SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - June 2, 1998
IEC Electronics Corp.
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(Exact name of Registrant as Specified in its Charter)
Delaware
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(State or other jurisdiction of Incorporation)
0-6508 13-3458955
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(Commission File Number) (IRS Employer Identification No.)
105 Norton Street, Newark, New York 14513
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(Address of Principal Executive Offices)
(315) 331-7742
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(Registrant's Telephone Number, including Area Code)
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Item 5. Other Events
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On June 2, 1998, the Board of Directors of IEC Electronics Corp. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of common stock, par value $.01 per share (the
"Common Shares"), of the Company to stockholders of record at the close of
business on June 15, 1998 (the "Record Date") and for each Common Share issued
(including shares distributed from Treasury) by the Company thereafter and prior
to the Distribution Date (as defined below). Each Right entitles the registered
holder, subject to the terms of the Rights Agreement (as defined below), to
purchase from the Company one one-thousandth of a share (a "Unit") of Series A
Preferred Stock, par value $.01 per share (the "Preferred Stock") at a purchase
price of $42.50 per Unit (the "Purchase Price"), subject to adjustment. The
Purchase Price is payable in cash or by certified or bank check payable to the
order of the Company or by wire transfer to the account of the Company (provided
a notice of such wire transfer is given by the holder of the related Right to
the Rights Agent). The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
Until the Distribution Date (or earlier redemption or expiration of the Rights),
which is defined below, the Rights will be evidenced with respect to any of the
Common Share certificates outstanding prior to the Distribution Date by such
Common Share certificates and no separate Right Certificates will be
distributed. The Rights Agreement provides that until the Distribution Date (or
earlier redemption or expiration of the Rights), (i) the Rights will be
transferred with and only with the Common Shares, (ii) new Common Share
certificates issued after the Record Date, upon transfer, replacement or new
issuance of Common Shares will be deemed to be issued with Rights and will
contain a notation incorporating the Rights Agreement by reference, and (iii)
the surrender for transfer of any certificates for Common Shares, outstanding as
of the Record Date, even without such notation or a copy of this Summary of
Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date. From and after the Distribution Date, such separate Right
Certificates alone will evidence the Rights.
As defined in the Rights Agreement, the "Distribution Date" means the
earlier to occur of (i) 10 business days following the date of a public
announcement (the date of such announcement being the "Shares Acquisition Date")
that a person, together with persons affiliated or associated with it (other
than the Company, any subsidiary of the Company, any employee benefit plan of
the Company or such subsidiary) (an "Acquiring Person"), has acquired, subject
to certain exceptions, beneficial ownership of 15% or more of the then
outstanding Common Shares of the Company or (ii) 10 business days (or such later
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date as may be determined by action of the Board of Directors prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the earlier of the commencement of, or the first public announcement
of the intent to commence, a tender offer or exchange offer by a person other
than the Company if, upon consummation of the offer, such person, together with
persons affiliated or associated with it, would be, subject to certain
exceptions, the beneficial owner of 15% or more of the outstanding Common
Shares.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on June 15, 2008 (the "Final Expiration
Date"), unless earlier redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities convertible
into Preferred Stock with a conversion price, less than the then current market
price of the Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness, cash or assets (excluding regular
quarterly cash dividends or dividends payable in Preferred Stock) 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 the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof an
adjustment in cash may be made based on the market value of a Unit of Preferred
Stock on the last trading day prior to the date of exercise.
The number of outstanding Rights are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares, payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
In the event that a person, together with persons affiliated or associated
with it, becomes an Acquiring Person, each holder of a Right, except as provided
below, will thereafter have the right to receive, upon exercise thereof, Units
of Preferred Stock having a value equal to two times the exercise price of the
Right. The exercise price is the Purchase Price multiplied by the number of
Units of Preferred Stock issuable upon exercise of a Right prior to the event
set forth in the preceding sentence. Notwithstanding the foregoing, following
the occurrence of the event set forth in the first sentence in this paragraph,
all Rights that are, or (under certain circumstances set forth in the Rights
Agreement) were, beneficially owned by any Acquiring Person (or by certain
related parties and transferees) will be null and void.
In the event that (i) the Company is acquired in a merger or other
business combination transaction in which the Company is not the surviving
corporation, or (ii) fifty percent (50%) or more of the Company's assets or
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earning power is sold or transferred, each holder of a Right (other than Rights
that theretofore become null and void as described in the second preceding
paragraph) shall thereafter have the right to receive, upon exercise thereof,
common stock of the acquiring company having a value equal to two times the
exercise price of the Right.
At any time until the close of business on the tenth business day
following the Shares Acquisition Date, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the
"Redemption Price"), payable at the election of the Board of Directors, in cash
or Company Common Shares; provided, however, that such redemption may occur
after any person becomes an Acquiring Person only if there has not been a change
in control of the Board of Directors of the Company. The redemption of the
Rights may be made effective at such time on such basis, with such conditions as
the Board of Directors in its sole discretion may establish. Immediately upon
the action of the Board of Directors of the Company ordering redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person, the Board of Directors of the Company, at its
option, may exchange each Right (other than Rights owned by such person or group
which have become void), in whole or in part, for Common Shares or Units of
Preferred Stock at an exchange ratio of on Common Share or one Unit of Preferred
Stock per Right (subject to adjustment).
Any of the provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Shares at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending on the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock.
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and will be subordinate to any other shares of
preferred stock that have been or may be issued by the Company. Each Unit of
Preferred Stock will receive ratably any dividend declared on the Company Common
Shares. In the event of liquidation, the holder of each Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $1.00 per
Unit or the per share amount paid in respect of a share of the Company Common
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Shares. Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Shares. In the event of any merger, consolidation or other
transaction in which Company Common Shares are exchanged, each Unit of Preferred
Stock will be entitled to receive the per share amount paid in respect of each
share of Company Common Shares. The rights of holders of the Preferred Stock to
dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock dividend, liquidation and
voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right is expected to approximate the economic
value of one share of Company Common Shares.
The Rights will not prevent a takeover of the Company. However, the Rights
may 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, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. In general, the
Rights should not interfere with any merger or other business combination
approved by the Board of Directors since the Rights may be redeemed by the
Company at the Redemption Price prior to the time that a person or group has
acquired beneficial ownership of 15% or more of the Common Shares.
Attached hereto as Exhibit 4.1 and incorporated herein by reference are a
copy of the Rights Agreement, dated as of June 2, 1998, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent, specifying the terms
of the Rights, and the exhibits thereto, as follows: Exhibit A - Form of Right
Certificate; Exhibit B - Summary of Rights to Purchase Preferred Stock; and
Exhibit C - Form of Certificate of Designations of the Series A Preferred Stock.
The foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement and the exhibits
thereto.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
4.1 Rights Agreement, dated as of June 2, 1998 between IEC
Electronics Corp. and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, which includes as Exhibit A -
Form of Right Certificate; Exhibit B - Summary of
Rights to Purchase Preferred Stock; and Exhibit C -
Form of Certificate of Designations of the Series A
Preferred Stock.
99.1 Press Release dated June 4, 1998
99.2 Form of Letter to Stockholders to be mailed with copies
of Summary of Rights to Purchase Preferred Stock.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IEC Electronics Corp.
