a New York corporation (the "Rights Agent"), dated as of September
11, 1996 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS HELD BY A
PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON
OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Final Expiration Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. If the Company purchases or
otherwise acquires any Common Shares after the Record Date but before the
Distribution Date, any Rights associated with such Common Shares shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as 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 or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the number and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President, any of its Vice Presidents or
its Treasurer, either manually or by facsimile signature, and have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by
the Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. If any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who
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<PAGE> 8
signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company
by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this 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 an office or agency designated for such purpose, 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 11(a)(iii) and Section 14 of
this Agreement, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier of the
Redemption Date or the Final Expiration Date, any Right Certificate or
Certificates (other than Right Certificates representing Rights that have
been exchanged pursuant to Section 24 of this Agreement) may be
transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a Preferred Share (or, following the
occurrence of a Triggering Event, Common Shares, and/or other securities,
cash or other property, as the case may be) as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at
the office or agency of the Rights Agent designated for such purpose.
Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request. Thereupon
the Rights Agent shall countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as
so requested. The Company may require payment of a sum sufficient to cover
any 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 reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to the provisions of Section 11(a)(iii) of this
Agreement, 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 agency of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of a Preferred
Share (or, following the occurrence of a Triggering Event, Common Shares
and/or other securities, cash or other property, as the case may be) as to
which the Rights are exercised, at or prior to the earlier of the Close of
Business on (i) September 11, 2001 (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed
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as provided in Section 23 of this Agreement (the "Redemption Date"), or
(iii) the time at which such Rights are exchanged as provided in Section 24
of this Agreement.
(b) The Purchase Price for each one one-hundredth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be
$40.00, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) of this Section
7.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares (or, following the occurrence
of a Triggering Event, Common Shares and/or other securities, cash or other
property, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check,
cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is
the transfer agent) certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, (ii) if the Company shall have elected to
deposit the Preferred Shares issuable upon exercise of the Rights with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are
to be purchased in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with
the depositary agent and the Company hereby directs the depositary agent to
comply with such request, (iii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iv) 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
(v) when appropriate, after receipt, promptly deliver such cash to or upon
the order of the registered holder of such Right Certificate. If the
Company elects or is obligated to issue other securities (including Common
Shares) of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) of this Agreement, the Company will make all arrangements
necessary so that such other securities, cash and/or property are available
for distribution by the Rights Agent, if and when appropriate.
(d) If the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Sections 11(a)(iii) and 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7 until the
registered holder shall have completed and signed the certificate contained
in the form of election to purchase on the reverse side of the Rights
Certificate surrendered for such exercise and the Company shall have been
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 to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES. The Company will cause
to be reserved and kept available for the exercise of Rights, out of its
authorized but unissued Preferred Shares (and, following the
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occurrence of a Triggering Event, Common Shares and/or other securities) or any
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) held in its treasury, such number of Preferred
Shares (and, following the occurrence of a Triggering Event, Common Shares
and/or other securities) as will be sufficient to permit the exercise in full of
all outstanding Rights.
So long as any securities purchasable upon the exercise of Rights are
listed on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange or approved for
listing on such exchange upon official notice of issuance.
The Company shall use its best efforts to (i) file, as soon as is required
by law following the Distribution Date, a registration statement on an
appropriate form under the Securities Act with respect to the securities
purchasable upon exercise of the Rights, (ii) cause such registration statement
to become effective as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable or (B) the Final
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercise of the Rights. The Company may
temporarily suspend, for a period of time not to exceed one hundred twenty (120)
days after the Distribution Date, the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite registration
or qualification in such jurisdiction shall have been obtained.
The Company will take all such action as may be necessary to ensure that
all Preferred Shares (or Common Shares and/or other securities, as the case may
be) delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (or Common Shares and/or other
securities, as the case may be), subject to payment of the Purchase Price, be
duly and validly authorized and issued and fully paid and non-assessable.
The Company 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 Preferred Shares (or Common Shares
and/or other securities, as the case may be) 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 the issuance or delivery of certificates or depositary receipts
for the Preferred Shares (or Common Shares and/or other securities, as the case
may be) in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or deliver
any certificates or depositary receipts for Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each Person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares or securities on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred Shares
(or Common Shares and/or other securities, as the case may be) 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
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rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of Preferred Shares purchasable upon the
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, or in securities convertible into, or exercisable for,
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a),
then the Purchase Price in effect immediately prior to 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 then issuable upon the exercise of a Right 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 (or securities convertible into, or exercisable
for, capital stock) which, if such Right had been exercised immediately
prior to such time and at a time when the Preferred Shares transfer books
of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs that would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) of
this Agreement, the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made before, any adjustment required
pursuant to Section 11(a)(ii) of this Agreement.
