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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NS Group, Inc.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Kentucky 61-0985936
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(STATE OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
Ninth and Lowell Streets,
Newport, Kentucky 41072
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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If this form relates to the registration of a If this form relates to the registration of a
class of debt securities pursuant to Section class of securities pursuant to Section 12(g)
12(b) of the Exchange Act and is effective of the Exchange Act and is effective pursuant
pursuant to General Instruction A.(c), please to General Instruction A.(d), please check the
check the following box. [ ] following box. [ ]
SECURITIES ACT REGISTRATION STATEMENT FILE NUMBER TO WHICH THIS FORM RELATES:
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(IF APPLICABLE)
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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 Rights New York Stock Exchange
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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(TITLE OF CLASS)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On November 5, 1998, the Board of Directors of NS Group, Inc.,
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, no par value, of the
Company (the "Common Stock"). The dividend distribution is payable on November
17, 1998 (the "Record Date") to the shareholders of record as of the close of
business on that date. Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series B Junior Participating
Preferred Stock, par value $10.00 per share (the "Preferred Stock") of the
Company at a price of $40.00 per one one-hundredth of a share of Preferred Stock
(the "Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a 1998 Rights Agreement dated as of November 17, 1998,
as the same may be amended from time to time (the "Rights Agreement"), between
the Company and Registrar and Transfer Company, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) the close of business on the
tenth business day following the date of public announcement or the date on
which the Company first has notice or determines that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) (an "Acquiring Person") has
acquired, or obtained the right to acquire, 20% or more of the outstanding
shares of voting stock of the Company without the prior express written consent
of the Company executed on behalf of the Company by a duly authorized officer of
the Company following express approval by action of at least a majority of the
members of the Board of Directors then in office (the "Stock Acquisition Date")
or (ii) the close of business on the tenth business day (or such later date as
may be determined by action of the Board of Directors but not later than the
Stock Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or any employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 20%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights, 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 Common Stock as of the close of business on the
Distribution Date and such separate certificates alone will then evidence the
Rights.
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The Rights are not exercisable until the Distribution Date.
The Rights will expire, if not previously exercised, on November 17, 2008 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable and junior to any other series of preferred stock the
Company may issue (unless otherwise provided in the terms of such stock). Each
share of Preferred Stock will have a preferential dividend in an amount equal to
100 times any dividend declared on each share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will receive a preferred
liquidation payment of equal to the greater of $100 and 100 times the payment
made per share of Common Stock. Each share of Preferred Stock will have 100
votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are converted
or exchanged, each share of Preferred Stock will be entitled to receive 100
times the amount and type of consideration received per share of Common Stock.
The rights of the Preferred Stock as to dividends, liquidation and voting, and
in the event of mergers and consolidations, are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary of
the Company or any employee benefit plan of the Company) acquires 20% or more of
the Company's outstanding voting stock without the prior written consent of the
Board of Directors, each Right, except those held by such persons, would entitle
each holder of a Right to acquire such number of shares of the Company's Common
Stock as shall equal the result obtained by multiplying the then current
Purchase Price by the number of one one-hundredths of a share of Preferred Stock
for which a Right is then exercisable and dividing that product by 50% of the
then current per-share market price of Company Common Stock.
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If any person or group (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company) acquires more than 20%
but less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Company Common Stock is exchanged or changed or 50% or more of the
Company's assets or earnings power is sold in one or several transactions
without the prior written consent of the Board of Directors, each Right would
entitle the holders thereof (except for the Acquiring Person) to receive such
number of shares of the acquiring company's common stock as shall be equal to
the result obtained by multiplying the then current Purchase Price by the number
of one one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current market price
per share of the common stock of the acquiring company on the date of such
merger or other business combination transaction.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.005 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors
of the Company without the consent of the holders of the Rights, including, but
not limited to, an amendment to lower certain thresholds described above to not
less than the greater of (i) any percentage greater than the largest percentage
of the voting power of all securities of the Company then known to the Company
to be beneficially owned by any person or group of affiliated or associated
persons (other than an excepted person) and (ii) 10%, except that from and after
such time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The form of Rights Agreement between the Company and the Rights
Agent specifying the terms of the Rights, which includes as Exhibit B thereto
the form of Right Certificate, is attached hereto as Exhibit 1 and is
incorporated herein by reference. The foregoing
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description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the form of Rights Agreement (and the exhibits
thereto) attached hereto.
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ITEM 2. EXHIBITS.
Exhibit No. Description of Exhibit
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1 Rights Agreement, dated as of November 17, 1998
between NS Group, Inc., and Registrar and Transfer
Company, as Rights Agent, which includes the form of
Articles of Amendment, setting forth the terms of the
Series B Junior Participating Preferred Stock, par
value $10.00 per share, as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of
Preferred Stock Purchase Rights as Exhibit C.