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(Registrant)
Date: June 16, 1998 By:/s/Diana R. Kurty
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Diana R. Kurty, Vice President of
Finance, Chief Financial Officer and
Treasurer
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EXHIBIT INDEX
Exhibit Sequentially
Number Exhibit Numbered Page
4.1 Rights Agreement, dated as of 8
June 2, 1998 between IEC
Electronics Corp. and
ChaseMellon Shareholder
Services, L.L.C., as
Rights Agent, which
includes as Exhibit A -
Form of Right Certificate;
Exhibit B - Summary of Rights to Purchase
Preferred Stock; and Exhibit C -
Form of Certificate of Designations
of the Series A Preferred Stock.
99.1 Press Release dated June 4, 1998 58
99.2 Form of Letter to Stockholders to be 59
mailed with copies of Summary of
Rights to Purchase Preferred Stock.
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EXHIBIT 4.1
IEC Electronics Corp.
and
ChaseMellon Shareholder Services, L.L.C.
Rights Agent
RIGHTS AGREEMENT
Dated as of June 2, 1998
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TABLE OF CONTENTS
Page
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Section 1 Certain Definitions..........................................1
Section 2 Appointment of Rights Agent..................................5
Section 3 Issue of Right Certificate...................................6
Section 4 Form of Right Certificates...................................7
Section 5 Countersignature and Registration............................7
Section 6 Transfer, Split Up, Combination
and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates...........................................8
Section 7 Exercise of Rights; Purchase Price; Expiration Date
of Rights....................................................9
Section 8 Cancellation and Destruction of Right
Certificates............................................... 10
Section 9 Reservation and Availability of
Preferred Stock............................................ 10
Section 10 Preferred Stock Record Date................................ 11
Section 11 Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights..................................11
Section 12 Certificate of Adjusted Purchase.Price or Number of
Shares......................................................17
Section 13 Consolidation, Merger or Sale or Transfer of Assets
or Earning Power............................................17
Section 14 Fractional Rights and Fractional Shares.....................19
Section 15 Rights of Action............................................20
Section 16 Agreement of Right Holders..................................21
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Section 17 Right Certificate Holder Not Deemed
a Stockholder...............................................21
Section 18 Concerning the Rights Agent.................................22
Section 19 Merger or Consolidation or Change.of Name of
Rights Agent................................................22
Section 20 Duties of Rights Agent......................................23
Section 21 Change of Rights Agent......................................25
Section 22 Issuance of New Right Certificates..........................26
Section 23 Redemption and Termination..................................26
Section 24 Exchange....................................................27
Section 25 Notice of Certain Events....................................28
Section 26 Notices.....................................................29
Section 27 Supplements and Amendments..................................30
Section 28 Successors..................................................30
Section 29 Determinations and Actions by the
Board of Directors, etc.....................................31
Section 30 Benefits of this Agreement..................................31
Section 31 Severability................................................31
Section 32 Governing Law...............................................31
Section 33 Counterparts................................................32
Section 34 Descriptive Headings........................................32
Signatures ............................................................32
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Exhibit A Form of Right Certificate...................................33
Exhibit B Summary of Rights to Purchase Preferred Stock...............39.
Exhibit C Certificate of Designations of the Series A Preferred
Stock.......................................................44
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RIGHTS AGREEMENT
Agreement, dated as of June 2, 1998, between IEC Electronics
Corp., a Delaware corporation (the "Company") and ChaseMellon
Shareholder Services, L.L.C. (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
hereinafter defined) of the Company outstanding on the close of business on June
15, 1998 (the "Record Date"), each Right representing the right to purchase one
Unit (as defined below) of Series A Preferred Stock (as defined below), upon the
terms and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date (as such
terms are hereinafter defined) and as otherwise provided in Section 3 of this
Agreement.
Accordingly, in consideration of the premises and the mutual agreements herein
set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
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the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Adverse Person (as such term is
hereinafter defined) or any Person (as such term is hereinafter defined) who or
which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, after the date hereof, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
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2
Common Shares of the Company then outstanding, but shall not include (i) the
Company, (ii) any subsidiary (as such term is hereinafter defined) of the
Company, (iii) any employee benefit plan of the Company or any Subsidiary of the
Company, (iv) any entity holding Common Shares for or pursuant to the terms of
any such plan, or (v) any such Person who is the Beneficial Owner, on the date
hereof, of 15% or more of the Common Shares outstanding on the date hereof
(excluding any such Person who has failed to disclose such Beneficial Ownership
in violation of any provision of the Exchange Act), provided, however, that such
Person shall become an Acquiring Person immediately after such Person, together
with all Affiliates and Associates, becomes the Beneficial Owner of such number
of additional Common Shares which increases the percentage of Common Shares then
beneficially owned by such Person by more than 2% over that percentage of Common
Shares beneficially owned by such Person on the date of this Agreement.
Notwithstanding the foregoing, 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 shares outstanding, increases the proportionate number of shares
beneficially owned by such Person together with all Affiliates and Associates of
such Person to 15% or more of the Common Shares of the Company 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
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares of the Company, then
such Person shall be deemed to be an "Acquiring Person". Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person", as defined pursuant
to the foregoing provisions of this paragraph (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 purpose
of this Agreement. For purposes of determining whether a Person is an "Acquiring
Person," a Person engaged in business as an underwriter of securities shall not
be deemed to be an Acquiring Person as a result of such Person becoming the
"Beneficial Owner" of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting unless such Person
is the "Beneficial Owner" of such securities upon the expiration of forty (40)
days after the date of such acquisition. The determination whether any Person
acted in "good faith" shall be conclusively determined by the Board of Directors
of the Company.
(b) "Adverse Person" shall mean any Person declared to be an Adverse Person by
the Board of Directors after (x) a determination that such Person, alone or
together with its Affiliates and Associates, has become the Beneficial Owner of
5% or more of the Common Shares and (y) a determination by the Board of
Directors, after reasonable inquiry and investigation, including such
consultation, if any, with such persons as such directors shall deem
appropriate, that (a) such Beneficial Ownership by such Person is intended to
cause, is reasonably likely to cause or will cause the Company to repurchase the
Common Shares beneficially owned by such Person or to cause pressure on the
Company to take action or enter into a transaction or series of transactions
which would provide such person with short-term financial gain under
circumstances where the Board of Directors determines that the best long-term
interests of the Company and its stockholders, but for the actions and possible
actions of such Person, would not be served by taking such action or entering
into such transactions or series of transactions at that time or (b) such
Beneficial Ownership is causing or reasonably likely to cause a material adverse
impact including, but not limited to, impairment of relationships with customers
or impairment of the Company's ability to maintain its competitive position) on
the business or prospects of the Company; provided, however, that the Board of
Directors of the Company may not declare a Person to be an Adverse Person if,
prior to the time that such Person acquired 5% or more of the Common Shares,
such Person provided to the Board of Directors in writing a statement of such
Person's acquisition of Common Shares, together with any other information
reasonably requested of such Person by the Board of Directors, and the Board of
Directors, based on such statement and reasonable inquiry and investigation,
including such consultation, if any, with such persons as the directors shall
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3
deem appropriate, determines to notify and notifies such Person in writing that
it will not declare such Person an Adverse Person on such conditions as the
Board of Directors may select, including, without limitation, such Person's not
acquiring more than a specified amount of stock and/or on such Person's not
taking actions inconsistent with the purposes and intentions disclosed by such
Person in the statement provided to the Board of Directors. No delay or failure
by the Board of Directors to declare a Person to be an Adverse Person shall in
any way waive or otherwise affect the power of the Board of Directors
subsequently to declare a Person to be an Adverse Person. In the event that the
Board of Directors should at any time determine, upon reasonable inquiry and
investigation, including consultation with such persons as the directors shall
deem appropriate, that such Person has not met or complied with any condition
specified by the Board of Directors, the Board of Directors may at any time
thereafter declare such Person to be an Adverse Person.
