SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20569
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
STAGE STORES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 76-0407711
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(State of Incorporation) (IRS Employer
Identification No.)
10201 Main Street, Houston, TX 77025
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(Address of principal (Zip Code)
executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Stock Purchase New York Stock Exchange
Rights
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Page 1 of 12 Pages
The Exhibit Index Appears on Page 12
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Item 1. Description of Securities to be Registered.
On November 2, 1998, the Board of Directors of the Company
declared a dividend of one Preferred Stock Purchase Right (the "Right(s)") for
each outstanding share of Common Stock, par value $0.01 per share (the "Common
Stock"), of the Company. The dividend is payable as of November 13, 1998 to
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-hundred thousandth (1/100,000) of a share
of a new series of preferred shares of the Company, designated as Series A
Junior Preferred Stock ("Preferred Stock"), at a price of $60.00 per one
one-hundred thousandth (1/100,000) of a share (the "Exercise Price"), subject to
certain adjustments. 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 ("Rights Agent"), dated as of
November 11, 1998.
Initially the Rights will not be exercisable, certificates
will not be sent to stockholders, and the Rights will automatically trade with
the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 15% or more of
the outstanding voting stock of the Company (an "Acquiring Person"), (ii) the
tenth day following a determination by the Board of Directors that any person or
group of affiliated or associated persons is an Adverse Person (as defined
below) and (iii) the tenth business day (or such later date as may be determined
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by the Board of Directors prior to such time as any person or group of
affiliated or associated persons becomes an Acquiring Person) after the date of
the commencement or announcement of a person's or group's intention to commence
a tender or exchange offer the consummation of which would result in the
ownership of 15% or more of the Company's outstanding voting stock (even if no
shares are actually purchased pursuant to such offer); prior thereto, the Rights
would not be exercisable, would not be represented by a separate certificate,
and would not be transferable apart from the Company's Common Stock, but will
instead be evidenced, with respect to any of the Common Stock certificates
outstanding as of November 13, 1998, by such Common Stock certificate.
An Acquiring Person does not include (A) the Company, (B) any
subsidiary of the Company, (C) any employee benefit plan or employee stock plan
of the Company or of any subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding voting stock for or pursuant to the
terms of any such plan, (D) any person or group whose ownership of 15% or more
of the shares of voting stock of the Company then outstanding results solely
from (i) any action or transaction or transactions approved by the Board of
Directors before such person or group became an Acquiring Person or (ii) a
reduction in the number of issued and outstanding shares of voting stock of the
Company pursuant to a transaction or transactions approved by the Board of
Directors (provided that any person or group that does not become an Acquiring
Person by reason of clause (i) or (ii) above shall become an Acquiring Person
upon acquisition of an additional 1% of the Company's voting stock unless such
acquisition of additional voting stock will not result in such person or group
becoming an Acquiring Person by reason of such clause (i) or (ii)) or (E) any
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person who, as of November 13 1998, together with all affiliates and associates
of such person, was the beneficial owner of 15% or more of the voting stock of
the Company outstanding as of such date; provided, however, that any person
described in this clause (E) shall no longer be an exempt person and shall
become an Acquiring Person if (i) such person, together with all affiliates and
associates of such person, after November 13 1998, acquires beneficial ownership
of an additional 1% or more of the voting stock (unless such acquisition is
pursuant to a transaction described in clause (D)(i) or (D)(ii) above) or (ii)
such person, together with all affiliates and associates of such person, after
November 13, 1998, reduces its beneficial ownership of the voting stock to less
than 15% of the outstanding voting stock and thereafter acquires beneficial
ownership of 15% or more of the outstanding voting stock (unless such
acquisition is pursuant to a transaction described in clause (D)(1) or (D)(ii)
above).
An "Adverse Person" is any person or group that at least a
majority of the Board of Directors who are not officers of the Company declares
such upon a determination that such person or group, alone or together with its
Affiliates and Associates, has become the Beneficial Owner of an amount of
Common Stock which the Board of Directors determines to be substantial (which
amount shall in no event be less than 5% of the shares of Common Stock then
outstanding) and, after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem appropriate, that
(i) such Beneficial Ownership by such Persons is intended to cause the Company
to repurchase the Common Stock beneficially owned by such Person or to cause
pressure on the Company to take action or enter into a transaction or series of
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transaction intended to provide such Person with short-term financial gain under
circumstances where the Board of Directors determines that the best long-term
interest of the Company and its shareholders would not be served by taking such
action or entering into such transactions or series of transactions at that time
or (ii) such Beneficial Ownership is causing or reasonably likely to cause a
material adverse impact (including, but not limited to, causing, or being
reasonably likely to cause, the Company to become a subsidiary of a registered
holding company under the Public Utility Holding Company Act of 1935, as
amended), on the business prospects of the Company.
Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after November
13, 1998 will contain a legend incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any of the Company's Common Stock certificates
outstanding as of November 13, 1998 will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate. As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Company's Common Stock as of the close of business on the Distribution Date and
such separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on November 11, 2008, unless
earlier redeemed by the Company as described below.
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The Preferred Stock is non-redeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, subordinate to any other series of the Company's preferred stock. The
Preferred Stock may not be issued except upon exercise of Rights. Each share of
Preferred Stock will be entitled to receive when, as and if declared, a
quarterly dividend in an amount equal to the greater of $0.01 per share and
100,000 times the cash dividends declared on the Company's Common Stock. In
addition, the Preferred Stock is entitled to 100,000 times any non-cash
dividends (other than dividends payable in equity securities) declared on the
Common Stock, in like kind. In the event of liquidation, the holders of
Preferred Stock will be entitled to receive for each share, a liquidation
payment in an amount equal to the greater of $60,000.00 or 100,000 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
100,000 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Preferred Stock will be entitled to receive 100,000 times the
amount received per share of Common Stock. The rights of Preferred Stock as to
dividends, liquidation and voting are protected by anti-dilution provisions.
The number of shares of Preferred Stock issuable upon exercise
of the Rights and the Exercise Price for the Rights are subject to certain
adjustments from time to time in the event of a stock dividend on, or a
subdivision or combination of, the Common Stock. The Exercise Price for the
Rights also is subject to adjustment in the event of extraordinary distributions
of cash or other property to holders of Common Stock.
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Unless the Rights are earlier redeemed, in the event that,
after the time that a person becomes an Acquiring Person, the Company were to be
acquired in a merger or other business combination (in which any shares of the
Company's Common Stock are changed into or exchanged for other securities or
assets) or more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right will from and
after such date have the right to receive, upon payment of the Exercise Price,
that number of shares of common stock of the acquiring company having a market
value at the time of such transaction equal to two times the Exercise Price. In
addition, unless the Rights are earlier redeemed, if a person becomes an
Acquiring Person, the Rights Agreement provides that proper provision will be
made so that each holder of record of a Right, other than the Acquiring Person
(whose Rights would thereupon become null and void), will thereafter have the
right to receive, upon payment of the Exercise Price, that number of shares of
the Company's Preferred Stock having a market value at the time of the
transaction equal to two times the Exercise Price (such market value to be
determined with reference to the market value of the Company's Common Stock as
provided in the Rights Agreement). The Rights Agreement also grants the Board of
Directors the option, after any person or group acquires beneficial ownership of
15% or more of the voting stock but before there has been a 50% acquisition, to
exchange one share of common stock for each then valid right (which would
exclude rights held by the Acquiring Person that have become void).
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Fractions of shares of Preferred Stock (other than fractions
that are integral multiples of one one-hundred thousandth (1/100,000) of a
share) may, at the election of the Company, be evidenced by depositary receipts.
The Company may also issue cash in lieu of fractional shares which are not
integral multiples of one one-hundred thousandth (1/100,000) of a share.
At any time on or prior to the close of business on the tenth
day after the time that a person has become either an Acquiring Person or an
Adverse Person, the Company may redeem the Rights in whole, but not in part, at
a price of $0.01 per Right ("Redemption Price"). Immediately upon the effective
time of the action of the Board of Directors of the Company authorizing
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of the Rights will be to receive the Redemption
Price. The foregoing notwithstanding, the Rights generally may not be redeemed
for one hundred eighty (180) days following a change in a majority of the Board
of Directors as a result of a proxy contest.
For as long as the Rights are then redeemable, the Company
may, except with respect to the Redemption Price or date of expiration of the
Rights, amend the Rights in any manner, including an amendment to extend the
time period in which the Rights may be redeemed. At any time when the Rights are
not then redeemable, the Company may amend the Rights in any manner that does
not materially adversely affect the interests of holders of the Rights as such.