(ii) Subject to Section 24 of this Agreement, if any Person or
group of Persons shall become an Acquiring Person, then each holder of a
Right (except as provided below) shall thereafter have a right to
receive, upon exercise thereof and in lieu of Preferred Shares, at a
price equal to the then-current Purchase Price multiplied by the number
of one one-hundredths of a Preferred Share for which a Right is then
exercisable in accordance with the terms of this Agreement, such number
of Common Shares of the Company as shall equal the result obtained by
(x) multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then-current per
share market price of the Company's Common Shares (determined pursuant
to Section 11(d) of this Agreement) on the date of the occurrence of
such event. In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company shall not
take any action which would eliminate or diminish the benefits intended
to be afforded by the Rights.
(iii) Notwithstanding any other provisions of this Agreement to
the contrary, from and after the occurrence of a Triggering Event, any
Rights that are beneficially owned by (A) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (B) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (C) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who
became a transferee prior to or concurrently with the Acquiring Person
becoming such and received such Rights pursuant to either (x) a transfer
(whether or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (y) a transfer which
the Board of Directors has reasonably determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 11(a)(iii), shall become null and void
without any further action and no holder of such Rights shall thereafter
have any right to exercise such Rights under any provision of this
Agreement. No Right Certificate shall be issued at any time upon the
transfer of any Rights to any Person whose Rights would be void pursuant
to the preceding sentence or any Associate or Affiliate thereof or to
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any nominee of such Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to any Person
whose Rights would be void pursuant to the preceding sentence shall be
cancelled.
The Company may require (or cause the Rights Agent to require) any Person
who purports to exercise any Rights to establish to the reasonable satisfaction
of the Company that he, she or it is not a Person whose Rights would be void
pursuant to the first sentence of the preceding paragraph of this Section
11(a)(iii).
The Company shall use all reasonable efforts to insure that the provisions
of this Section 11(a)(iii) are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(iv) In lieu of issuing Common Shares of the Company in accordance
with Section 11(a)(ii) hereof, the Company may, in the sole discretion
of the Board of Directors, elect to (and, in the event that the Board of
Directors has not exercised the exchange right contained in Section 24
hereof and there are not sufficient issued but not outstanding and
authorized but unissued Common Shares to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph (ii), the
Company shall) take all such action as may be necessary to authorize,
issue or pay, upon the exercise of the Rights, cash (including by way of
a reduction of the Purchase Price), property, other securities or any
combination thereof having an aggregate value equal to the value of the
Common Shares of the Company which otherwise would have been issuable
pursuant to Section 11(a)(ii), which aggregate value shall be determined
by a majority of the Board of Directors. For purposes of the preceding
sentence, the value of the Common Shares shall be determined pursuant to
Section 11(d) hereof and the value of any equity securities which a
majority of the Board of Directors determines to be a "common stock
equivalent" (including the Preferred Shares, in such ratio as the Board
of Directors shall determine) shall be deemed to have the same value as
the Common Shares. Any such election by the Board of Directors must be
made and publicly announced within 60 days following the date on which
the event described in Section 11(a)(ii) shall have occurred. Following
the occurrence of the event described in Section 11(a)(ii), a majority
of the Board of Directors then in office may suspend the exercisability
of the Rights for a period of up to 60 days following the date on which
the event described in Section 11(a)(ii) shall have occurred to the
extent that such directors have not determined whether to exercise the
Company's right of election under this Section 11(a)(iv). In the event
of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preference shares")) or securities convertible into Preferred Shares or
equivalent preference shares (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preference shares)
less than the then-current per share market price of the Preferred Shares
(determined pursuant to Section 11(d) of this Agreement) on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number
of Preferred Shares and equivalent preference shares outstanding on such
record date plus the number of Preferred Shares and equivalent preference
shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preference shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares and equivalent preference
shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preference shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); PROVIDED, HOWEVER, that in no event
shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If 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
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consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with
the Rights Agent. Preferred Shares and equivalent preference shares owned
by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and if such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, assets or shares of capital stock (other than a regular cash
dividend or a dividend payable in Preferred Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b) of this
Agreement), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the
then-current per share market price of the Preferred Shares (as defined in
Section 11(d) of this Agreement) on such record date, less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent) of the portion of the evidences of indebtedness, assets or shares of
capital stock so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share and the denominator of which
shall be such current per share market price (as defined in Section 11(d)
of this Agreement) of the Preferred Shares; PROVIDED, HOWEVER, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and if such distribution
is not so made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, other than
under Section 11(a)(iv) hereof, the "current per share market price" of any
security (a "Security" for the purpose of this Section 11(d)) on any date
shall be deemed to be the average of the daily closing prices per share
equivalent of such Security for the 30 consecutive Trading Days immediately