(c) "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, within the meaning of Rule 13d-3 of
the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement;
(ii) which such Person or any of such Person's Affiliates or Associates
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 between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; 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 pursuant to this clause (B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
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4
(iii) which are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section l(c)(ii)(B))
or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday, or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) The "Close of business" on any given date shall mean 5:00 P.M., New York
City, 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 City, New York time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean the
shares of common stock, par value $.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person the
Person or Persons which ultimately control such first-mentioned Person.
(h) "Continuing Director" shall mean (i) any member of the Board of Directors of
the Company, while such Person is a member of the Board of Directors, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board on the date of this Agreement, or (ii)
any Person who subsequently becomes a member of the Board of Directors, while
such Person is a member of the Board of Directors, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
or nominee of an Acquiring Person or of any such Affiliate or Associate, if such
Person's initial nomination for election or initial election to the Board of
Directors is recommended or approved by the Board of Directors at a time when a
majority of the directors then serving are Continuing Directors.
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5
(i) "Depositary Agent" shall have the meaning set forth in Section 7(c).
(j) "Distribution Date" shall mean the earlier of (i) the close of business on
the tenth business day after the Shares Acquisition Date, as hereinafter defined
(or, if the tenth business day after the Shares Acquisition Date occurs before
the Record Date, the close of business on the Record Date), or (ii) the close of
business on the tenth business day (or such later day as may be determined by
the Board of Directors) after the date of the commencement of, or the first
public announcement of the intent to commence (as determined pursuant to Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act in effect
on the date of this Agreement), a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, or any Person or entity
organized, appointed or established by or for the Company for or pursuant to the
terms of any such Plan), if upon consummation thereof, such Person would be an
Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights).
(k) "Equivalent Preferred Stock" shall have the meaning set forth in Section
11(b) hereof.
(l) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(m) "Person" shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(n) "Preferred Stock" shall mean the Series A Preferred Stock, par value $.01
per share, of the Company having the voting powers, designation, preferences and
relative participating, optional or other special rights and qualifications,
limitations and restrictions described in the Certificate of Designation set
forth as Exhibit C hereto.
(o) "Redemption Date" shall have the meaning set forth in Section 7 hereof.
(p) "Shares Acquisition Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed or amended pursuant to Section 13(d) under the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(q) "Subsidiary" of any Person shall mean any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
(r) "Unit" shall mean one one-thousandth of a share of Preferred Stock.
Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights
---------------------------
Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
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6
Section 3. Issue of Right Certificates. (a) Until the Distribution Date, the
----------------------------
Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by
the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and the Rights will be transferred with and
only with the transfer of the underlying Common Shares (including a transfer to
the Company). As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock, in substantially
the form of Exhibit B hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with a
copy of the Summary of Rights attached thereto. Until the earliest of the
Distribution Date, 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 attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Certificates for Common Shares which become outstanding (including, without
limitation, reacquired Common Shares referred to in the last sentence of this
paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, 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 IEC Electronics Corp. and
ChaseMellon Shareholder Services, L.L.C. dated as of June 2, 1998 (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 IEC Electronics
Corp. 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. IEC Electronics Corp. will mail to the holder of
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<PAGE>
7
this certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor. Under certain circumstances, as set forth in the
Rights Agreement, Rights issued to any Person who becomes an Acquiring Person
(as defined in the Rights Agreement) may become null and void."
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificate. The Right Certificates (and the forms of
--------------------------
election to purchase Preferred Stock and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A 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 11 and Section 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of Units of Preferred Stock
as shall be set forth therein at the price per Unit set forth therein (the
"Purchase Price"), but the number of such Units and the Purchase Price shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates shall be
----------------------------------
executed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, any of its Vice Presidents, or its Treasurer
either manually or by facsimile signature, shall have affixed thereto the
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 countersigned by the Rights Agent,
either manually or by facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any 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 he countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
18
<PAGE>
8
Following the Distribution Date, the Rights Agent will keep or cause to be kept,
at its principal office, 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. Subject to the
- --------------------------------------------------------
provisions of Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant
to Section 24 hereof) 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 Units 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 principal office of the
Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer, split up, combination
or exchange of any such surrendered Right Certificate unless the registered
holder thereof shall have completed and signed the form of assignment and
related certificate on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof, as the Company
shall reasonably request. Thereupon the Rights Agent shall 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.
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)
--------------------------------------------------------------
The registered holder of any Right Certificate may exercise the Rights evidenced
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<PAGE>
9
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together with payment
of the Purchase Price for each Unit as to which the Rights are exercised, at or
prior to the earliest of (i) the close of business on June 15, 2008 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date"), or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each Unit of Preferred Stock pursuant to the exercise
of a Right shall initially be $42.50 shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.
(c) As promptly as practicable following the occurrence of the Distribution
Date, the Company shall deposit with a corporation in good standing organized
under the laws of the United States or any State of the United States, 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 (the
"Depositary Agent"), certificates representing the shares of Preferred Stock
that may be acquired upon exercise of the Rights and shall cause such Depositary
Agent to enter into an agreement pursuant to which the Depositary Agent shall
issue receipts representing interests in the shares of Preferred Stock so
deposited. 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 each Right to be exercised 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 the Depositary Agent (or make available,
if the Rights Agent is the Depositary Agent) depositary receipts representing
such Units of Preferred Stock as are to be purchased and the Company hereby
irrevocably authorizes its Depositary Agent to comply with all such requests,
(ii) 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, (iii) after receipt of such depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise less
than all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered
20
<PAGE>
10
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
(e) The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Stock, the number of
shares of Preferred Stock that will be sufficient to permit the exercise in full
of all outstanding Rights in accordance with this Section 7.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
---------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or 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 Preferred Stock. The Company
------------------------------------------------
covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Stock delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Stock (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Stock upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Stock in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates for Preferred Stock or depositary receipts upon the exercise of any
21
<PAGE>
11
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 reasonable satisfaction that no such tax is
due.
The Company shall use its best efforts to (i) file, as soon as practicable
following the Shares Acquisition Date, a registration statement under the
Securities Act of 1933 with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the earlier of the Expiration Date or the date as of which the rights are
no longer exercisable. The Company will also take such action as may be
appropriate under the blue sky laws of the various states.
Section 10. Preferred Stock Record Date. Each person in whose name any
----------------------------
depositary certificate or certificate for Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Units of Preferred Stock represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the 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 Stock transfer books of
the Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
the Units of Preferred Stock or other securities for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
--------------------------------------------------------------------
Rights. The Purchase Price, the number of Units of Preferred Stock or other
- -------
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares of Preferred Stock
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
22
<PAGE>
12
number and kind of shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of Preferred Stock or shares of capital stock which,
if such Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open, 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 Preferred Stock of
the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any Person, alone or
together with its Affiliates and Associates, shall become an Acquiring Person,
each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of Units of Preferred Stock for which a Right is then exercisable, in
accordance with the terms of this Agreement, such number of Units of Preferred
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of Units of Preferred Stock for which
a Right is then exercisable and dividing that product by (y) 50% of the then
current market price of the Company's Units of Preferred Stock (determined
pursuant to Section 11(d) hereof) on the date when such Person became an
Acquiring Person. 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.