Pursuant to the Rights Agreement, printed Right
Certificates will not be mailed until as soon as
practicable after the earlier of the tenth day after
public announcement that a person or group (except
for certain exempted persons or groups) has acquired
beneficial ownership of 20% or more of the
outstanding shares of Common Stock or the tenth
business day (or such later date as may be determined
by action of the Board of Directors) after a person
commences, or announces its intention to commence, a
tender offer, or exchange offer the consummation of
which would result in the beneficial ownership by a
person or group of 20% or more of the outstanding
shares of Common Stock.
2 Letter to be sent to the Shareholders of NS Group,
Inc.
SIGNATURE
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, thereto duly authorized.
NS GROUP, INC.
(Registrant)
Date: November 5, 1998
By: /s/ John R. Parker
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Name: John R. Parker
Title: Vice President and Treasurer
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EXHIBIT INDEX
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Exhibit No. Description of Exhibit
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1 Rights Agreement, dated as of November 17, 1998
between NS Group, Inc., and Registrar and Transfer
Company, as Rights Agent, which includes the form of
Articles of Amendment, setting forth the terms of the
Series B Junior Participating Preferred Stock, par
value $10.00 per share, as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of
Preferred Stock Purchase Rights as Exhibit C.
Pursuant to the Rights Agreement, printed Right
Certificates will not be mailed until as soon as
practicable after the earlier of the tenth day after
public announcement that a person or group (except
for certain exempted persons or groups) has acquired
beneficial ownership of 20% or more of the
outstanding shares of Common Stock or the tenth
business day (or such later date as may be determined
by action of the Board of Directors) after a person
commences, or announces its intention to commence, a
tender offer, or exchange offer the consummation of
which would result in the beneficial ownership by a
person or group of 20% or more of the outstanding
shares of Common Stock.
2 Letter to be sent to the Shareholders of NS Group,
Inc.
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Exhibit 1
1998 RIGHTS AGREEMENT
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NS GROUP, INC.
and
REGISTRAR AND TRANSFER COMPANY
Rights Agent
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Dated as of November 17, 1998
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INDEX
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Section 1. Certain Definitions...................................................................................1
Section 2. Appointment of Rights Agent...........................................................................4
Section 3. Issue of Right Certificates...........................................................................4
Section 4. Form of Right Certificates............................................................................6
Section 5. Countersignature and Registration.....................................................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.............................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.........................................8
Section 8. Cancellation and Destruction of Right Certificates...................................................10
Section 9. Reservation and Availability of Shares of Preferred Stock............................................11
Section 10. Preferred Stock Record Date.........................................................................11
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights..................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..........................................18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................................19
Section 14. Fractional Rights and Fractional Shares.............................................................21
Section 15. Rights of Action....................................................................................22
Section 16. Agreement of Right Holders..........................................................................23
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Section 17. Right Certificate Holder Not Deemed a Shareholder...................................................23
Section 18. Concerning the Rights Agent.........................................................................23
Section 19. Merger or Consolidation or Change of Name of Rights Agent...........................................24
Section 20. Duties of Rights Agent..............................................................................24
Section 21. Change of Rights Agent..............................................................................26
Section 22. Issuance of New Right Certificates..................................................................27
Section 23. Redemption and Termination..........................................................................28
Section 24. Exchange............................................................................................28
Section 25. Notice of Proposed Actions..........................................................................29
Section 26. Notices.............................................................................................30
Section 27. Supplements and Amendments..........................................................................31
Section 28. Successors..........................................................................................32
Section 29. Benefits of This Rights Agreement...................................................................32
Section 30. Severability........................................................................................32
Section 31. Governing Law.......................................................................................32
Section 32. Counterparts........................................................................................32
Section 33. Descriptive Headings................................................................................32
Exhibit A - Form of Articles of Amendment for
Series B Junior Participating
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Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Preferred Stock Purchase Rights
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1998 RIGHTS AGREEMENT
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This 1998 Rights Agreement, dated as of November 17, 1998 (the
"Rights Agreement") is entered into between NS GROUP, INC., a Kentucky
corporation (the "Company") and REGISTRAR AND TRANSFER COMPANY, a New York
corporation (the "Rights Agent").