Until a Right is exercised, the holder, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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As of October 31, 1998, there were 26,689,576 shares of Common
Stock issued and outstanding and 1,250,584 shares of Class B Common Stock issued
and outstanding (and 1,500,000 shares reserved for issuance under stock option
plans). Five hundred shares of Preferred Stock have been reserved for issuance
upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group who attempts to acquire the
Company on terms not approved by the Company's Board of Directors. The Rights
should not interfere with any merger or other business combination approved by
the Board since they may be redeemed by the Company at $0.01 per Right at any
time until the close of business on the tenth day after a person or group has
obtained beneficial ownership of 15% or more of the voting stock.
The form of Rights Agreement between the Company and the
Rights Agent, specifying the terms of the Rights, which includes as Exhibit A
the form of Right Certificate and as Exhibit B the form of Certificate of
Designations of the Company setting forth the terms of the Preferred Stock are
attached hereto as exhibits and incorporated herein by reference. The foregoing
description of the Rights is qualified by reference to such exhibits.
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Item 2. Exhibits.
1. Rights Agreement dated as of November 11, 1998
between Stage Stores, Inc. and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent. The
Rights Agreement includes as Exhibit A the form of
Right Certificate and as Exhibit B the form of
Certificate of Designations.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned hereunto duly authorized.
By: /s/ James Marcum
-------------------------------
James Marcum
Vice President and
Chief Financial Officer
November 12, 1998
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1. Rights Agreement dated as of November 11, 1998 between Stage
Stores, Inc. and ChaseMellon Shareholder Services, L.L.C. as
Rights Agent. The Rights Agreement includes as Exhibit A the
form of Right Certificate and as Exhibit B the form of
Certificate of Designations.
================================================================================
AGREEMENT
by and between
STAGE STORES, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
Dated as of
November 11, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Certain Definitions............................................................................1
Section 2. Appointment Of Rights Agent...................................................................11
Section 3. Issuance Of Right Certificates................................................................11
Section 4. Form Of Right Certificates....................................................................13
Section 5. Countersignature And Registration.............................................................14
Section 6. Transfer, Split Up, Combination And Exchange Of Right Certificates; Mutilated,
Destroyed, Lost Or Stolen Right Certificates..................................................15
Section 7. Exercise Of Rights; Exercise Price; Expiration Date Of Rights.................................16
Section 8. Cancellation And Destruction Of Right Certificates............................................20
Section 9. Reservation And Availability Of Shares Of Preferred Stock.....................................21
Section 10. Preferred Stock Record Date...................................................................23
Section 11. Adjustment Of Exercise Price Or Number Of Shares..............................................23
Section 12. Certification Of Adjusted Exercise Price Or Number Of Shares..................................33
Section 13. Consolidation, Merger Or Sale Or Transfer Of Assets Or Earning Power..........................34
Section 14. Fractional Rights And Fractional Shares.......................................................39
Section 15. Rights Of Action..............................................................................41
Section 16. Agreement Of Right Holders....................................................................41
Section 17. Right Certificate Holder Not Deemed A Stockholder.............................................42
Section 18. Concerning The Rights Agent...................................................................43
Section 19. Merger Or Consolidation Of, Or Change In Name Of, The Rights Agent............................44
Section 20. Duties Of Rights Agent........................................................................45
Section 21. Change Of Rights Agent........................................................................48
Section 22. Issuance Of New Right Certificates............................................................49
Section 23. Redemption And Termination....................................................................50
Section 24. Notice Of Proposed Actions....................................................................51
Section 25. Notices.......................................................................................53
Section 26. Supplements And Amendments....................................................................54
Section 27. Exchange......................................................................................55
Section 28. Successors....................................................................................57
Section 29. Benefits Of This Agreement....................................................................57
Section 30. Delaware Contract.............................................................................57
Section 31. Counterparts..................................................................................58
Section 32. Descriptive Headings..........................................................................58
Section 33. Severability..................................................................................58
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Exhibit A -- Form of Right Certificate
Exhibit B -- Form of Certificate of Designations of Series A Junior Preferred Stock
</TABLE>
ii
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AGREEMENT
Agreement, dated as of November 11, 1998, by and between Stage
Stores, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
W I T N E S S E T H :
WHEREAS, on November 2,1998 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized the issuance of, and
declared a dividend payable in, one right (a "Right") for each share of Common
Stock, $0.01 par value per share, of the Company outstanding as of the close of
business on November 13, 1998 (the "Record Date"), each such Right representing
the right to purchase one one-hundred thousandth (1/100,000) of a share of
Series A Junior Preferred Stock of the Company ("Preferred Stock") having the
rights and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit B authorized by the Board of Directors on November 2,
1998, upon the terms and subject to the conditions hereinafter set forth (the
"Rights"); and
WHEREAS, the Board of Directors of the Company further
authorized the issuance of one Right (subject to adjustment) with respect to
each share of Common Stock which may be issued between the Record Date and the
earlier to occur of the Distribution Date, the Expiration Date or the Final
Expiration Date (as such terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings indicated:
<PAGE>
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates (as such term is hereinafter
defined) and Associates (as such term is hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or
more of the Voting Stock of the Company then outstanding; provided, that, an
Acquiring Person shall not include (i) an Exempt Person (as such term is
hereinafter defined) or (ii) any Person who or which, together with all
Affiliates and Associates of such Person, would be an Acquiring Person solely by
reason of (A) being the Beneficial Owner of shares of Voting Stock of the
Company, the Beneficial Ownership of which was acquired by such Person (together
with all Affiliates and Associates of such Person) pursuant to any action or
transaction or series of related actions or transactions approved by the Board
of Directors before such Person (together with all Affiliates and Associates of
such Person) otherwise became an Acquiring Person or (B) a reduction in the
number of issued and outstanding shares of Voting Stock of the Company pursuant
to a transaction or a series of related transactions approved by the Board of
Directors of the Company; provided, further, that in the event such Person
described in this clause (ii) does not become an Acquiring Person by reason of
subclause (A) or (B) of this clause (ii), such Person nonetheless shall become
an Acquiring Person in the event such Person (together with all Affiliates and
Associates of such Person) thereafter acquires Beneficial Ownership of an
additional 1% of the Voting Stock of the Company, unless the acquisition of such
additional Voting Stock would not result in such Person becoming an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii). Notwithstanding
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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 (as determined in good faith
by the Board of Directors) a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
an "Acquiring Person" for any purposes of this Agreement.
(b) "Adverse Person" shall mean any Person declared to an Adverse Person
by the Board of Directors by the Board of Directors upon determination that the
criteria set forth in Section 11(a)(ii)(B) apply to such Person.
(c) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended ("Exchange Act"), as in effect on the date of this Agreement.
(d) "Associate" of a Person shall mean (i) with respect to a corporation,
any officer or director thereof or of any Subsidiary (as such term is
hereinafter defined) thereof, or any Beneficial Owner of 15% or more of any
class of equity security thereof, (ii) with respect to an association, any
officer or director thereof or of a Subsidiary thereof, (iii) with respect to a
partnership, any general partner thereof or any limited partner thereof who is,
directly or indirectly, the Beneficial Owner of a 15% ownership interest
therein, (iv) with respect to a business trust, any officer or trustee thereof
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or of any Subsidiary thereof, (v) with respect to any other trust or an estate,
any trustee, executor or similar fiduciary or any Person who has a 15% or
greater interest as a beneficiary in the income from or principal of such trust
or estate, (vi) with respect to a natural person, any relative or spouse of such
person, or any relative of such spouse, who has the same home as such person,
and (vii) any Affiliate of such Person.
(e) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have correlative
meanings):
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Regulations 13D and 13G thereunder (or
any comparable or successor law or regulation), in each case as in
effect on the date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or the
fulfillment of a condition or both) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, other rights (other than the Rights),
warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", securities tendered pursuant to a tender or
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exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange or (B) the right to vote, alone or in concert with others,
pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "Beneficially Own", any securities if
the agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given in response to a
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act and
(2) is not at the time reportable by such Person on a Schedule 13D
report under the Exchange Act (or any comparable or successor report),
other than by reference to a proxy or consent solicitation being
conducted by such Person; or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (whether
or not in writing) for the purpose of acquiring, holding, voting
(except as described in clause (B) of subparagraph (ii) of this
paragraph (d)) or disposing of any securities of the Company;
provided, however, that for purposes of determining Beneficial
Ownership of securities under this Agreement, officers and directors
of the Company solely by reason of their status as such shall not
constitute a group (notwithstanding that they may be Associates of one
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another or may be deemed to constitute a group for purposes of Section
13(d) the Exchange Act) and shall not be deemed to own shares owned by
another officer or director of the Company.