From and after the time when a Person becomes an Acquiring Person, any Rights
that are or were acquired or beneficially owned by such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence shall be
cancelled.
(iii) In the event that there shall not be sufficient Preferred Stock issued but
not outstanding or authorized but unissued 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 additional Preferred Stock
for issuance upon exercise of the Rights.
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<PAGE>
13
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase shares of Preferred Stock (or shares having substantially the same
rights, privileges and preferences as shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock at a price per
share of Preferred Stock or Equivalent Preferred Stock (or having a conversion
price per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the then current per share market price of the
Preferred Stock (as defined in Section 11(d)) 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 shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock or Equivalent Preferred Stock 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 shares of Preferred Stock and/or Equivalent
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or Equivalent Preferred Stock 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. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding upon the Rights Agent and the
holders of the Rights. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a distribution
to all holders of the Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in shares of Preferred
Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price as determined pursuant to Section 11(d) of
the shares of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose
24
<PAGE>
14
determination shall be described in a statement filed with the Rights Agent and
shall be binding upon the Rights Agent and the holders of the Rights) of the
portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one share of Preferred Stock
and the denominator of which shall be such current per share market price as
determined pursuant to Section 11(d) of the Preferred Stock; 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 to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the 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, the "current per share
market price" of the Common Shares on any date shall be deemed to be the average
of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current per share
--------- --------
market price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in shares of such Common Shares or
securities convertible into such shares, or (B) any subdivision, combination or
reclassification of such Common Shares and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per Common Share. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported on The Nasdaq National Market or, if the Common
Shares are not listed on The Nasdaq National Market, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date the Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Shares selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Common Shares are
listed or admitted to trading is open for the transaction of business or, if the
Common Shares are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Shares are not publicly held or 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 of the Company,
25
<PAGE>
15
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current market price"
per share of Preferred Stock shall be determined in the same manner as set forth
above for Company Common Shares in clause (i) of this Section 11(d) (other than
the last sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the "current market price" per share of Preferred
Stock shall be conclusively deemed to be an amount equal to 1,000 (as such
amount may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to Company Common Stock occurring
after the date of this Agreement) multiplied by the current market price per
share of Company Common Shares. If neither Company Common Shares nor Preferred
Stock is publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as determined in good
faith by the Company's Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. For all purposes of this Agreement,
the "current market price" of a Unit of Preferred Stock shall be equal to the
"current market price" of one share of Preferred Stock divided by 1,000.
(e) No adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one ten-thousandth of a Common Share or
one one-hundred thousandth of a share of Preferred Stock 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 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the purchase price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11(a), (b),
(c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder shall evidence the right to purchase, at
the adjusted Purchase Price, the number of Units of Preferred Stock (or other
26
<PAGE>
16
securities or assets) 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 Units of Preferred
Stock (calculated to the nearest one hundred thousandth of a Unit) obtained by
(i) multiplying (x) the number of Units of Preferred Stock covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the Purchase
Price to adjust the number of Rights, in substitution for any adjustment in the
number of Units of Preferred Stock 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 Units of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest hundred thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. 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 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and 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 Units of Preferred Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit and the number of Units of Preferred Stock which were
expressed in the initial Right Certificates issued hereunder.
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17
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Units of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such fully paid and nonassessable Units of
Preferred Stock 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 that number of Units of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of Units of Preferred
Stock 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 (fractional or otherwise) upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that it, in its sole discretion, shall determine to be advisable in order that
(i) any consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) dividends on Preferred Stock payable in shares of
Preferred Stock or (v) issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders, or shall reduce the
taxes payable by such holder.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever
-----------------------------------------------------------
an adjustment is made as provided in Sections 11 and 13 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power. In the event, directly or indirectly, (a) the Company shall consolidate
- ------
with, or merge with and into, any other Person, (other than a subsidiary of the
28
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18
Company in a transaction which will not diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights) and the Company
shall not be the surviving or continuing corporation, (b) 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 consolidation or merger
and, in connection with such consolidation or merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
other Person (or the Company) or cash or any other property, or (c) 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 other Person other than the Company or
one or more of its wholly-owned Subsidiaries (in a transaction which will not
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights), then, and in each such case, proper provision shall be made so that (i)
each holder of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the
then current Purchase Price, such number of validly authorized and issued, fully
paid, non-assessable and freely tradable Common Shares of such other Person
(including the Company as successor thereto), free and clear of any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of Units of Preferred Stock for which a Right is
then exercisable and dividing that product by (B) 50% of the then current per
share market price of the Common Shares of such other Person (determined
pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) 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; (iii) the term "Company" shall thereafter be
deemed to refer to such issuer; and (iv) 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 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 this Section 13 and further providing that as soon as
practicable after the date of any consolidation , merger, sale or transfer of
assets mentioned in this Section 13, such issuer will: (i) prepare and file a
registration statement under the Securities Act of 1933, as amended, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Final Expiration Date; (ii) take such action as
may be required to ensure that the acquisition of such Common Shares complies
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19
with any applicable state securities or Blue Sky law, and (iii) 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.
In case the Person which is to be a party to a transaction referred to in this
Section 13 has a provision in any of its authorized securities or in its
Certificate of Incorporation or by-laws or other instrument governing its
corporate affairs, which provision would have the effect of (i) causing such
Person to issue, in connection with, or as a consequence of, the consummation of
a transaction referred to in this Section 13, Common Shares of such Person at
less than the then current market price per share (determined pursuant to
Section 11(d) or securities exercisable for, or convertible into, Common Shares
of such Person at less than such then current market price (other than to
holders of Rights pursuant to this Section 13) or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of the Common
Shares of such Person pursuant to the provisions of this Section 13, then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Person shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Person shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a) hereof.
The Company shall not enter into any transaction of the kind referred to in this
Section 13 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 eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not
----------------------------------------
be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For the purposes
of this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
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20
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported on The Nasdaq National Market, if the
Rights are not listed on The Nasdaq National Market, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used and such determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(b) The Company shall not be required to issue fractions of shares of Preferred
Stock (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock. In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share, the Company shall pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
share of Preferred Stock. For the purposes of this Section 14(b), the current
market value of a share of Preferred Stock shall be the closing price of a share
of Preferred Stock (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.
(c) The holder of a Right by the acceptance of the Right expressly waives his
right to receive any fractional Rights or any fractional shares upon exercise of
a Right (except as 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 or any other Person to enforce, or otherwise act in respect
of, his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
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21
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 principal office of
the Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer;
(c) the Company and the Rights Agent may deem and treat the person in whose name
the Right Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right 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; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 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 Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a 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 hereof), or to receive dividends
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22
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
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
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 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 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 stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and at such
time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned and in case at that time any of
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23
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 Chief
Executive Officer, the President, any 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 gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution
of any Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights becoming
void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Section
3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
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24
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 shares
of Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or whether any shares of Preferred Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the 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 by it in good faith in accordance
with instructions of any such officer. At any time, the Rights Agent may apply
to the Company for written instructions from the Company with respect to any
matter arising in connection with the Rights Agent's duties and obligations
arising under this Agreement. Such application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent with
respect to its duties or obligations under this Agreement and the date on and/or
after which such action shall be taken and the Rights Agent shall not be liable
for any action taken, suffered or omitted by the Rights Agent in accordance with
a proposal included in any such application on or after the date specified in
such application (which date shall not be less than five Business Days after the
date any such officer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any 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. 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
35
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25
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) The Rights Agent undertakes only the express duties and obligations imposed
on it by this Agreement and no implied duties or obligations shall be read into
this Agreement against the Rights Agent.