W I T N E S S E T H
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WHEREAS, on November 17, 1988 the Board of Directors of the
Company declared a dividend of one Preferred Stock Purchase Right (the "1988
Rights") for each outstanding share of Common Stock to shareholders of record as
of the close of business on November 30, 1988 which 1988 Rights expire at the
close of business on November 17, 1998; and
WHEREAS, on November 5, 1998 the Board of Directors of the Company
authorized and declared a dividend distribution of one right (hereinafter
referred to as a "Right") for each share of Common Stock, no par value, of the
Company outstanding at the close of business on November 17, 1998 (the "Record
Date") (other than shares of such Common Stock held in the Company's treasury on
such date), and has authorized the issuance of one Right in respect of each
share of Common Stock of the Company issued between the Record Date (whether
originally issued or issued from the Company's treasury) and the Distribution
Date (as such term is defined in Section 3 hereof), each Right representing the
right to purchase one one-hundredth of a share of Series B Junior Participating
Preferred Stock of the Company having the preferences, limitations and relative
rights set forth in the form of Articles of Amendment attached hereto as Exhibit
A, upon the terms and subject to the conditions hereinafter set forth (the
"Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to act as
provided herein, and the Rights Agent is willing to so act.
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 Rights
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates (as hereinafter defined) and
Associates (as hereinafter defined) of such Person, without the Prior Written
Approval of the Company (as hereinafter defined), shall be the Beneficial Owner
(as hereinafter defined) of securities of the Company constituting 20% or more
of the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 20% or more of
the Voting Power of the Company, but shall not include (i) the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
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the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement, or (ii) any Person who
or which, together with all Affiliates and Associates of such Person,
inadvertently may become the Beneficial Owner of securities of the Company
representing 20% or more of the Voting Power of the Company or otherwise becomes
such a Beneficial Owner without a plan or intention to acquire control of the
Company, so long as such Person, individually or together with the Affiliates
and Associates of such Person, promptly enters into, and delivers to the
Company, an irrevocable commitment promptly to divest, and thereafter promptly
divests (without exercising or retaining any power, including voting, with
respect to such securities), sufficient securities of the Company so that such
Person, together with all Affiliates and Associates of such Person, ceases to be
the Beneficial Owner of 20% or more of the Voting Power of the Company.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of voting securities of the Company by the Company
which, by reducing the amount of such securities outstanding, increases the
proportionate voting power of such securities beneficially owned by such Person
to 20% or more of the Voting Power; provided, however, that if a Person becomes
the Beneficial Owner of securities constituting 20% or more of the Voting Power
of the Company by reason of purchases by the Company and shall, after such
purchases by the Company, become the Beneficial Owner of any additional voting
securities of the Company without the Prior Written Approval of the Company,
then such Person shall be deemed to be an Acquiring Person.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise, provided, however,
that a Person shall not be deemed the "Beneficial Owner" of securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for payment or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or understanding,
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of any security under this clause (B) if the agreement,
arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2) is
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not also then reportable by such person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in
clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of
any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Board of Directors" shall mean the Board of Directors of the
Company as constituted from time to time.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of Kentucky
are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Newport, Kentucky time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Newport, Kentucky time, on the next
succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, no par value, of
the Company, except that "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock with the greatest Voting
Power of such Person or the equity securities or other equity interest having
power to control or direct the management of such Person or, if such Person is a
Subsidiary (as hereinafter defined) of another Person, of the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(j) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of any such entity.
(l) "Preferred Stock" shall mean the Series B Junior Participating
Preferred Stock, par value $10.00 per share, of the Company.
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(m) "Prior Written Approval of the Company" shall mean prior
express written consent of the Company to the actions in question, executed on
behalf of the Company by a duly authorized officer of the Company following
express approval by action of at least a majority of the members of the Board of
Directors then in office.
(n) "Purchase Price" shall have the meaning set forth in Section 4
hereof.
(o) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(p) "Section 11(b) Event" shall have the meaning set forth in
Section 11(b) hereof.
(q) "Section 13 Event" shall mean an event described in clauses
(x), (y) or (z) of Section 13(a) hereof.
(r) "Stock Acquisition Date" shall mean the earlier of (i) the
first date of public announcement by a Person that an Acquiring Person has
become an Acquiring Person, or (ii) the date on which the Company first has
notice, direct or indirect, or otherwise determines that a Person has become an
Acquiring Person.
(s) "Subsidiary" shall mean, with respect to any Person, any other
Person of which securities or other ownership interests having ordinary Voting
Power, in the absence of contingencies, to elect a majority of the board of
directors (or other persons performing similar functions) of such other Person
are at the time directly or indirectly owned by such Person or one or more of
such Person's Subsidiaries, except that "Subsidiary" when used with reference to
the Company shall mean any Person of which either a majority of the Voting Power
of the voting equity securities or a majority of the equity interests is owned,
directly or indirectly, by the Company.
(t) "Voting Power" shall mean the voting power of all
securities of a Person then outstanding generally entitled to vote for the
election of directors of the Person (or, where appropriate, for the election of
persons performing similar functions).