Notwithstanding anything in this paragraph (d) to the contrary, a Person
engaged in the business of underwriting securities shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," any securities acquired in good
faith in a firm commitment underwriting until the expiration of forty days after
the date of such acquisition.
(f) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of Texas or New York are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., Houston,
Texas time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Houston, Texas time, on the next succeeding
Business Day.
(h) "Common Stock" when used with reference to the Company shall
collectively mean the Common Stock, $0.01 par value, of the Company. "Common
Stock" when used with reference to any Person other than the Company which shall
be organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person. "Common Stock"
when used with reference to any Person other than the Company which shall not be
organized in corporate form shall mean units of beneficial interest which shall
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represent the right to participate in profits, losses, deductions and credits of
such Person and which shall be entitled to exercise the greatest voting power
per unit of such Person.
(i) "Distribution Date" shall have the meaning set forth in Section 3(b)
hereof.
(j) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan or employee stock plan of the Company
or any Subsidiary of the Company, or any trust or other entity organized,
appointed, established or holding Voting Stock for or pursuant to the terms of
any such plan (iv) any Person who, as of November 13, 1998, together with all
Affiliates and Associates of such Person, was the Beneficial Owner of 15% or
more of the Voting Stock of the Company outstanding as of such date; provided,
however, that any Person described in this clause (iv) shall no
longer be an Exempt Person and shall become an Acquiring Person if (A) such
Person, together with all Affiliates and Associates of such Person, after
November 13, 1998, acquires Beneficial Ownership of an additional 1% or more of
the Voting Stock or (B) such Person, together with all Affiliates and Associates
of such Person, after November 13, 1998, reduces its Beneficial Ownership of the
Voting Stock to less than 15% of the outstanding Voting Stock and thereafter
acquires Beneficial Ownership of 15% or more of the outstanding Voting Stock,
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unless in the case of clause (A) or (B) such acquisition of Voting Stock was
pursuant to (i) any action or transaction or series of related actions or
transactions approved by the Board of Directors before such acquisition or (ii)
a reduction in the number of issued and outstanding shares of Voting Stock of
the Company pursuant to a transaction or a series of related transactions
approved by the Board of Directors of the Company provided, further, that
in the event such Person described in clause (A) or (B) above
does not become an Acquiring Person by reason of the foregoing subclauses (i) or
(ii), such Person nonetheless shall become an Acquiring Person in the event such
Person (together with all Affiliates and Associates of such Person) thereafter
acquires Beneficial Ownership of an additional 1% of the Voting Stock of the
Company, unless the acquisition of such additional Voting Stock would not result
in such Person becoming an Acquiring Person by reason of such subclauses (i) or
(ii).
(l) "Exercise Price" shall have the meaning set forth in Section 4 hereof.
(m) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(n) "Fair Market Value" of any property shall mean the fair market value
of such property as determined in accordance with Section 11(b) hereof.
(o) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
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(p) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company or other entity.
(q) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(s) "Rights" shall have the meaning set forth in the WHEREAS clause at the
beginning of this Agreement.
(t) "Right Certificate" shall have the meaning set forth in Section 3(d)
hereof.
(u) "Rights Dividend Declaration Date" shall have the meaning set forth in
the WHEREAS clause at the beginning of this Agreement.
(v) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) or such earlier date as a majority of the Board of Directors of
the Company shall become aware of the existence of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or other entity of
which securities or other ownership interests having voting power sufficient to
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elect a majority of the board of directors or other persons performing similar
functions are Beneficially Owned, directly or indirectly, by such Person or by
any corporation or other entity that is otherwise controlled by such Person. (x)
"Trading Day" shall have the meaning set forth in Section 11(b) hereof.
(y) "Transfer Tax" shall mean any tax or charge, including, but not
limited to, any documentary stamp tax, imposed or collected by any governmental
or regulatory authority in respect of any transfer of any security, instrument
or right, including the Rights, shares of the Common Stock and shares of the
Preferred Stock.
(z) "Triggering Event" shall mean any event described in Section 11(a)(ii)
or Section 13(a) hereof.
(aa) "Voting Stock" shall mean (i) the Common Stock of the Company and
(ii) any other shares of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Stock
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. For purposes of this
Agreement, a stated percentage of the Voting Stock shall mean a number of shares
of the Voting Stock as shall equal in voting power that stated percentage of the
total voting power of the then outstanding shares of Voting Stock in the
election of a majority of the Board of Directors of the Company or in respect of
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any merger, consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of the Company
for purposes of applying the definitions contained in this Section 1 shall be
made by a majority of the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the Close of Business on the day which is the earlier of (i) the
tenth day after the Stock Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or the first public
announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of the then outstanding shares of Voting Stock
of the Company (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights shall be evidenced by the
certificates for Common Stock registered in the name of the holders of Common
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Stock and not by separate Right certificates and the record holders of such
certificates for Common Stock shall be the record holders of the Rights
represented thereby and (y) each Right shall be transferable only simultaneously
and together with the transfer of a share of Common Stock (subject to adjustment
as hereinafter provided). Until the Distribution Date (or, if earlier, the
Expiration Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Stock shall constitute the surrender for transfer of the
Right or Rights associated with the Common Stock evidenced thereby.
(b) Rights shall be issued in respect of all shares of Common Stock that
become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date shall have impressed, printed, written or stamped thereon or otherwise
affixed thereto the following legend:
This certificate also evidences and entitles the
holder hereof to the same number of Rights (subject to
adjustment) as the number of shares of Common Stock
represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between Stage
Stores, Inc. and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agent"), dated as of November 11, 1998, as it may be
amended from time to time (the "Agreement"), the terms of
which are incorporated herein by reference and a copy of which
is on file at the principal executive offices of Stage Stores,
Inc. Under certain circumstances, as set forth in the
Agreement, such Rights shall be evidenced by separate
certificates and shall no longer be evidenced by this
certificate. Stage Stores, Inc. shall mail to the registered
holder of this certificate a copy of the Agreement without
charge within five days after receipt of a written request
therefor. As provided in Section 7(e) of the Agreement, Rights
issued to or Beneficially Owned by Acquiring Persons or their
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Affiliates or Associates (as such terms are defined in the
Agreement) or any subsequent holder of such Rights shall be
null and void and may not be exercised by or transferred to
any Person.
(c) 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 and provided
with all necessary information, send), by first class mail, postage prepaid, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Company, at the address of
such holder shown on such records, a certificate in the form provided by Section
4 hereof (a "Right Certificate"), evidencing one Right (subject to adjustment as
provided herein) for each share of Common Stock so held. As of and after the
Distribution Date, the Rights shall be evidenced solely by Right Certificates
and may be transferred by the transfer of the Right Certificate as permitted
hereby, separately and apart from any transfer of one or more shares of Common
Stock.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares, certificate and assignment to be printed
on the reverse thereof), when, as and if issued, shall be substantially in the
form set forth in Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Common
Stock or the Rights may from time to time be listed or as the Company may deem
appropriate (provided such do not affect the duties or responsibilities or the
Rights Agent) to conform to usage or otherwise and as are not inconsistent with
the provisions of this Agreement. Subject to the provisions of Section 22
hereof, Right Certificates evidencing Rights whenever issued, (i) shall be dated
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as of the date of issuance of the Rights they represent and (ii) subject to
adjustment from time to time as provided herein, on their face shall entitle the
holders thereof to purchase such number of shares (including fractional shares
which are integral multiples of one one-hundred thousandth (1/100,000) of a
share) of Preferred Stock as shall be set forth thereon at the price payable
upon exercise of a Right provided by Section 7(b) hereof, as the same may from
time to time be adjusted as provided herein (the "Exercise Price").
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Each Right Certificate shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President, either manually or
by facsimile signature, and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. Each Right
Certificate shall be countersigned by the Rights Agent either manually or by
facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
Right Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed on
behalf of the Company by any Person who, on the date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer.
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(b) Following the Distribution Date and the receipt by the Rights Agent of
all relevant information, the Rights Agent will keep or cause to be kept, at its
office designated as the appropriate place for surrender of Right Certificates
upon exercise or transfer, and in such other locations as may be required by
law, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES.