(k) Anything in this Agreement to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits).
(l) If, with respect to any Rights Certificate surrendered to the Rights Agent
for exercise or transfer, the Certificate attached to the Form of Assignment or
Form of Election to purchase, as the case may be, has either not been completed,
or not signed, the Company and the Rights Agent will deem the beneficial owner
of the Rights evidenced by the Rights Certificate to be beneficially owned by an
Acquiring Person or an Affiliate or Associate thereof and such Assignment or
Election to Purchase will not be honored.
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 and Preferred Stock by registered or certified mail, and to the
holders of the Right Certificates (or of the Common Shares prior to the
Distribution Date) by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares and Preferred Stock by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 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 (or prior to the Distribution Date, by the holder of Common
Shares) (who shall, with such notice, submit his Right Certificate (or common
share certificate) for inspection by the Company), then the registered holder of
any Right Certificate (or holder of Common Shares prior to the Distribution
Date) 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 either (a) a corporation organized and doing
business under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of New York), in good
standing, having an office in the State of New York, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million or (b) an affiliate of such a corporation.
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26
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
and Preferred Stock and mail a notice thereof in writing to the registered
holders of the Right Certificates (or holders of Common Shares prior to the
Distribution Date). Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
-----------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to Common Shares so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Company's Board of Directors, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the person to whom such Rights Certificate
would be issued and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board of Directors of the
---------------------------
Company may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth business day following the Shares Acquisition Date or (ii)
the Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 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 the
"Redemption Price"), provided, however, that for the purposes hereof the Board
of Directors of the Company shall be entitled to so redeem the Rights after the
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27
time at which any Person first becomes an Acquiring Person only if a majority of
the directors then serving are Continuing Directors. The Redemption Price may be
paid in cash or Common Shares (valued in accordance with Section 11(d)). Subject
to the foregoing, the redemption of the Rights by the Board of Directors may be
made effective at such time on such basis and with such conditions as the Board
of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23, and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. 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 such action of the Board of Directors ordering the
redemption of the Rights, the Company shall mail a notice of 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.
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 hereof, and other
than in connection with the purchase of Common Shares prior to the Distribution
Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at its
--------
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares or Units of Preferred Stock at an exchange ratio of
one Common Share or Unit of Preferred Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares or Units of Preferred
38
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28
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of Common Shares or Units of Preferred
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section ll(a)(ii) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient Common Shares or Preferred
Stock 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 Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of Common Shares or
fractions of Units of Preferred Stock or to distribute certificates which
evidence fractional Common Shares or fractional Units of Preferred Stock. In
lieu of such fractional Common Shares or fractional Units of Preferred Stock,
the Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional Common Shares or fractional Units of Preferred
Stock would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a Common Share or Unit of Preferred Stock. For
the purposes of this paragraph (d), the current market value of a Common Share
or Unit of Preferred Stock shall be determined pursuant to Section 11(d) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall propose (i)
-------------------------
to pay any dividend payable in stock of any class to the holders of its
Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), (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 (other than the Company
and/or one or more of its subsidiaries in a transaction which will not
substantially diminish or eliminate the benefits intended to be afforded by the
39
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29
Rights), (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Right Certificate, (or prior to the Distribution Date to each holder of Common
Shares) in accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend, 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
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Stock whichever shall be
the earlier. No such notice shall be required pursuant to this section if any
subsidiary of the Company effects a consolidation or merger with or into or
effects a sale or other transfer of assets or earning power to, any other
subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii) hereof shall occur,
then the Company shall as soon as practicable thereafter give to each holder of
a Right Certificate to the extent feasible, and in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right Certificate to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
IEC Electronics Corp.
105 Norton Street
P.O. Box 271
Newark, NY 14513
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by
40
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30
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
ChaseMellon Shareholder Services, LLC
85 Challenger Road
Ridgefield Park, NJ 07660
Attention: Corporate Secretary
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 Rights Agent or prior to the Distribution Date, the registry books
of the Company's Transfer Agent.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
---------------------------
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing the Common Shares. From and after the Distribution
Date, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder
or (iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided, from and after
the Distribution Date, this Agreement may not be supplemented or amended to
lengthen any time period hereunder pursuant to clause (iii) of this sentence
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights and
provided further that no change made in the rights or duties of the Rights Agent
shall be effective without its express written consent. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares. Notwithstanding
anything contained herein to the contrary, this Agreement may not be amended at
a time when the Rights are not redeemable.
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.
41
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31
Section 29. Determinations and Actions by the Board of Directors, etc. For
-----------------------------------------------------------
purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13-3(d)(1)(i) of the Exchange Act Regulations as in effect on the date hereof.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company, or the Company,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (ii) below, all omissions with respect to the foregoing) which are done
or made by the Board of Directors of the Company in good faith, shall (i) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (ii) not subject the Board of Directors of
the Company to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
---------------------------
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction of
-------------
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid, void or
unenforceable language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors of
the Company.
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 New
York and for all purposes shall be governed by and construed in
accordance with the
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32
laws of such State applicable to contracts to be made and performed entirely
within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction
of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested, all as of the day and year first above written.
IEC Electronics Corp.
Attest: By:
Name: /S/ Diana R. Kurty Name: /S/ Russell E. Stingel
------------------------- ----------------------------
Title: Chief Financial Offcier Title: Chairman
------------------------ -----------------------------
ChaseMellon Shareholder
Services, L.L.C.
Attest: By:
Name: /S/ James E. Hagan Name: /S/ Cynthia Gonzalez
------------------------- ----------------------------
Title: Vice President Title: Assistant Vice President
------------------------ -----------------------------
43
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33
Exhibit A
[Form of Right Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER THE FINAL EXPIRATION DATE (AS DEFINED IN THE RIGHTS
AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY
OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
IEC Electronics Corp.
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 June 2, 1998 (the "Rights Agreement"; terms defined therein have the
same meaning herein unless otherwise defined herein), between IEC Electronics
Corp.,a Delaware corporation (the "Company"), and ChaseMellon Shareholder
Services,L.L.C. (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., New York City, New York time, on the Final Expiration
Date at the principal office of the Rights Agent, or at the office of its
successor as Rights Agent, one thousandth of one fully paid non-assessable share
of Series A Preferred Stock, par value $.01 per share (the "Preferred Stock"),
of the Company, at a purchase price of $ 42.50 per one one-thousandth share
(each such one one-thousandth share being a "Unit") (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 Units which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above are subject to
modification and adjustment upon the happening of certain events as provided in
the Rights Agreement.
Upon the occurrence of certain events set forth in the Rights Agreement, if the
Rights evidenced by this Rights Certificate are beneficially owned by an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person or,
under certain circumstances described in the Rights Agreement, a transferee of
any such Acquiring Person, Associate or Affiliate, such Rights shall become null
44
<PAGE>
34
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such an event.