prior to such date, and for purposes of Section 11(a)(iv) hereof, the
"current per share market price" of a Security on any date shall be deemed
to be the average of the daily closing prices per share equivalent of such
Security for the 30 consecutive Trading Days immediately following such
date; PROVIDED, HOWEVER, that if the current per share equivalent market
price of the Security is determined with respect to a date, which date
follows the announcement by the issuer of such Security of (A) a dividend
or distribution on such Security payable in such Security or securities
convertible into such Security (other than the Rights) or (B) any
subdivision, combination or reclassification of such Security, and which
date precedes the expiration of 30 Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current
per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing
price for each day shall be the last sale price, regular way, or, if 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 a Security listed
or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by Nasdaq or
such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors. If on any such date no market
maker is making a market in the Security, the fair value of such Security
on such date as determined in good faith by the Board of Directors shall be
used. If the Security is not publicly held or not so listed or traded,
"current per share market price" shall mean the fair value per share
equivalent as
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<PAGE> 14
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the
date hereof), multiplied by one hundred. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent.
(e) Notwithstanding any provision of this Agreement to the contrary,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of any other share
or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) of this Agreement, the holder of any Right thereafter
exercised shall become entitled to receive any Common Shares or other
securities of the Company other than Preferred Shares, thereafter the
number of such other shares or securities so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect
to the Preferred Shares contained in this Section 11 and the provisions of
Sections 7, 9, 10, 13 and 14 of this Agreement with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths
of a Preferred Share purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the
number of one one-hundredths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price as a result of the calculations made in Section 11(b)
and (c) to adjust the number of Rights, in substitution for any adjustment
pursuant to Section 11(h), in the number of one one-hundredths of a
Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make
a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to
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<PAGE> 15
be made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least 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 of this Agreement, 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 Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Preferred
Shares or other shares of capital 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 non-assessable Preferred Shares or other
such shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the
Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; PROVIDED, HOWEVER, that the Company shall
deliver to such holder a due 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) After the earlier of the time that any Person becomes an
Acquiring Person and the Distribution Date, the Company will not, except as
permitted by Sections 23, 24 and 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 diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(n) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares
or issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(o) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay
any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common
Shares) into a greater or lesser number of Common Shares, then in any such
case (A) the number of one one-hundredths of a Preferred Share purchasable
after such event upon proper exercise of each Right shall be determined by
multiplying the
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<PAGE> 16
number of one one-hundredths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is
the number of Common Shares outstanding immediately before such event and
the denominator of which is the number of Common Shares outstanding
immediately after such event, and (B) each Common Share outstanding
immediately after such event shall have issued with respect to it that
number of Rights which each Common Share outstanding immediately prior to
such event had issued with respect to it. The adjustments provided for in
this Section 11(o) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 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
Common Shares or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof.
Section 13. CONSOLIDATION, MERGER, SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) If, directly or indirectly, at any time after the time that any
Person becomes an Acquiring Person, (i) the Company shall consolidate with,
or merge with and into, any other Person, (ii) any Person 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 Common Shares of the
Company shall be changed into or exchanged for stock or other securities of
any other Person (or of the Company) or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
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 Person or Persons (other than the Company or one or more of its
wholly-owned Subsidiaries), then, and in each such case, proper provision
shall be made so that (A) each holder of a Right (except any Person whose
Rights shall have become void pursuant to Section 11(a)(iii) of this
Agreement) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then-current Purchase Price multiplied by
the number of one one-hundredths of a Preferred Share for which a Right is
then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of validly authorized and issued,
fully paid, non-assessable and freely tradeable Common Shares of the
Principal Party (as hereinafter defined), free and clear of all liens,
rights of call or first refusal, encumbrances or other adverse claims, as
shall be equal to the result obtained by (x) multiplying the then-current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the time that any Person
became an Acquiring Person and dividing that product by (y) 50% of the
current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; (B) the issuer of such
Common Shares shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (C) the term "Company"
shall thereafter be deemed to refer to such issuer; and (D) such issuer
shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with Section 9 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 the Common Shares thereafter deliverable upon the
exercise of the Rights. The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other transfers.