(a) Subject to the provisions of Section 7(e), 7(f) and 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the earlier of the Expiration Date or the Final
Expiration Date, any Right Certificate, may be (i) transferred or (ii) split up,
combined or exchanged for one or more other Right Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock as the
Right Certificate or Rights Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer any Right Certificate
shall surrender the Right Certificate at the office of the Rights Agent
designated for the surrender of Right Certificates with the form of certificate
and assignment on the reverse side thereof duly endorsed (or enclose with such
Right Certificate a written instrument of transfer in form satisfactory to the
Company and the Rights Agent), duly executed by the registered holder thereof or
his attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
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Agent, and shall surrender the Right Certificate to be split up, combined or
exchanged at the office of the Rights Agent designated therefor. Thereupon, the
Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any Transfer Tax
that may be imposed in connection with any transfer, split up, combination or
exchange of any Right Certificates. The Rights Agent shall have no duty or
obligation under this Section 6(a) unless and until it is satisfied that all
such taxes and/or charges have been paid.
(b) Subject to the provisions of Section 7(e), 7(f) and 14 hereof, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them and, if requested by the Company, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, or
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company shall cause a new Right Certificate of like tenor to be
issued and delivered to the registered owner in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Section 7. EXERCISE O RIGHTS; EXERCISE PRICE; EXPIRATION DATE O RIGHTS.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e), 23(a) and 27(b) hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly and
properly executed (with signatures duly guaranteed), to the Rights Agent at the
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office of the Rights Agent designated for such purpose, together with payment of
the Exercise Price for each Right exercised, subject to adjustment as
hereinafter provided, at or prior to the Close of Business on the earlier of (i)
November 11, 2008 (the "Final Expiration Date") or (ii) the date on which the
Rights are redeemed as provided in Section 23 hereof or the date on which the
Rights are exchanged as provided in Section 27 hereof (such earlier date being
herein referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $60.00 for each one one-hundred
thousandth (1/100,000) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United States
of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase and certificate duly executed, accompanied by payment by certified
check, cashier's check, bank draft or money order payable to the Company or the
Rights Agent of the Exercise Price for the shares to be purchased and an amount
equal to any applicable Transfer Tax required to be paid by the holder of the
Right Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Preferred
Stock of the Company one or more certificates representing the number of shares
of Preferred Stock to be so purchased, and the Company hereby authorizes and
directs such transfer agent to comply with all such requests, (ii) as provided
in Section 14(b), at the election of the Company, cause depositary receipts to
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be issued in lieu of fractional shares of Preferred Stock, (iii) if the election
provided for in the immediately preceding clause (ii) has not been made,
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares (other than fractions that are integral multiples
of one one-hundred thousandth of a share) in accordance with Section 14(b)
hereof, (iv) after receipt of such Preferred Stock certificates and, if
applicable, depositary receipts, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (v) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate; provided, however, that in the case of a
purchase of securities, other than Preferred Stock, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding in such case to that referred to in the foregoing clauses (i)
through (v) of this Section 7(c). Notwithstanding the foregoing provisions of
this Section 7(c), the Company may suspend the issuance of shares of Preferred
Stock upon exercise of a Right for a reasonable period, not in excess of 90
days, during which the Company seeks to register under the Securities Act of
1933, as amended (the "Act"), and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the Rights;
provided, however, that nothing contained in this Section 7(c) shall relieve the
Company of its obligations under Section 9(d) hereof.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or his assign,
subject to the provisions of Section 14(b) hereof.
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(e) Notwithstanding any provision of this Agreement to the contrary, from
and after the time (the "invalidation time") when any Person first becomes an
Acquiring Person, any Rights that are Beneficially Owned by (x) such Acquiring
Person (or any Associate or Affiliate of such Acquiring Person), (y) a
transferee of such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person (or any such Associate or Affiliate) to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined is part of
an agreement, arrangement or understanding which has the purpose or effect of
avoiding the provisions of this Section 7(e), and subsequent transferees of such
Persons referred to in clause (y) and (z) above, shall be null and void without
any further action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this Agreement.
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) are complied with, but shall have no liability to any holder
of Right Certificates or any other Person as a result of its failure to make any
determination with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. No Right Certificate shall be issued pursuant to
Section 3 hereof that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof whose Rights would be null and void
pursuant to the provisions of this Section 7(e); no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person (or an
Affiliate or Associate of such Acquiring Person) whose Rights would be null and
void pursuant to the provisions of this Section 7(e) or any Associate or
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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 (or an Associate or Affiliate of such Acquiring Person)
whose Rights would be null and void pursuant to the provisions of this Section
7(e) shall be cancelled.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
properly completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent 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 Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall cancel and
retire, any Right Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
out of authorized and issued shares of Preferred Stock held in its treasury,
such number of shares of Preferred Stock as will from time to time be sufficient
to permit the exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares of Preferred Stock issued or
reserved for issuance in accordance with this Agreement to be listed, upon
official notice of issuance, upon the principal national securities exchange, if
any, upon which the Common Stock is listed or, if the principal market for the
Common Stock is not on any national securities exchange, to be eligible for
quotation in the National Association of Securities Dealers' Automated Quotation
System or any successor thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such action as
may be necessary to insure that all shares of Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
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soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (a) the date as of which the
Rights are no longer exercisable for Preferred Stock, and (b) the earlier of the
Expiration Date and the Final Expiration Date. The Company may temporarily
suspend, for a period of time not to exceed ninety days, the issuance of shares
of Preferred Stock upon exercise of a Right in order to prepare and file a
registration statement under the Act and permit it to become effective. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Act (if required)
shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due and payable
any and all federal and state Transfer Taxes which may be payable in respect of
the issuance or delivery of the Right Certificates or of any shares of Preferred
Stock issued or delivered upon the exercise of Rights. The Company shall not,
however, be required to pay any Transfer Tax which may be payable in respect of
any transfer or delivery of a Right Certificate to a Person other than, or the
issuance or delivery of certificates for Preferred Stock upon exercise of Rights
in a name other than that of, the registered holder of the Right Certificate,
and the Company shall not be required to issue or deliver a Right Certificate or
certificate for Preferred Stock to a Person other than such registered holder
until any such Transfer Tax shall have been paid (any such Transfer Tax being
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payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such
Transfer Tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock represented thereby on, and such certificate shall be dated as
of, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated as of, the next succeeding
Business Day on which the Preferred Stock transfer books of the Company are
open.
Section 11. ADJUSTMENT OF EXERCISE PRICE OR NUMBER OF SHARES. The Exercise
Price and the number of shares of Preferred Stock which may be purchased upon
exercise of a Right are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare or pay any dividend on Common Stock payable
in shares of Common Stock, (B) subdivide or split the outstanding
shares of Common Stock into a greater number of or (C) combine or
consolidate the outstanding shares of Common Stock into a smaller
number of shares or effect a reverse split of the outstanding shares
of Common Stock, then and in each such event the number of one
one-hundred thousandth (1/100,000) of a share of Preferred Stock
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issuable upon the Exercise of a Right after the record date for such
event (if one shall have been established or, if not, after the date
of such event) shall be the number of one one-hundred thousandth
(1/100,000) of a share of Preferred Stock issuable immediately prior
to such event multiplied by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which is the number of shares of Common
Stock outstanding immediately after such event and the Exercise Price
to be in effect after the record date for such event (if one shall
have been established or, if not, after the date of such event) shall
be determined by multiplying the Exercise Price in effect immediately
prior to such event by such fraction. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) Subject to Section 27 of this Agreement, in the event (A) any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan), alone
or together with its Affiliates and Associates, shall at any time
after the Rights Dividend Declaration Date, become an Acquiring
Person, unless the event causing the 15% threshold to be crossed is a
transaction set forth in Section 13(a) hereof, or (B) the Board of
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Directors of the Company shall declare any Person to be an Adverse
Person, upon a determination that such Person, alone or together with
its Affiliates and Associates, has, at any time after the Rights
Dividend Declaration Date, become the Beneficial Owner of an amount of
Common Stock which the Board of Directors determines to be substantial
(which amount shall in no event be less than 5% of the shares of
Common Stock then outstanding) and a determination by at least a
majority of the Board of Directors who are not officers of the
Company, after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem
appropriate, that (i) such Beneficial Ownership by such Persons is
intended to cause the Company to repurchase the Common Stock
beneficially owned by such Person or to cause pressure on the Company
to take action or enter into a transaction or series of transaction
intended to provide such Person with short-term financial gain under
circumstances where the Board of Directors determines that the best
long-term interest of the Company and its shareholders would not be
served by taking such action or entering into such transactions or
series of transactions at that time or (ii) such Beneficial Ownership
is causing or reasonably likely to cause a material adverse impact
(including, but not limited to, causing, or being reasonably likely to
cause, the Company to become a subsidiary of a registered holding
company under the Public Utility Holding Company Act of 1935, as
amended), on the business prospects of the Company, then, subject to
the last sentence of Section 23(a) and except as otherwise provided in
this Section 11, each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive upon exercise
of such Right in accordance with the terms of this Agreement and
payment of the Exercise Price, such number of one one-hundred
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thousandth (1/100,000) of a share of Preferred Stock as shall equal
the result obtained by (1) multiplying the then current Exercise Price
by the number of one one-hundred thousandth (1/100,000) of a share of
Preferred Stock for which a Right is then exercisable and dividing the
product by (2) 50% of the per share Fair Market Value of the Preferred
Stock (determined pursuant to Section 11(b) hereof) on the date of
such occurrence.