In certain circumstances described in the Rights Agreement, the Rights evidenced
hereby may entitle the registered holder thereof to purchase capital stock of an
entity other than the Company or receive common stock, cash or other assets, all
as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and conditions
of the Rights Agreement, which terms, provisions and conditions are 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 offices of the Rights Agent and are available
upon written request.
This Right Certificate, with or without other Right Certificates, upon surrender
at the principal office of the Rights Agent, 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 Units of Preferred
Stock as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised .
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate (i) may be redeemed by the Company at a redemption price of $0.001
per Right, subject to adjustment, payable at the option of the Company in cash
or stock, or (ii) may be exchanged in whole or in part for Common Shares or
Units of Preferred Stock.
No fractional shares of Preferred Stock will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Stock or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
45
<PAGE>
35
other actions affecting stockholders (except as provided in the Rights
agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal.
Dated as of , 19 _.
----------------------------
IEC Electronics Corp..
Attest:
By:
- ------------------------------- ---------------------------
Title:
------------------------
Countersigned:
ChaseMellon Shareholder Services, L.L.C.
By:
- --------------------------------
Authorized Signature
Title:
--------------------------
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36
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and transfers
--------------------
unto (Please print name and address of transferee) this
-------------------------
Right Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint Attorney,
-----------------------------
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
------------- ----------------------------------
Signature
Signature Guaranteed:
- -----------------------
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and after due inquiry and
to the best of knowledge of the undersigned, the undersigned did not acquire the
rights evidenced by this Right Certificate from any person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated:
------------------------ --------------------------
Signature
Signature Guaranteed:
- ----------------------
47
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37
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To: IEC Electronics Corp.
The undersigned hereby irrevocably elects to exercise Rights
-------------------
represented by this Right Certificate to purchase the Units of Preferred Stock
(or such other securities of the Company or of any other Person or property)
issuable upon the exercise of such Rights and requests that certificates for
such Units (or other property) 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:
- ----------------------
48
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38
Form of Reverse Side of Right Certificate -- continued
NOTICE
------
Signatures 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 or correspondent in
the United States.
The signature in the foregoing Forms of Assignment, Election, and Certificate
must conform to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
49
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39
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
Dividend of Right to Purchase Preferred Stock
- ---------------------------------------------
On June 2, 1998, the Board of Directors of IEC Electronics Corp. (the "Company")
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.01 per share (the "Common
Shares"), of the Company to shareholders of record at the close of business on
June 15, 1998 (the "Record Date") and for each Common Share issued (including
shares distributed from Treasury by the Company thereafter and prior to the
Distribution Date (as defined below)). Each Right entitles the registered
holder, subject to the terms of the Rights Agreement (as defined below), to
purchase from the Company one one-thousandth of a share (a "Unit") of Series A
Preferred Stock, par value $.01 per share (the "Preferred Stock") at a purchase
price of $42.50 per Unit (the "Purchase Price"), subject to adjustment. The
Purchase Price is payable in cash or by certified or bank check payable to the
order of the Company or by wire transfer to the account of the Company (provided
a notice of such wire transfer is given by the holder of the related Right to
the Rights Agent). The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
Distribution of the Rights; Right Certificates
- ----------------------------------------------
Until the Distribution Date (or earlier redemption or expiration of the Rights),
which is defined below, the Rights will be evidenced with respect to any of the
Common Share certificates outstanding prior to the Distribution Date by such
Common Share certificates and no separate Right Certificates will be
distributed. The Rights Agreement provides that until the Distribution Date (or
earlier redemption or expiration of the Rights), (i) the Rights will be
transferred with and only with the Common Shares, (ii) new Common Share
certificates issued after the Record Date, upon transfer, replacement or new
issuance of Common Shares will be deemed to be issued with Rights and will
contain a notation incorporating the Rights Agreement by reference, and (iii)
the surrender for transfer of any certificates for Common Shares, outstanding as
of the Record Date, even without such notation or a copy of this Summary of
Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date. From
and after the Distribution Date, such separate Right Certificates alone will
evidence the Rights.
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40
Definition of Distribution Date
- -------------------------------
"Distribution Date" means the earlier to occur of (i) 10 business days following
the date of a public announcement (the date of such announcement being the
"Shares Acquisition Date") that a person, together with persons affiliated or
associated with it (other than the Company, any subsidiary of the Company, any
employee benefit plan of the Company or such subsidiary) (an "Acquiring
Person"), has acquired beneficial ownership of 15% or more of the then
outstanding Common Shares of the Company 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 of affiliated persons becomes an Acquiring Person)
following the earlier of the commencement of, or the first public announcement
of the intent to commence, a tender offer or exchange offer by a person other
than the Company if, upon consummation of the offer, such person, together with
persons affiliated or associated with it, would be the beneficial owner of 15%
or more of the outstanding Common Shares.
Exercise and Expiration of the Rights
- -------------------------------------
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on June 15, 2008 (the "Final Expiration Date"),
unless earlier redeemed or exchanged by the Company as described below.
Adjustment of the Purchase Price
- --------------------------------
The Purchase Price payable, and the number of Units of Preferred Stock issuable,
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) upon the grant to
holders of the Preferred Stock of certain rights or warrants to subscribe for or
purchase Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock
of evidences of indebtedness, cash or assets (excluding regular quarterly cash
dividends or dividends payable in Preferred Stock) 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 the Purchase Price. The Company is not
required to issue fractional Units. In lieu thereof an adjustment in cash may be
made based on the market value of a Unit of Preferred Stock on the last trading
day prior to the date of exercise.
The number of outstanding Rights are also subject to adjustment in the event of
a stock split of the Common Shares or a stock dividend on the Common Shares,
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
51
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41
Effects of Certain Events
- -------------------------
In the event that a person, together with persons affiliated or associated with
it, becomes an Acquiring Person, each holder of a Right, except as provided
below, will thereafter have the right to receive, upon exercise thereof, Units
of Preferred Stock having a value equal to two times the then current exercise
price of the Right. The exercise price is the Purchase Price multiplied by the
number of Units of Preferred Stock issuable upon exercise of a Right prior to
the event set forth in the preceding sentence. Notwithstanding the foregoing,
following the occurrence of the event set forth in the first sentence in this
paragraph, all Rights that are, or (under certain circumstances set forth in the
Rights Agreement) were, beneficially owned by any Acquiring Person (or by
certain related parties and transferees) will be null and void.
For example, at an exercise price of $42.50 per Right, each Right not owned by
an Acquiring Person (or by certain related parties and transferees) following
the event set forth in the preceding paragraph would entitle its holder to
purchase $85 worth of Units of Preferred Stock for $42.50. Assuming that the
Units of Preferred Stock had a per Unit value of $10 at such time, the holder of
each valid Right would be entitled to purchase 8.5 Units of Preferred Stock for
$42.50.
In the event that (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation,
or (ii) fifty percent (50%) or more of the Company's assets or earning power is
sold or transferred, each holder of a Right (other than Rights that theretofore
become null and void as described in the second preceding paragraph) shall
thereafter have the right to receive, upon exercise thereof, common stock of the
acquiring company having a value equal to two times the then current exercise
price of the Right.