(b) The Company shall not enter into any transaction of the kind
listed in Sec-tion 13(a) if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such transaction,
would substantially diminish or eliminate the benefits intended to be
afforded by the Rights.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section
13
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<PAGE> 17
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, such issuer will:
(i) prepare and file a registration statement on an appropriate
form under the Securities Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights, and will use its
best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;
(ii) deliver to holders of the Rights historical financial
statements for such issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act; and
(iii) take such actions as may be necessary or appropriate under
the blue sky laws of the various states.
(d) "Principal Party" means:
(i) in the case of any transaction described in clauses (i) or
(ii) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the surviving entity of such merger or
consolidation (including the Company if applicable); and
(ii) in the case of any transaction described in clause (iii) 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 described in clauses (d)(i) or
(d)(ii) of this Section 13: (x) if the Common Shares of such Person are not at
such time and have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Shares of which are and have
been so registered, "Principal Party" shall refer to such other Person; (y) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of Common Shares having the greatest aggregate market value; 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 Person
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.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there may be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, if no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by Nasdaq or such
other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and
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<PAGE> 18
asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors. If on any such date no such
market maker is making a market in the Rights the fair value of the Rights
on such date as determined in good faith by the Board of Directors shall be
used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other
than fractions which are integral multiples of one one-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral multiples of
one one-hundredth of a Preferred Share may, at the election of the Company,
be evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it; PROVIDED, that such
agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled
as beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the Company may pay to
the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one Preferred Share. For purposes of this
Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to Section 11(d)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common
Shares. In lieu of fractional Common Shares, the Company may pay the
registered holders of Right Certificates at the time such Rights are
exercised as provided herein an amount in cash equal to the same fraction
of the current market value of one Common Share. For purposes of this
Section 14(c), the current market value of one Common Share shall be the
closing price of one Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior
to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, and may otherwise act in respect of, his right
to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 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, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or agency of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of
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<PAGE> 19
ownership or writing on the Right Certificates or the associated Common
Shares certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; PROVIDED, HOWEVER,
the Company must use its best efforts to have any such injunction, order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 of this Agreement), 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. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
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 the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer powers 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. If 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 if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent 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.
If 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
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<PAGE> 20
under its prior name and deliver Right Certificates so countersigned; and if 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 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 (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 be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman
of the Board, the President, a Vice-President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization 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 to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature 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 changes in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 11(a)(iii) of this Agreement) or any adjustments in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24 of this Agreement or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required); nor shall
it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Preferred Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and issued, fully
paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, a Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and 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 or for any delay in
acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement.
18
<PAGE> 21
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, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of 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 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the registered holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares or Preferred Shares
by registered or certified mail, and to the registered holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of the States of Delaware or Florida (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 States of Delaware or Florida), in good standing,
having an office in the States of Delaware or Florida, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million 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 Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 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 the Board of Directors to reflect any adjustment or change
in the Purchase Price per share and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. REDEMPTION.
(a) The Board of Directors may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as
19
<PAGE> 22
the "Redemption Price"). The Company may, at its option, pay the Redemption
Price in cash, Common Shares (based on the current per share market price
of the Common Shares at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors. The redemption
of the Rights by the Board of Directors may be made effective at such time,
on such basis and with such conditions as the Board of Directors in its
sole discretion may establish.
(b) Subject to the last sentence of Section 23(a) of this Agreement,
immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to Sec-tion 23(a) (or at such later time
as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price. The
Company shall promptly give public notice of any such redemption; PROVIDED,
HOWEVER, that the failure to give, or any defect in, any such notice shall
not affect the validity of such redemption. Within 10 days after the action
of the Board of Directors ordering the redemption of the Rights or the
effectiveness of the redemption of the Rights pursuant to Section 23(a), as
the case may be, the Company shall mail a notice of such redemption to all
the holders of the then outstanding Rights 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 Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Except in connection with the purchase of
Common Shares prior to the Distribution Date, 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 in Section 24 of this Agreement.