(iii) In the event that the Company does not have available sufficient
authorized but unissued Preferred Stock 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
and reserve for issuance such number of additional shares of Preferred
Stock as may from time to time be required to be issued upon the
exercise in full of all Rights from time to time outstanding and, if
necessary, shall use its best efforts to obtain stockholder approval
thereof. In lieu of issuing shares of Preferred Stock in accordance
with the foregoing subparagraph (ii), the Company may, if the Board of
Directors determines that such action is necessary or appropriate and
not contrary to the interests of holders of Rights, elect to issue or
pay, upon the exercise of the Rights, cash, property, shares of
Preferred or Common Stock, or any combination thereof, having an
aggregate Fair Market Value equal to the Fair Market Value of the
shares of Preferred Stock which otherwise would have been issuable
pursuant to Section 11(a)(ii), which Fair Market Value shall be
determined by an investment banking firm selected by the Board of
Directors. For purposes of the preceding sentence, the Fair Market
Value of the Preferred Stock shall be as determined pursuant to
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Section 11(b). Subject to Section 23 hereof, any such election by the
Board of Directors of the Company must be made and publicly announced
(with prompt written notice thereof delivered to the Rights Agent)
within thirty (30) days after the date on which the event described in
Section 11(a)(ii) occurs.
(b) For the purpose of this Agreement, the "Fair Market Value" of any
share of Preferred Stock, Common Stock or any other stock or any Right or other
security or any other property on any date shall be determined as provided in
this Section 11(b). In the case of a publicly-traded stock or other security,
the Fair Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such stock or per unit of such other security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Fair Market Value per share of any share of Common Stock is determined during a
period which includes any date that is within 30 Trading Days after (i) the
ex-dividend date for a dividend or distribution on such stock payable in shares
of Common Stock or securities convertible into shares of Common Stock, or (ii)
the effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in each such
case, the Fair Market Value shall be appropriately adjusted by the Board of
Directors of the Company to take into account ex-dividend or post-effective date
trading. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way (in either case, as reported in the
applicable transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange), or, if the securities are
not listed or admitted to trading on the New York Stock Exchange, as reported in
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the applicable transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if not listed or admitted to trading on any national
securities exchange, the last quoted price (or, if not so quoted, the average of
the high bid and low asked prices) in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") or such other system then in use; or, if no bids for such
security are quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in such
security selected by the Board of Directors of the Company. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which such security is listed or admitted to trading is open for the transaction
of business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. If a security is not publicly held
or not so listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of securities
selected in good faith by the Board of Directors of the Company, or, if no such
investment banking firm is, in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the Board of
Directors of the Company; provided, however, that for purposes of making the
adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a
share of Preferred Stock shall not be less than 100% of the product of the Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock (as defined
in the Certificate of Designations relating to the Preferred Stock) and shall
not exceed 105% of the product of the then Fair Market Value of a share of
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Common Stock multiplied by the higher of the then Dividend Multiple or Vote
Multiple applicable to the Preferred Stock. In the case of property other than
securities, the "Fair Market Value" thereof shall be determined in good faith by
the Board of Directors of the Company based upon such appraisals or valuation
reports of such independent experts as the Board of Directors of the Company
shall in good faith determine to be appropriate in accordance with good business
practices and the interests of the holders of Rights. Any such determination of
Fair Market Value shall be described in a statement filed with the Rights Agent
and shall be binding upon the Rights Agent.
(c) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Common Stock or securities convertible into Common Stock at a price
per share (or having a conversion price per share, if a security convertible
into Common Stock) less than the then current per share Fair Market Value of the
Common Stock on such record date, the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common 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 Fair Market Value and the denominator of
which shall be the number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). 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
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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. Shares of Common 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 Exercise Price shall be adjusted to be the Exercise Price
which would then be in effect if such record date had not been fixed.
(d) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend not in excess of 150% of the previous
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section 11(c)
hereof), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Fair Market Value
of the shares of Common Stock on such record date, less the fair market value
(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) 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 Common Stock
and the denominator of which shall be such current Fair Market Value of the
shares of Common Stock. Such adjustment shall be made successively whenever such
a record date is fixed and in the event that such distribution is not so made,
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the Exercise Price shall again be adjusted to be the Exercise Price which would
then be in effect if such record date had not been fixed.
(e) Unless the Company shall have exercised its election as provided in
Section 11(f), upon each adjustment of the Exercise Price as a result of the
calculations made in Section (c) and (d), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of one one-hundred
thousandth (1/100,000) of a share of Preferred Stock obtained by (i) multiplying
(x) the number of one one-hundred thousandth (1/100,000) of a share of Preferred
Stock covered by a Right immediately prior to the adjustment pursuant to this
Section 11(e) by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(f) The Company may elect on or after the date of any adjustment of the
Exercise Price pursuant to Section (c) and (d) to adjust the number of Rights in
substitution for any adjustment pursuant to Section 11(e) in the number of one
one-hundred thousandth (1/100,000) of a share 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 one
one-hundred thousandth (1/100,000) of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
announcement, and shall promptly deliver written notice to the Rights Agent, of
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its election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Exercise Price is adjusted or any
day thereafter, but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. If the Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(e), 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, if any, 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.
(g) All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-hundred thousandth (1/100,000) of a share, as the
case may be.
(h) Irrespective of any adjustment or change in the Exercise Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Exercise Price and the number of shares to be issued upon exercise of the
Rights as in the initial Right Certificates issued hereunder but, nevertheless,
shall represent the Rights as so adjusted.
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(i) Before taking any action that would cause an adjustment reducing the
purchase price per whole share of Preferred Stock upon exercise of the Rights
below the then par value, if any, of the shares of Preferred Stock, the Company
shall use its best efforts to take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of such Preferred Stock at
such adjusted purchase price per share.
(j) Anything in this Section 11 to the contrary notwithstanding, in the
event of any reclassification of stock of the Company or any recapitalization,
reorganization or partial liquidation of the Company or similar transaction, the
Company shall be entitled to make such further adjustments in the number of
shares of Preferred Stock which may be acquired upon exercise of the Rights, and
such adjustments in the Exercise Price therefor, in addition to those
adjustments expressly required by the other paragraphs of this Section 11, as
the Board of Directors of the Company shall determine to be necessary or
appropriate in order for the holders of the Rights in such event to be treated
equitably and in accordance with the purpose and intent of this Agreement or in
order that any such event shall not, but for such adjustment, in the opinion of
counsel to the Company, result in the stockholders of the Company being subject
to any United States federal income tax liability by reason thereof.