Redemption of the Rights
- ------------------------
At any time until the close of business on the tenth business day following the
Shares Acquisition Date, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (the
"Redemption Price"), payable at the election of the Board of Directors, in cash
or Company Common Shares; provided, however, that such redemption may occur
after any person becomes an Acquiring Person only if there has not been a change
in control of the Board of Directors of the Company. The redemption of the
Rights may be made effective at such time on such basis, with such conditions as
the Board of Directors in its sole discretion may establish. Immediately upon
the action of the Board of Directors of the Company ordering redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
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Exchange of the Rights
- ----------------------
At any time after a person or group of affiliated or associated persons becomes
an Acquiring Person, the Board of Directors of the Company, at its option, may
exchange each Right (other than Rights owned by such person or group which have
become void), in whole or in part, for Common Shares or Units of Preferred Stock
at an exchange ratio of on Common Share or one Unit of Preferred Stock per Right
(subject to adjustment).
Amendment of the Rights Agreement
- ---------------------------------
Any of the provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Shares at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
Exercise of the Right Entitles the Rightholder to the Rights of a
- -----------------------------------------------------------------
Shareholder; Tax Consequences
- -----------------------------
Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Company, including, without limitation, the right to vote
or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may, depending on the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock.
Description of Preferred Stock
- ------------------------------
The Units of Preferred Stock that may be acquired upon exercise of the Rights
will be nonredeemable and will be subordinate to any other shares of preferred
stock that have been or may be issued by the Company.
Each Unit of Preferred Stock will receive ratably any dividend declared on the
Company Common Shares.
In the event of liquidation, the holder of each Unit of Preferred Stock will
receive a preferred liquidation payment equal to the greater of $1.00 per Unit
or the per share amount paid in respect of a share of the Company Common Shares.
Each Unit of Preferred Stock will have one vote, voting together with the
Company Common Shares.
In the event of any merger, consolidation or other transaction in which Company
Common Shares are exchanged, each Unit of Preferred Stock will be entitled to
receive the per share amount paid in respect of each share of Company Common
Shares.
The rights of holders of the Preferred Stock to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock dividend, liquidation and voting
rights, the economic value of one Unit of Preferred Stock that may be acquired
upon the exercise of each Right is expected to approximate the economic value of
one share of Company Common Shares.
Copy of the Rights Agreement and Certificate of Amendment Available
- -------------------------------------------------------------------
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on Form 8-K. Copies of the Rights
Agreement and the Certificate of Amendment are available free of charge from the
Company. This summary description of the Rights and the Preferred Stock does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement and the Certificate of Designations, including the definitions
therein of certain terms, which Rights Agreement and Certificate of Designations
are incorporated herein by reference.
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44
EXHIBIT C
CERTIFICATE OF DESIGNATIONS
OF THE SERIES A PREFERRED STOCK
of
IEC Electronics Corp.
Pursuant to Section 151
of the General Corporation Law
of the State of Delaware
IEC Electronics Corp., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of the
Corporation by the Certificate of Incorporation (the "Certificate"), and,
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, the Board of Directors, at a duly called meeting held on June
2, 1998, at which a quorum was present and acted throughout, adopted the
following resolutions, which resolutions remain in full force and effect on the
date hereof, creating a series of 100,000 shares of preferred stock having a par
value of $.01 per share, designated as Series A Preferred Stock (the "Series A
Preferred Stock") out of the class of 500,000 shares of preferred stock of the
par value of $.01 per share (the "Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors does hereby create,
authorize and provide for the issuance of the Series A Preferred Stock having
the voting and other powers, designations, relative, participating, optional and
other special rights, preferences, and the qualifications, limitations and
restrictions thereof that are set forth as follows:
Section 1.Designation And Amount. The shares of such series shall be
-----------------------
designated as "Series A Preferred Stock". The number of shares initially
constituting the Series A Preferred Stock shall be 100,000; provided, however,
that if more than a total of 100,000 shares of Series A Preferred Stock shall be
issuable upon the exercise of Rights (the "Right") issued pursuant to the Rights
Agreement dated as of June 2, 1998 between the Corporation and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agreement"), the
Board of Directors of the Corporation, pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware, shall direct by resolution or
resolutions that a certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of Section 103 thereof, providing
for the total number of shares of Series A Preferred Stock authorized to be
issued to be increased (to the extent that the Certificate of Incorporation then
permits) to the largest number of whole shares (rounded up to the nearest whole
share) issuable upon exercise of such Rights.
Section 2.Dividends and Distributions. (A) Subject to the prior and
----------------------------
superior rights of the holders of shares of any other series of Preferred Stock
or other class of stock of the Corporation ranking prior and superior to the
Series A Preferred Stock with respect to dividends, each holder of
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45
one-thousandth of a share (a "Unit") of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, dividends payable in cash in an amount
per Unit (rounded to the nearest cent) equal to the per share amount of cash
dividends declared on shares of the Common Stock. In the event the Corporation
shall at any time after June 15, 1998 (the "Rights Declaration Date"), (i)
declare any dividend on outstanding shares of Common Stock, payable in Common
Shares, (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding shares of Common Stock into a smaller number of shares, then in each
such case the amount to which the holder of a Unit of Series A Preferred Stock
was entitled immediately prior to such event pursuant to the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock, that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Units
of Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the shares of Common
Stock (other than a dividend payable in shares of Common Stock).
Section 3. Voting Rights. The holders of Units of Series A
--------------
Preferred Shares shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or required by
law, each Unit of Series A Preferred Stock shall entitle the holder thereof to
one vote on all matters upon which the holders of the shares of Common Stock of
the Corporation are entitled to vote. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on outstanding
shares of Common Stock, payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock, or (iii) combine outstanding shares of
Common Stock into a smaller number of shares, then in each such case the number
of votes per Unit to which holders of Units of Series A 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 the Certificate of
Incorporation or in any other Amendment creating a series of Preferred Stock or
any similar stock, and except as otherwise required by law, the holders of Units
of Series A Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of shareholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders
of Units of Series A Preferred Stock shall have no special voting rights and
their consents shall not be required (except to the extent they are entitled to
vote with holders of shares of Common Stock as set forth herein) for taking any
corporate action.
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46
Section 4. Reacquired Shares. Any Units of Series A Preferred Stock
------------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
Units shall, upon their cancellation, become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 5. Liquidation, Dissolution or Winding Up. (A) Upon any voluntary
---------------------------------------
or involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of junior stock unless
the holders of Units of Series A Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (B), the greater of either (a)
$1.00 per Unit or (b) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to the holders of
shares of parity stock, unless simultaneously therewith distributions are made
ratably on Units of Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of Units of Series
A Preferred Stock are entitled under clause (i)(a) of this sentence and to which
the holders of shares of such parity stock are entitled, in each case upon such
liquidation, dissolution or winding up.
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock,
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, or (iii) combine outstanding shares of Common Stock into a smaller number
of shares, then in each such case the aggregate amount to which holders of Units
of Series A Preferred Stock were entitled immediately prior to such event
pursuant to clause (i)(b) of paragraph (A) of this Section 5 shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 6. Consolidation, Merger, Etc. In case the Corporation shall enter
---------------------------
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are converted into, exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case Units
of Series A Preferred Stock shall at the same time be similarly converted into,
exchanged for or changed into an amount per Unit (subject to the provisions for
adjustment hereinafter set forth) equal to 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 converted, exchanged
or converted. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in Common Shares, (ii) subdivide outstanding Common Shares, or (iii)
combine outstanding shares of Common Stock into a small number of shares, then
in each such case the amount set forth in the immediately preceding sentence
with respect to the exchange or conversion of Units of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which shall be the number of shares of Common Stock that are outstanding
immediately after such event and the denominator of which shall be the number of
shares of Common Stock that were outstanding immediately prior to such event.