Section 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time after the
occurrence of a Triggering 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 11(a)(iii) of this
Agreement) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this Agreement (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 an
Exempt Person) together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to Section 24(a) and without any
further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(iii) of this
Agreement) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preference shares,
as such term is defined in Section 11(b) hereof) for Common Shares
exchangeable for Rights, at the initial rate of one one-hundredth of a
Preferred Share (or equivalent preference share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of
20
<PAGE> 23
a Preferred Share delivered in lieu of each Common Share shall have the
same voting rights as one Common Share.
(d) If there shall not be sufficient Common Shares or Preferred
Shares 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 Common Shares or Preferred Shares for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares upon any exchange of Rights. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) of this Agreement) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) If the Company shall propose (i) to declare any dividend payable
in stock of any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other than a
regular cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person, (v)
to effect the liquidation, dissolution or winding up of the Company, or
(vi) to declare or pay any dividend on the Common Shares payable in Common
Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares), then, in each such case, the Company shall
give to each holder of a Right Certificate, in accordance with Section 26
of this Agreement, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding
up is to take place and the date of participation therein by the holders of
the Common Shares and/or Preferred Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 20 days prior to the record date for
determining holders of the Preferred Shares for purposes of such action,
and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred Shares,
whichever shall be the earlier.
(b) If any of the events set forth in Section 11(a)(ii) or Section
13(a) of this Agreement shall occur, then, in any such case, the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 of this Agreement, 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) or
Section 13(a) of this Agreement.
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:
Empire of Carolina, Inc.
5150 Linton Boulevard
Delray Beach, Florida 33484
Attention: Corporate Secretary
21
<PAGE> 24
Subject to the provisions of Section 21 of this Agreement, 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:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Executive Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS.
(a) The Company may from time to time supplement or amend this
Agreement without the approval of the Rights Agent or any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with respect to
the Rights which the Company may deem necessary or desirable; provided,
however, (i) that no such amendment or supplement shall be effected without
the written consent of the Rights Agent if it would adversely affect any
right or create any additional obligation of the Rights Agent under this
Agreement and (ii) that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended (A) so as to make the
Rights redeemable if the Rights are not then redeemable in accordance with
Section 23(a) of this Agreement or (b) in any manner which would adversely
affect the interests of the holders of Rights (other than holders of Rights
which have become void pursuant to Section 11(a)(iii) of this Agreement).
(b) To effect any amendment or supplement pursuant to this Section
27, the Company shall deliver to the Rights Agent a copy, certified by the
Secretary or any Assistant Secretary of the Company, of resolutions of the
Board of Directors adopting such amendment or supplement. Upon such
delivery, the amendment or supplement shall be deemed effective and shall
be administered by the Rights Agent as part of this Agreement in accordance
with its terms.
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. The
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (a) interpret the provisions of this Agreement, and (b) 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 purpose of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Right Certificates and all other interested
parties, and (y) not subject the Board of Directors to any liability to the
holders of the Right Certificates.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) (and, after the Distribution Date, also the holders of
(i) securities of the Company or any of its Subsidiaries convertible into Common
Shares and (ii) any options, warrants or other rights to purchase Common Shares,
which convertible securities, options, warrants or other rights were outstanding
on the Distribution Date) 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
22
<PAGE> 25
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) (and, after the Distribution Date, also
any holder of any such convertible securities, options, warrants or other
rights).
Section 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
23
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
<TABLE>
<S> <C>
EMPIRE OF CAROLINA, INC.
Attest:
By By
Name: Name:
Title: Title:
AMERICAN STOCK TRANSFER & TRUST COMPANY
Attest:
By By
Name: Name:
Title: Title:
</TABLE>
24
<PAGE> 27
EXHIBIT A
FORM
OF
CERTIFICATE OF DESIGNATION
OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
EMPIRE OF CAROLINA, INC.