Section 12. CERTIFICATION OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11, 13, 23 or 27, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief and reasonably detailed statement of the facts and computations
giving rise to such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Stock a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in accordance
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with Section 25. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such adjustment. Any
adjustment to be made pursuant to Section 11, 13 or 23(c) of this Agreement
shall be effective as of the date of the event giving rise to such adjustment.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained and shall have no duty with respect to nor
be deemed to have knowledge of any adjustment unless and until it shall have
received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, at any time after the time that any Person becomes
an Acquiring Person, (x) the Company shall, directly or indirectly, consolidate
with, or merge with and into, any other Person or Persons (other than an Exempt
Person) and the Company shall not be the surviving or continuing corporation of
such consolidation or merger, or (y) any Person or Persons (other than an Exempt
Person) shall, directly or indirectly, consolidate with, or merge with and into,
the Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (other than
an Exempt Person) or of the Company or cash or any other property, or (z) the
Company or one or more of its Subsidiaries shall, directly or indirectly, sell
or otherwise transfer to any other Person, in one or more transactions, assets
or earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event, proper provision shall be made so that (i) each holder of
record of a Right, except as provided in Section 7(e) hereof, shall thereafter
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have the right to receive, upon the exercise thereof at a price equal to the
then current Exercise Price multiplied by the number of one one-hundred
thousandth (1/100,000) of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of validly issued, fully paid,
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined herein), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall equal the result obtained by (1) multiplying
the then current Exercise Price by the number of one one-hundred thousandth
(1/100,000) of a share of Preferred Stock for which a Right is then exercisable
and dividing that product by (2) 50% of the then per share Fair Market Value of
the Common Stock of the Principal Party on the date of the consummation, merger,
sale or transfer; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" for all purposes of this Agreement shall thereafter be deemed to refer
to such Principal Party; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock in accordance with the provisions of Section 9 hereof
applicable to the reservation of Preferred Stock) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Exercise Price,
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such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the occurrence of any
event described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which shares of Common Stock of the Company are changed or
otherwise exchanged or converted in such merger or consolidation, or, if there
is more than one such issuer, the issuer of the Common Stock of which has the
greatest market value or (B) if no securities are so issued, (x) the Person that
is the other party to the merger or consolidation and that survives such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the greatest market value or (y) if the Person that is
the other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
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transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest market value of shares outstanding;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, the term "Principal Party" shall refer to such other
Person, or if such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of all of which are and have been so registered,
the term "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Company shall not consummate any consolidation, merger or sale or
transfer of assets or earning power referred to in Section 13(a) unless the
Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Agreement in accordance with
Section 13(a) hereof and that all rights of first refusal or preemptive rights
in respect of the issuance of shares of Common Stock of the Principal Party upon
exercise of outstanding Rights have been waived and that such transaction shall
not result in a default by the Principal Party under this Agreement, and further
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providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets or earning power referred to in Section
13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting
the requirements of the Act) until the date of expiration of the
Rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements
for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under
the Exchange Act.
(d) In the event that any of the transactions described in Section 13(a)
hereof shall occur at any time after the occurrence of a transaction described
in Section 11(a)(ii) hereof, the Rights which have not theretofore been
exercised shall, subject to the provisions of Section 7(e) hereof, thereafter be
exercisable in the manner described in Section 13(a).
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(e) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then Fair Market Value per
share (determined pursuant to Section 11(b) hereof) or securities exercisable
for, or convertible into, Common Stock of such Principal Party at less than such
then Fair Market Value (other than to holders of Rights pursuant to this Section
13) or (ii) providing for any special tax or similar payment in connection with
the issuance to any holder of a Right of Common Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event, the Company
shall not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been 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.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights (i.e., Rights to
acquire less than one one-hundred thousandth (1/100,000) of a share of Preferred
Stock), unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) hereof. If the Company shall determine not to issue such
fractional Rights, then, in lieu of such fractional Rights, there shall be paid
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to the holders of record of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-hundred thousandth (1/100,000) of a share) upon exercise of the Rights or to
distribute certificates which evidence fractional shares (other than fractions
that are integral multiples of one one-hundred thousandth of a share). In lieu
of issuing fractions of shares of Preferred Stock, the Company may, at its
election, issue depositary receipts evidencing fractions of shares pursuant to
an appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all of the rights, privileges and preferences to which they
would be entitled as owners of the Preferred Stock. With respect to fractional
shares that are not integral multiples of one one-hundred thousandth (1/100,000)
of a share, if the Company does not issue such fractional shares or depositary
receipts in lieu thereof, there shall be paid to the holders of record of Right
Certificates at the time such Right Certificates are exercised as herein
provided an amount in cash equal to the same fraction of the Fair Market Value
of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right expressly waives
his right to receive any fractional Right or any fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundred
thousandth (1/100,000) of a share) upon exercise of a Right.
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Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent in Section 18
hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the
holders of Common Stock, which certificates for Common Stock shall
also constitute certificates for Rights, and not by separate Right
Certificates, and each Right shall be transferable only simultaneously
and together with the transfer of shares of Common Stock;
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(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock or any other
securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
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Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the preparation, delivery, amendment, 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, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense, incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent, for action
taken, suffered or omitted to be done by the Rights Agent in connection with the
acceptance and administration of this Agreement, including, without limitation,
the cost and expenses of defending against any claim of liability relating to
the Rights or this Agreement.
(b) The Rights Agent shall be authorized and protected, and shall incur no
liability for or in respect of, any action taken, suffered or omitted by it in
connection with the acceptance and administration of this Agreement in reliance
upon any Right Certificate or certificate for Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF, THE RIGHTS
AGENT.
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(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person 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 Rights Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; in case at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent only undertakes the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
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, suffering or omitting to
take any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board, the
President or any Vice President and by the Treasurer or the Secretary of the
Company and delivered to the Rights Agent. Any such certificate shall be full
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or omitted in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect, punitive consequential or incidental loss or damage of any kind
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whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this 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 liability or 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 adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of Preferred Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
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by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of the Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken, suffered or omitted to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, affiliate, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or any other Person resulting from any
such act, default, neglect or misconduct; absent gross negligence, bad faith or
willful misconduct in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability
hereunder or in the exercise of its rights if it believes that repayment of such
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funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
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 Stock and the Preferred Stock by registered or certified mail. The
Company may remove the Rights Agent or any successor Rights Agent (with or
without cause) upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Stock by registered or certified mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the incumbent Rights Agent or the holder of
record of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a Person organized and
doing business under the laws of the United States or of any state thereof, in
good standing, subject to supervision or examination in the conduct of its
business by federal or state authorities and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$5,000,000 or (b) an Affiliate controlled by a Person described in clause (a) of
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this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Company shall have the authority to act
as the Rights Agent until a successor Rights Agent shall have assumed the duties
of the Rights Agent hereunder.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Exercise Price per share and the number or kind or class of shares of stock
or other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
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Section 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, but only by the vote of a majority of
the Board of Directors, redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date, (ii) the tenth day following the
determination by the Board of Directors that a Person is an Adverse Person, or
(iii) the Final Expiration Date, at a redemption price of $0.01 per Right,
subject to adjustments as provided in subsection (c) below (the "Redemption
Price"). Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable pursuant to Section 11(a)(ii) prior to the
expiration of the Company's right of redemption hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 days after the effective time of the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made. At the option of the
Board of Directors, the Redemption Price may be paid in cash to each Rights
holder or by the issuance of shares (and, at the Company's election pursuant to
Section 14(b) hereof, cash or depositary receipts in lieu of fractions of shares
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other than fractions which are integral multiples of one one-hundred thousandth
(1/100,000) of a share) of Preferred Stock or Common Stock having a Fair Market
Value equal to such cash payment.
(c) In the event the Company shall at any time after the date of this
Agreement (A) pay any dividend on Common Stock in shares of Common Stock, (B)
subdivide or split the outstanding shares of Common Stock into a greater number
of shares or (C) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the outstanding
shares of Common Stock, then, and in each such event, the Redemption Price shall
be appropriately adjusted to reflect the foregoing.
(d) Notwithstanding the provisions of Section 23(a) hereof, in the event
that a majority of the Board of Directors of the Company is elected by
shareholder action by written consent or is comprised of persons elected at a
meeting of shareholders who were not nominated by the Board of Directors of the
Company in office immediately prior to such meeting, then for a period of one
hundred and eighty (180) days following the effectiveness of such election the
Rights shall not be redeemed if such redemption is reasonably likely to have the
purpose or effect of allowing any Person to become an Acquiring Person or
otherwise facilitating the occurrence of a Triggering Event or a transaction
with an Acquiring Person.
Section 24. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall propose (i) to
effect any of the transactions referred to in Section 11(a)(i) or to pay any
dividend to the holders of record of its shares of Common Stock payable in
shares of capital stock of any class or to make any other distribution to the
holders of record of its Common Stock (other than a regular periodic cash
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dividend at a rate not in excess of 150% of the rate of the last cash dividend
theretofore paid), or (ii) to offer to the holders of record of its Common Stock
options, warrants, or other rights to subscribe for or to purchase shares of
Common Stock (including any security convertible into or exchangeable for Common
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to
effect any reclassification of its Preferred Stock or Common Stock or any
recapitalization or reorganization of the Company, or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 15% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and to each holder of record of a Right Certificate, in
accordance with Section 25, notice of such proposed action, which shall specify
the record date for the purposes of such transaction referred to in Section
11(a)(i) or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale
or transfer of assets, liquidation, dissolution, or winding up is to take place
and the record date for determining participation therein by the holders of
record of Common Stock or Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the record date for determining holders of
record of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock or Preferred Stock, whichever shall be the earlier. The failure to
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give notice required by this Section 24 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case the event referred to in Section 11(a)(ii) shall occur, then
the Company shall as soon as practicable thereafter, in accordance with Section
25 hereof, give to each holder of a Right notice of the occurrence of such
event, which notice shall describe the event and the consequences of the event
to holders of Rights under Section 11(a)(ii) hereof.