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47
Section 7. No Redemption. The Units of Series A Preferred
Stock shall not be redeemable from any holder.
Section 8.Rank. The Units of Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, junior to all other
series of Preferred Stock unless the terms of any such series shall provide
otherwise and senior to the shares of Common Stock.
Section 9. Amendment. If any proposed amendment to the Certificate of
Incorporation would alter, change, or repeal any of the preferences, powers or
special rights given to the Series A Preferred Stock so as to affect the Series
A Preferred Stock adversely, then the holders of the Series A Preferred Stock
shall be entitled to vote separately as a class upon such amendment, and the
affirmative vote of a majority of the outstanding shares of the Series A
Preferred Stock, voting separately as a class, shall be necessary for the
adoption thereof.
Section 10. Fractional Shares. The Series A Preferred Stock may be issued
in Units or other fractions of a share, which Units or fractions shall entitle
the holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Preferred Stock. In lieu of
fractional shares, the Corporation may elect to make a cash payment as provided
in the Rights Agreement for fractions of a share other than one-thousandth of a
share or any integral multiple thereof.
Section 11. Certain Definitions. As used herein with
respect to the Series A Preferred Stock, the following terms
shall have the following meanings:
(A) The term "Common Stock" shall mean the class of stock designated as
the common stock, par value $.01 per share, of the Corporation at the date
hereof or any other class of stock resulting from successive changes or
reclassification of such common stock.
(B) The term "Junior Stock", as used in Section 5 hereof, shall mean the
Common Stock and any other class or series of capital stock of the Corporation
over which the Series A Preferred Stock has preference or priority in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
(C) The term "Parity Stock", as used in Section 5 hereof, shall mean any
class of series of capital stock ranking pari passu with the Series A Preferred
Stock in the distribution of assets or any liquidation, dissolution or winding
up of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be duly executed in its corporate name on this 2nd day of June,
1998.
IEC Electronics Corp.
By:
-------------------------
Name: Russell E. Stingel
Title:Chairman of the Board and
Chief Executive Officer
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Exhibit 99.1
FROM: MARTIN E. JANIS & COMPANY, INC. CONTACT: Bev Jedynak
PUBLIC RELATIONS 312-943-1100
919 North Michigan Avenue
Chicago, IL 60611 CORPORATE CONTACT:
Diana Kurty
315-331-7742
FOR IMMEDIATE RELEASE
IEC ADOPTS SHAREHOLDER RIGHTS AGREEMENT
Newark, NY, June 4, 1998 - IEC Electronics Corp. (NASDAQ: IECE) today announced
that its Board of Directors has adopted a Shareholder Rights Agreement and has
declared a dividend of one Preferred Share Purchase Right for each outstanding
share of IEC's common stock held by stockholders of record at the close of
business on June 15, 1998.
The Rights will generally be exercisable only if a person or group acquires
beneficial ownership of 15 percent or more of the Company's outstanding common
stock, or commences a tender or exchange offer that would result in the
beneficial ownership by a person or a group of 15 percent or more of the
Company's outstanding common stock.
Each Right, which is not now exercisable, will entitle the holder to purchase
one one-thousandth of a share of the Company's new Series A Preferred Stock at
an exercise price of $42.50 (subject to adjustment). In the event the Rights
become exercisable, holders (other than the acquiring group or person) will be
entitled to purchase, at the Rights' then-current exercise price, shares of IEC
preferred stock, or common stock of the acquiring company, which have a market
value equal to twice the Rights' then-current exercise price.
Unless or until the Rights become exercisable, they will trade with IEC common
stock and no separate certificates will be issued. Under certain circumstances,
the Rights are redeemable at a price of $0.001 per Right and will expire on June
15, 2008, unless redeemed earlier.
A summary of the Rights Agreement will be mailed to all stockholders of record
as of June 15, 1998.
The Company observed that numerous public companies have adopted similar plans.
The plans are intended to protect shareholders' rights to realize the full,
long-term value of their investment in the Company, while not preventing a
fairly valued bid. The Plan was not adopted in response to any known effort to
acquire the Company.
SAFE HARBOR: Certain statements contained above are forward-looking statements
that involve risks and uncertainties, such as those relating to distribution of
dividends and operation of the Shareholder Rights Agreement. These risks include
the risk that future action or inaction by the Board with respect to the
Shareholder Rights Agreement, including any future decision relating to
redemption of the Rights or amendments of the terms of the Rights, could become
the subject of litigation and other risks detailed from time to time in the
Company's SEC reports, including the Company's Annual Report on Form 10-K and in
other documents recently filed by the Company with the Securities and Exchange
Commission.
IEC is a full service ISO 9001 certified contract manufacturer employing
state-of-the-art production utilizing both surface mount and pin-through-hole
technology. IEC offers its customers a wide range of manufacturing and
management services, on either a turnkey or consignment basis, including
material procurement and control, concurrent engineering services, manufacturing
and test engineering support, statistical quality assurance and complete
resource management. Information regarding IEC can be found on its World Wide
Web page located at http://www.iec.
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Exhibit 99.2
June 16, 1998
To our Stockholders:
On June 2, 1998, your Board of Directors adopted a stockholder Rights
Agreement. This letter briefly describes the Rights Agreement and the Board's
reasons for adopting it.
The Rights Agreement was not adopted in response to any specific effort to
acquire control of the Company. Rather, it was adopted to increase your Board's
ability to represent the interests of the Company's stockholders more
effectively in the event of an unsolicited takeover attempt. The Board believes
that the action taken will encourage potential acquirors to negotiate with your
Board of Directors prior to any takeover attempt, give your Board of Directors
increased leverage in such negotiations and enable your Board of Directors to
protect you against being deprived of the full value of IEC's long-term
potential.
Under the Rights Agreement, a dividend of one Preferred Share Right for
each outstanding share of IEC common stock was made on June 15, 1998 to
stockholders of record on that date. The adoption of the Rights Agreement does
not require action on your part. Initially, the Rights are not exercisable.
Separate certificates representing the Rights will not be sent to you, and the
Rights will automatically trade with your shares of the Company's common stock.
A document entitled "Summary of Rights to Purchase Preferred Stock" explaining
the terms of the Agreement is enclosed.
There are several means by which an acquiror may attempt to obtain control
of a target company upon terms that are unfair to its stockholders. The Rights
Agreement contains provisions designed to protect stockholders against abusive
practices that can unfairly pressure stockholders to sell their stock at less
than full value. Thousands of public companies have adopted rights plans similar
to that adopted by your Board of Directors.
The distribution of these Rights is not intended to prevent a takeover of
the Company on terms beneficial to its stockholders. However, it may deter an
attempt to acquire the Company in a manner or on terms which the Board
determines not to be in the best interests of its stockholders.
Adoption of the Rights Agreement will not weaken the financial condition
of the Company or interfere with its business plans. Issuance of the Rights has
no dilutive effect, will not affect reported earnings per share, is not taxable
to the Company or to stockholders, and will not change the manner in which IEC's
common stock is traded.
In adopting the Rights Agreement, your Board has expressed its confidence
in IEC's future and its belief that it has increased your ability to participate
in that future.
Very truly yours,
-----------------------
Russell E. Stingel
Chairman of the Board and
Chief Executive Officer
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