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
---------------------------
Empire of Carolina, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was adopted by the
Board of Directors of the Company as required by Section 151 of the General
Corporation Law at a meeting duly called and held on September 11, 1996:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of the Company (hereinafter called the "Board of Directors" or the
"Board") in accordance with the provisions of the Restated Certificate of
Incorporation, as amended to date (hereinafter called the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Company and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be 2,000,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series B Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company or Preferred Stock (or any similar stock) ranking prior and
superior to the Series B Preferred Stock with respect to dividends, the
holders of shares of Series B Preferred Stock, in preference to the holders
of Common Stock, par value $.10 per share (the "Common Stock"), of the
Company, 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 B Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share
A-1
<PAGE> 28
amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock 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 B Preferred Stock. In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or 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
to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
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 per share on the Series B Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, 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 B 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 B
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 a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series B Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the
Company. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or 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 number of votes per
share to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or Preferred Stock or any
similar stock, or by law, the holders of shares of Series B Preferred Stock
and the holders of shares of Common Stock and any other capital stock of
the Company
A-2
<PAGE> 29
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B 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 quarterly dividends or other dividends or distributions
payable on the Series B 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 B Preferred
Stock outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock;
(ii) declare or pay dividends, 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 B Preferred
Stock, except dividends paid ratably on the Series B 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) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock,
provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any
stock of the Company ranking junior (as to dividends and upon
dissolution, liquidation and winding up) to the Series B Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series B 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 Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
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 subject to
the conditions and restrictions on issuance set forth herein, in the Certificate
of Incorporation, or in any other Certificate of Designation creating a series
of Preferred Stock or Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (A) to
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock unless,
prior thereto, the holders of shares of Series B Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series B Preferred Stock shall be
entitled to receive an aggregate
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<PAGE> 30
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (B) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Stock, except distributions made ratably on the
Series B Preferred Stock and all 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 Company shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or 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 to which
holders of shares of Series B Preferred Stock were entitled immediately prior to
such event under the proviso in clause (A) 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.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series B Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or 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 B 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. NO REDEMPTION. The shares of Series B Preferred Stock shall
not be redeemable.
Section 9. RANK. The Series B Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of Preferred Stock or Preferred Stock.
Section 10. AMENDMENT. If any proposed amendment to the Certificate of
Incorporation would alter or change the preferences, special rights or powers
given to the Series B Preferred Stock so as to affect the Series B Preferred
Stock adversely, or would authorize the issuance of a class or classes of stock
having preferences or rights with respect to dividends or dissolutions or the
distribution of assets that would be superior to the preferences or rights of
the Series B Preferred Stock, then the holders of the Series B Preferred Stock
shall be entitled to vote as a series upon such amendment, and the affirmative
vote of two-thirds of the outstanding shares of Series B Preferred Stock shall
be necessary to the adoption thereof, in addition to such other vote as may be
required by the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Company by its Chairman of the Board of Directors and attested by its
Secretary this 11th day of September, 1996.
--------------------------------------
Chairman of the Board of Directors
Attest:
- ---------------------------------------------------------
Secretary
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<PAGE> 31
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- ___________________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 11, 2001 OR EARLIER IF REDEEMED OR
EXCHANGED IN ACCORDANCE WITH THE RIGHTS AGREEMENT. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS HELD
BY A PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND CERTAIN TRANSFEREES THEREOF, WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL
AND VOID.
Right Certificate
EMPIRE OF CAROLINA, INC.
This certifies that ____________________________ , or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of September 11, 1996 (the "Rights Agreement")
between Empire of Carolina, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York corporation (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement), and prior to 5:00 p.m., New
York time, on September 11, 2001 at the office or agency of the Rights Agent
designated for such purpose, or of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series B Junior
Participating Preferred Stock, par value $.01 per share (a "Preferred Share"),
of the Company, at a purchase price of $40 per one one-hundredth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-hundredths
of a Preferred Share which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of September 11, 1996, based on the Preferred Shares as
constituted at such date, and are subject to adjustment as provided in the
Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share 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, as the same may be amended from time to
time, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the above-mentioned
office or agency of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be
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<PAGE> 32
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.01 per Right, (ii) entitle the holder to purchase the
number of Common Shares and/or, under certain circumstances, the number of
Preferred Shares, cash, other property or other securities with a value of twice
the exercise price, or (iii) may be exchanged, in whole or in part, by the
Company at its option for the number of Preferred Shares, Common Shares or other
securities with a market value equal to 50% of fair market value.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
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<PAGE> 33
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ________, ____.
<TABLE>
<CAPTION>
<S> <C>
ATTEST: EMPIRE OF CAROLINA, INC.
By
- --------------------------------------------- ---------------------------------------------
Secretary Title:
</TABLE>
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By ________________________
Authorized Signature
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<PAGE> 34
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO
EXERCISE RIGHTS REPRESENTED BY THE RIGHT CERTIFICATE.)