Section 25. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Stage Stores, Inc.
10201 Main Street
Houston, TX 77025
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of record of any
Right Certificate or Right to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660-2108
Attn: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Right Certificate or
Right shall be sufficiently given or made if sent by first-class mail, postage
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prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS.
(a) For as long as the Rights are then redeemable and except as provided
in Section 26(b) and the last sentence of this Section 26(a), the Company may in
its sole and absolute discretion, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. At any time when the Rights are not then
redeemable and except as provided in the last sentence of this Section 26(a),
the Company may, and the Rights Agent shall if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Right
Certificates (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or (iii) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable, provided, however,
that no such supplement or amendment pursuant to this clause (iii) shall
materially adversely affect the interest of the holders of Right Certificates
(other than an Acquiring Person, an Adverse Person or an Affiliate or Associate
of any such Person); provided, further, that from and after the Distribution
Date, this Agreement may not be supplemented or amended to lengthen (y) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable, or (z) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26(a), the Rights
Agent shall execute such supplement or amendment, provided that, any such
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supplement or amendment does not change or increase the Rights Agent's duties,
liabilities or obligations. Notwithstanding anything contained in this Agreement
to the contrary, no supplement or amendment shall be made which changes the
Redemption Price or the Final Expiration Date.
(b) Notwithstanding the provisions of Section 26(a) hereof, in the event
that a majority of the Board of Directors of the Company is elected by
shareholder action by written consent or is comprised of persons elected at a
meeting of shareholders who were not nominated by the Board of Directors of the
Company in office immediately prior to such meeting, then for a period of one
hundred and eighty (180) days following the effectiveness of such election this
Agreement shall not be supplemented or amended if such supplement or amendment
is reasonably likely to have the purpose or effect of allowing any Person to
become an Acquiring Person or otherwise facilitating the occurrence of a
Triggering Event or a transaction with an Acquiring Person.
Section 27. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 7(e) hereof) for
shares of Common Stock at an exchange ratio of one share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
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Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Voting Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 27
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of the holders of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange and shall
promptly deliver written notice thereof to the Rights Agent; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become null and void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 27, the Company shall
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
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(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional shares of Common
Stock would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole share of Common Stock. For the purposes
of this paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock for the Trading Day
immediately prior to the date of exchange pursuant to this Section 27.
Section 28. SUCCESSORS. All of the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. 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 holders of Common Stock in their capacity as holders
of the Rights) 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 holders of record of the Right Certificates
(and, prior to the Distribution Date, the holders of Common Stock in their
capacity as holders of the Rights).
Section 30. DELAWARE CONTRACT. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed and
enforced in accordance with the laws of such state applicable to contracts to be
made and performed entirely within such state.
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Section 31. 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 32. 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.
Section 33. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
STAGE STORES, INC.
By: /s/ James Marcum
-------------------------------
James Marcum
Vice Chairman and Chief
Financial Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ Mona Vorhees
-------------------------------
Name: Mona Vorhees
Title:
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER NOVEMBER 11, 2008 OR EARLIER IF EXCHANGED OR
REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY AND UNDER CERTAIN OTHER CIRCUMSTANCES, AT $0.01 PER RIGHT
(SUBJECT TO ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE
RIGHTS AGREEMENT. AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO
BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE EXERCISED OR TRANSFERRED TO ANY PERSON.
Right Certificate
This certifies that ____, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of November 11, 1998 (the "Rights Agreement") between Stage Stores,
Inc., a Delaware corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M. (New York time)
on November 11, 2008 at the office of the Rights Agent designated in the Rights
Agreement for such purpose, or its successor as Rights Agent, in New York, New
York, one one-hundred thousandth (1/100,000) of a fully paid nonassessable share
of Series A Junior Preferred Stock (the "Preferred Stock") of the Company at a
<PAGE>
purchase price of $60.00, as the same may from time to time be adjusted in
accordance with the Rights Agreement (the "Exercise Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and
the number of shares of Preferred Stock which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of record of Right Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office of the Rights Agent designated in the
Rights Agreement for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder of record to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
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receive upon surrender hereof, another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option or
under certain other circumstances at a redemption price of $0.01 per Right.
No fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundred thousandth (1/100,000) of a
share) are required to be issued upon the exercise of any Right or Rights
evidenced hereby, and in lieu thereof the Company may cause depositary receipts
to be issued and/or a cash payment may be made, as provided in the Rights
Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________, ____.
ATTEST:
By
Secretary Title:
Countersigned:
[Rights Agent]
By
------------------------------
Authorized Signature
4
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
Attorney to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ________________, _____
Signature
Signature Guaranteed:
5
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Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Associate or an Affiliate thereof (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: ____________, _____
Signature
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
6
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FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO _____________________:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such share(s) be issued in the following name:
Please insert social security or other identifying number:
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
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Please insert social security or other identifying number:
(Please print name and address)
Dated: _____________, ____
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate)
Signature Guaranteed:
8
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EXHIBIT B
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PREFERRED STOCK
OF
STAGE STORES, INC.
Pursuant to Section 151 of the Delaware
General Corporation Law
I, ____________, ____________ of Stage Stores, Inc., a
corporation organized and existing under the Delaware General Corporation Law
(the "Company"), in accordance with the provisions of Section 151 of such law,
DO HEREBY CERTIFY that pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the Company, the Board
of Directors on November 11, 1998 adopted the following resolution which creates
a series of shares of Preferred Stock designated as Series A Junior Preferred
Stock, as follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware
General Corporation Law and the authority vested in the Board of Directors of
the Company in accordance with the provisions of ARTICLE FOURTH of the Restated
Certificate of Incorporation of the Company, a series of Preferred Stock of the
Company be, and hereby is, created, and the powers, designations, preferences
and relative, participating, optional or other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof, be,
and hereby are, as follows:
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Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
500.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, and subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, (i) cash dividends in an amount per
share (rounded to the nearest cent) equal to 100,000 times the aggregate per
share amount of all cash dividends declared or paid on the Common Stock, $0.01
par value per share, of the Company (the "Common Stock") and (ii) a preferential
cash dividend (the "Preferential Dividends"), if any, in preference to the
holders of Common Stock, on the first day of March, June, November and December
of each year (each a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, payable in an amount (except in the case
of the first Quarterly Dividend Payment if the date of the first issuance of
Series A Preferred Stock is a date other than a Quarterly Dividend Payment date,
in which case such payment shall be a prorated amount of such amount) equal to
$0.01 per share of Series A Preferred Stock less the per share amount of all
cash dividends declared on the Series A Preferred Stock pursuant to clause (i)
of this sentence since the immediately preceding Quarterly Dividend Payment Date
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or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. In the
event the Company shall, at any time after the issuance of any share or fraction
of a share of Series A Preferred Stock, make any distribution on the shares of
Common Stock of the Company, whether by way of a dividend or a reclassification
of stock, a recapitalization, reorganization or partial liquidation of the
Company or otherwise, which is payable in cash or any debt security, debt
instrument, real or personal property or any other property (other than cash
dividends subject to the immediately preceding sentence, a distribution of
shares of Common Stock or other capital stock of the Company or a distribution
of rights or warrants to acquire any such share, including any debt security
convertible into or exchangeable for any such share, at a price less than the
Fair Market Value (as hereinafter defined) of such share), then, and in each
such event, the Company shall simultaneously pay on each then outstanding share
of Series A Preferred Stock of the Company a distribution, in like kind, of
100,000 times such distribution paid on a share of Common Stock (subject to the
provisions for adjustment hereinafter set forth). The dividends and
distributions on the Series A Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to as
"Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Dividends, which shall be 100,000
initially but shall be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Dividend Multiple". In the event the Company
shall at any time after November 13, 1998 declare or pay any dividend or make
any distribution on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
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outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then in each such case the Dividend Multiple thereafter applicable
to the determination of the amount of Dividends which holders of shares of
Series A Preferred Stock shall be entitled to receive shall be the Dividend
Multiple applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare each Dividend at the same time
it declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Dividend is required
to be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series A Preferred
Stock.