To EMPIRE OF CAROLINA, INC.:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights (or such other securities of the Company or of
any other Person which may be issuable upon exercise of the Rights) and requests
that certificates for such securities be issued in the name of:
Please insert Social Security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert Social Security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: ____________ , ____
---------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Act of 1934.)
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<PAGE> 35
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, was or became an Acquiring
Person or an Affiliate or Associate thereof (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 acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate thereof.
---------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Act of 1934.)
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<PAGE> 36
[Form of Reverse Side of Right Certificate--continued]
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.
<TABLE>
<S> <C>
Dated: ________________,____
Signature
</TABLE>
Signature Guaranteed:
(Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office in the United
States of America.)
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is/ [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is, was or became an Acquiring
Person or an Affiliate or Associate thereof (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 purchase or otherwise acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate thereof.
<TABLE>
<S> <C>
Signature
</TABLE>
Signature Guaranteed:
(Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Act of 1934.)
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<PAGE> 37
NOTICE
Each signature to the foregoing Form of Assignment, the Form of Election to
Purchase, and the related Certificates, as the case may be, 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.
If the Certificate set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed and signed, the
Company and the Rights Agent will deem the Rights evidenced by this Right
Certificate to be void as provided in Section 11(a)(iii) of the Rights Agreement
and such Form of Assignment or Form of Election to Purchase will not be honored.
B-7
<PAGE> 38
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
HELD BY A PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR ANY
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF, WHETHER CURRENTLY
HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL
BECOME NULL AND VOID.
EMPIRE OF CAROLINA, INC.
SUMMARY OF STOCKHOLDER RIGHTS AGREEMENT
BACKGROUND. On September 11, 1996, the Board of Directors of Empire of
Carolina, Inc., a Delaware corporation (the "Company"), declared a dividend of
one preferred share purchase right ("Right") on each outstanding share of the
Company's common stock, $.10 par value per share (the "Common Shares"), payable
to stockholders of record at the close of business on September 11, 1996 (the
"Record Date"). Except as described below, each Right, when exercisable,
entitles the holder thereof to purchase from the Company one one-hundredth of a
share of Series B Junior Participating Preferred Shares, par value $.01 per
share (the "Preferred Shares"), of the Company at an exercise price of $40 per
one one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer & Trust
Company, a New York corporation, as Rights Agent.
DISTRIBUTION DATE. Until the earlier to occur of (i) 10 days following
a public announcement that a person or group has become an "Acquiring Person"
(as defined below) or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a person or group (other than certain
exempt persons) becoming an Acquiring Person (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced by Common Share
certificates.
ACQUIRING PERSON. An "Acquiring Person" is a person or group of
affiliated or associated persons who have acquired beneficial ownership of 15%
or more of the outstanding Common Shares, other than the Company, any
subsidiary of the Company, any employee benefit plan of the Company or its
subsidiaries, or WPG Corporate Development Associates IV, L.P., WPG Corporate
Development Associates IV (Overseas) L.P., Glenbrook Partners, L.P., Westpool
Investment Trust plc, Steven E. Geller, Marvin Smollar, the Autumn Glory Trust,
The Iridium Trust and certain persons affiliated or associated with or related
to the foregoing persons ("Exempt Persons"). Notwithstanding the foregoing, (i)
no person shall become an Acquiring Person as the result of an acquisition of
Common Shares by the Company which increases the proportionate number of shares
beneficially owned by such person and its affiliates and associates to 15% or
more of the Common Shares then outstanding (PROVIDED, HOWEVER, that if such
person becomes the beneficial owner of 15% or more of the Common Shares then
outstanding by reason of share acquisitions by the Company and, after such
share acquisitions, (A) acquires beneficial ownership of an additional number
of Common Shares which exceeds the LESSER of 10,000 Common Shares or 0.25% of
the then-outstanding Common Shares and (B) beneficially owns after such
acquisition 15% or more of the aggregate number of Common Shares then
outstanding, then such person shall be deemed to be an Acquiring Person), (ii)
no person who, together with its affiliates and associates, was the beneficial
owner of 15% or more of the aggregate number of Common Shares of the Company
outstanding as of 5:00 p.m., New York time, on September 11, 1996 shall be
deemed an Acquiring Person (PROVIDED, HOWEVER, that if such person or any of
its affiliates and associates, after 5:00 p.m., New York time, on September 11,
1996, (A) acquires beneficial ownership of an additional number of Common
Shares which exceeds the LESSER of 10,000 Common Shares or 0.25% of the then-
outstanding
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<PAGE> 39
Common Shares and (B) beneficially owns after such acquisition 15% or more of
the aggregate number of Common Shares of the Company then outstanding, then such
person shall be deemed to be an Acquiring Person), and (iii) if the Board of
Directors of the Company determines in good faith that a person who would
otherwise be an Acquiring Person has become such inadvertently, and such person
divests as promptly as practicable a sufficient number of Common Shares so that
such person would no longer be an Acquiring Person, then such person shall not
be deemed to be an Acquiring Person for any purposes of the Rights Agreement.