(C) Preferential Dividends shall begin to accrue on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of any shares of Series A
Preferred Stock. Accrued but unpaid Preferential Dividends shall cumulate but
shall not bear interest. Preferential Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
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Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100,000 votes on all matters submitted to a vote of the holders of the Common
Stock. The number of votes which a holder of Series A Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple". In the event the
Company shall at any time after November 13, 1998 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or split
or a combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock, then in
each such case the Vote Multiple thereafter applicable to the determination of
the number of votes per share to which holders of shares of Series A Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation or by law, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Company.
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(C) In the event that the Preferential Dividends accrued on
the Series A Preferred Stock for four or more quarterly dividend periods,
whether consecutive or not, shall not have been declared and paid or irrevocably
set aside for payment, the holders of record of Preferred Stock of the Company
of all series (including the Series A Preferred Stock), other than any series in
respect of which such right is expressly withheld by the Restated Certificate of
Incorporation or the authorizing resolutions included in any Certificate of
Designations therefor, shall have the right, at the next meeting of stockholders
called for the election of directors, to elect two members to the Board of
Directors, which directors shall be in addition to the number required prior to
such event, to serve until the next Annual Meeting and until their successors
are elected and qualified or their earlier resignation, removal or incapacity or
until such earlier time as all accrued and unpaid Preferential Dividends upon
the outstanding shares of Series A Preferred Stock shall have been paid (or
irrevocably set aside for payment) in full. The holders of shares of Series A
Preferred Stock shall continue to have the right to elect directors as provided
by the immediately preceding sentence until all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series A Preferred Stock shall have
been paid (or set aside for payment) in full. Such directors may be removed and
replaced by such stockholders, and vacancies in such directorships may be filled
only by such stockholders (or by the remaining director elected by such
stockholders, if there be one) in the manner permitted by law; provided,
however, that any such action by stockholders shall be taken at a meeting of
stockholders and shall not be taken by written consent thereto.
(D) Except as otherwise required by the Restated Certificate
of Incorporation or by law or set forth herein, holders of Series A Preferred
Stock shall have no other special voting rights and their consent shall not be
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required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in
arrears or the Company shall be in default of payment thereof, thereafter and
until all accrued and unpaid Preferential Dividends and Dividends, whether or
not declared, on shares of Series A Preferred Stock outstanding shall have been
paid or set irrevocably aside for payment in full, and in addition to any and
all other rights which any holder of shares of Series A Preferred Stock may have
in such circumstances, the Company shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration, any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity as to dividends with the
Series A Preferred Stock, unless dividends are paid ratably on the
Series A Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled if the full dividends
accrued thereon were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
4(A), redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
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Stock, provided that the Company may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Company ranking junior (both as to dividends
and upon liquidation, dissolution or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock (either as to dividends or upon
liquidation, dissolution or winding up), except in accordance with a
purchase offer made to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any Subsidiary (as
hereinafter defined) of the Company to purchase or otherwise acquire for
consideration any shares of stock of the Company unless the Company could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner. A "Subsidiary" of the Company shall mean any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect a majority of the board of
directors of such corporation or other entity or other persons performing
similar functions are beneficially owned, directly or indirectly, by the Company
or by any corporation or other entity that is otherwise controlled by the
Company.
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(C) The Company shall not issue any shares of Series A
Preferred Stock except upon exercise of Rights issued pursuant to that certain
Rights Agreement dated as of November 11, 1998 between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent, as it may be amended
from time to time, a copy of which is on file with the Secretary of the Company
at its principal executive office and shall be made available to stockholders of
record without charge upon written request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof shall prohibit or restrict the Company from issuing for any purpose any
series of Preferred Stock with rights and privileges similar to, different from,
or greater than, those of the Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and such
shares may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
no distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless the holders of shares of Series A
Preferred Stock shall have received for each share of Series A Preferred Stock,
subject to adjustment as hereinafter provided, (A) $60,000.00 plus an amount
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equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment or, (B) if greater than the amount
specified in clause (i)(A) of this sentence, an amount equal to 100,000 times
the aggregate amount to be distributed per share to holders of Common Stock, as
the same may be adjusted as hereinafter provided and (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with the
Series A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series A
Preferred Stock may be entitled upon liquidation, dissolution or winding up of
the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple of the
amount to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable pursuant to
said clause to the determination of the Participating Liquidation Amount, as
said multiple may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Liquidation Multiple". In the event the Company
shall at any time after November 13, 1998 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then, in each
such case, the Liquidation Multiple thereafter applicable to the determination
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of the Participating Liquidation Amount to which holders of Series A Preferred
Stock shall be entitled after such event shall be the Liquidation Multiple
applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after November 13, 1998 in respect of their shares of Common
Stock any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Transaction"),
then, and in each such event, the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall be adjusted so that after such event the holders
of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock, (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights which the holder of a share of Common
Stock shall be entitled to receive by virtue of the receipt in the Transaction
of such capital stock and (iii) such additional distributions upon liquidation,
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dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company by virtue of the receipt
in the Transaction of such capital stock, as the case may be, all as provided by
the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after November 13, 1998 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Common Stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights, voting rights and
rights upon the liquidation, dissolution or winding up of the Company of the
shares of Series A Preferred Stock shall each be adjusted so that after such
event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
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Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Company receive after November 13, 1998 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Company (other than
shares of Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Fair Market Value of such shares of capital stock on the date of issuance of
such right or warrant, then and in each such event the dividend rights, voting
rights and rights upon liquidation, dissolution or winding up of the Company of
the shares of Series A Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior to
such event, to receive (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such event multiplied, first, by the
additional dividends to which the holder of a share of Common Stock shall be
entitled upon exercise of such right or warrant by virtue of the capital stock
which could be acquired upon such exercise and multiplied again by the Discount
Fraction (as hereinafter defined) and (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such event multiplied,
first, by the additional voting rights to which the holder of a share of Common
Stock shall be entitled upon exercise of such right or warrant by virtue of the
capital stock which could be acquired upon such exercise and multiplied again by
the Discount Fraction and (iii) such additional distributions upon liquidation,
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dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Common Stock shall be entitled to receive
upon liquidation, dissolution or winding up of the Company upon exercise of such
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction the numerator of
which shall be the difference between the Fair Market Value of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Fair Market Value of a share of such capital stock immediately
after the distribution of such right or warrant.
(D) For purposes of this Certificate of Designations, the
"Fair Market Value" of a share of capital stock of the Company (including a
share of Common Stock) on any date shall be deemed to be the average of the
daily closing price per share thereof over the 30 consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date; provided,
however, that, in the event that such Fair Market Value of any such share of
capital stock is determined during a period which includes any date that is
within 30 Trading Days after (i) the ex-dividend date for a dividend or
distribution on stock payable in shares of such stock or securities convertible
into shares of such stock, or (ii) the effective date of any subdivision, split,
combination, consolidation, reverse stock split or reclassification of such
stock, then, and in each such case, the Fair Market Value shall be appropriately
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adjusted by the Board of Directors of the Company to take into account
ex-dividend or post-effective date trading. The closing price for any day shall
be the last sale price, regular way, or, in case, no such sale takes place on
such day, the average of the closing bid and asked prices, regular way (in
either case, as reported in the applicable transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange), or, if the shares are not listed or admitted to trading on the New
York Stock Exchange, as reported in the applicable transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the shares are listed or admitted to trading or, if the shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or if on any such date the shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares are listed or
admitted to trading is open for the transaction of business or, if the shares
are not listed or admitted to trading on any national securities exchange, on
which the New York Stock Exchange or such other national securities exchange as
may be selected by the Board of Directors of the Company is open. If the shares
are not publicly held or not so listed or traded on any day within the period of
30 Trading Days applicable to the determination of Fair Market Value thereof as
aforesaid, "Fair Market Value" shall mean the fair market value thereof per
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share as determined in good faith by the Board of Directors of the Company. In
either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by
the provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each
holder of a share of Series A Preferred Stock of the effect of any adjustment to
the voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
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Section 10. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable at the option of the Company or any holder
thereof. Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Series A Preferred Stock in any other manner permitted by law,
the provisions hereof and the Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the Restated
Certificate of Incorporation of the Company or a Certificate of Designations
relating to a subsequent series of preferred stock of the Company, the Series A
Preferred Stock shall rank junior to all other series of the Company's preferred
stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the
Certificate of Incorporation of the Company shall not be amended in any manner
which would adversely affect the rights, privileges or powers of the Series A
Preferred Stock without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Preferred Stock, voting together as a single
class.
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IN WITNESS WHEREOF, I have executed and subscribed this
Certificate of Designations and do affirm the foregoing as true under the
penalties of perjury this ____ day of November __, 1998.
-------------------------
Name:
Title:
ATTEST:
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