TRADING OF RIGHTS. The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of the Rights), the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
EXERCISABILITY. The Rights are not exercisable until the Distribution
Date. The Rights will expire on September 11, 2001 (the "Final Expiration
Date"), unless the Rights are earlier redeemed or exchanged by the Company, as
described below.
EXERCISE PRICE. The Purchase Price payable, and the number of Preferred
Shares 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 Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then-current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness, assets or capital stock (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those referred to
above). With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. The Company will not be required to issue fractional Common
Shares or Preferred Shares (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash may be made based on the market price of the Common Shares or Preferred
Shares on the last trading day prior to the date of exercise.
PREFERRED SHARES. Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share. Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be entitled to the
greater of (1) a preferential quarterly dividend payment of $1.00 per share, or
(2) an aggregate dividend of 100 times the dividend declared per Common Share.
In the event of liquidation, the holders of the Preferred Shares will be
entitled to a preferential liquidation payment of $100 per share, plus an amount
equal to 100 times the aggregate amount to be distributed per share of common
stock of 100 times the payment made per Common Share. Each Preferred Share will
have 100 votes, voting together with the Common Shares except as otherwise
required by law. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 100 times the amount received per Common Share. These rights
are protected by customary antidilution provisions.
FLIP-IN. If any person or group becomes an Acquiring Person, then each
holder of a Right (other than Rights beneficially owned by the Acquiring Person,
any Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement), and certain transferees thereof, which will be void) will have the
right to receive upon exercise of such Right that number of Common Shares (or,
in certain circumstances, cash,
C-2
<PAGE> 40
property or other securities of the Company) having a market value of two times
the exercise price of the Right.
FLIP-OVER. If at any time after the time that any person or group becomes
an Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
(other than Rights beneficially owned by the Acquiring Person, any Associate or
Affiliate thereof, and certain transferees thereof, which will be void) will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right.
EXCHANGE OF RIGHTS. At any time after the time that any person or group
becomes an Acquiring Person and prior to the acquisition by such person or group
of 50% or more of the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights beneficially owned by such
person or group, any Associate or Affiliate thereof, and certain transferees
thereof, which will be void), in whole or in part, at an exchange ratio of one
Common Share or one one-hundredth of a Preferred Share (or of a share of a class
or series of the Company's preferred stock having equivalent rights, preferences
and privileges) per Right (subject to adjustment).
REDEMPTION OF RIGHTS. At any time prior to the time that any person
becomes an Acquiring Person, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right, subject to
adjustment (the "Redemption Price"), which may (at the option of the Company) be
paid in cash, Common Shares or other consideration deemed appropriate by the
Board of Directors. The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish; provided, however, that no redemption will be
permitted or required after the time that any person becomes an Acquiring
Person. Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of the Rights will be to
receive the Redemption Price.
AMENDMENT. The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
except that from and after such time as any person becomes an Acquiring Person
no such amendment may make the Rights redeemable if the Rights are not then
redeemable in accordance with the terms of the Rights Agreement or may adversely
affect the interests of the holders of the Rights.
NO RIGHTS AS STOCKHOLDER. Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
RIGHTS AGREEMENT GOVERNS. This Summary is subject to all of the terms,
provisions and conditions of the Rights Agreement, as the same may be amended
from time to time, 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. A copy of
the Rights Agreement has been filed with the Securities and Exchange Commission
as an exhibit to a Registration Statement on Form 8-A dated September 12, 1996.
Copies of the Rights Agreement are also on file at the principal executive
offices of the Company and the principal office of the Rights Agent.
1241105.04
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