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. In the event the Company appoints one or
more Co-Rights Agents, the respective duties of the Rights Agents and any
Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth
Business Day after the Stock Acquisition Date or (ii) the Close of Business on
the tenth Business Day (or such later date as may be determined by action of the
Board of Directors but in no event later than the tenth Business Day after such
time as any Person becomes an Acquiring Person) after the date
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that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or of any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, without the Prior Written Approval of the
Company, which tender or exchange offer would result in any Person becoming the
Beneficial Owner of Voting Power aggregating 20% or more of the outstanding
Voting Power (including any such date which is after the date of this Rights
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (y) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
Right Certificates) and not by separate Right Certificates, as more fully set
forth below, and (z) the Rights (and the right to receive certificates therefor)
will be transferable only in connection with the transfer of the underlying
shares of Common Stock, as more fully set forth below. As soon as practicable
after the Company has notified the Rights Agent of the occurrence of the
Distribution Date and provided the Rights Agent with all necessary information,
the Company shall prepare and execute, and the Rights Agent shall countersign
and send, by first-class, insured, postage prepaid mail, to each record holder
of the Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a right certificate,
in substantially the form of Exhibit B hereto (the "Right Certificate"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of the Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date (or the earlier
redemption, expiration or termination of the Rights), the Rights will be
evidenced by such certificates for the Common Stock registered in the names of
the holders of the Common Stock and the registered holders of the Common Stock
shall also be registered holders of the associated Rights. Until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the surrender for transfer of any of the certificates for the Common
Stock outstanding in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Certificates for the Common Stock issued after the Record Date
but prior to the earlier of the Distribution Date or the redemption, expiration
or termination of the Rights shall be deemed also to be certificates for Rights
and shall have impressed, printed or written on, or otherwise affixed to them a
legend substantially to the following effect:
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<PAGE> 10
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a 1998 Rights Agreement dated as of
November 17, 1998 between NS Group, Inc. (the "Company") and
Registrar and Transfer Company (the "Rights Agreement"), as it may
from time to time be supplemented or amended, the terms of which
are incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights may expire or may be redeemed, exchanged or be evidenced by
separate certificates and no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly
after receipt of a written request therefor. Under certain
circumstances, Rights issued to or held by Acquiring Persons or
their Affiliates or Associates (as defined in the Rights
Agreement) and any subsequent holder of such Rights may become
null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificates.
In the event that the Company purchases or acquires any Common
Stock after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated with shares
of Common Stock which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preferred Stock and of assignment to be printed on the reverse thereof) shall be
in substantially the same form as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which does not affect
the duties or responsibilities of the Rights Agent) and as are not inconsistent
with the provisions of this Rights Agreement, or as may be required to comply
with any applicable law, rule or regulation or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to customary usage. Subject to the provisions of Section 11 and Section
22 hereof, the Right Certificates, whenever issued, shall be dated as of the
Record Date, and on their face shall entitle the holders thereof to purchase
such number of one one-hundredths of a share of Preferred Stock as shall be set
forth therein at the price per one one-hundredth of a share as set forth therein
(the "Purchase Price"), but the number and identity of such shares and the
Purchase Price shall be and remain subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant hereto that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
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<PAGE> 11
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Board of Directors has determined to be part of
an agreement, arrangement or understanding which has as a primary purpose or
effect the avoidance of Section 7(e), and any Right Certificate issued pursuant
to Section 6 hereof, Section 11 hereof or Section 22 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent the Rights Agent has notice and
to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an Acquiring Person.
Accordingly, this Right Certificate and the Rights represented
hereby are void in the circumstances specified in Section 7(e) of
the Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer or any Vice President, either manually or by facsimile
signature, and shall 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. The Right Certificates
shall be countersigned manually or by facsimile signature by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company whose manual or facsimile signature is affixed to the
Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
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,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights
Agent of any relevant information, the Rights Agent will keep or cause to be
kept, at its stockholder services office or such other office designated for
such purpose, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each
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<PAGE> 12
of the Right Certificates, the certificate number of 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 Sections 4(b), 7(e) 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 Expiration Date (as such term is
defined in Section 7(a) hereof), any Right Certificate or Right Certificates may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the stockholder services office of the Rights Agent or
such office designated for such purpose. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly and properly executed, to the Rights Agent at the stockholder services
office of the Rights Agent or such office designated for such purpose, together
with payment of the Purchase Price for each one one-hundredth of a share of
Preferred Stock as to which the Rights are exercised, at or prior to the Close
of Business on the Expiration Date. The "Expiration Date", as used in this
Rights Agreement, shall be the earliest of (i) the Final Expiration Date (as
defined below), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, or (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof. The "Final Expiration Date", as used in this
Rights Agreement, shall be November 17, 2008.
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<PAGE> 13
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $40.00,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate, with the form of election
to purchase duly and properly executed, accompanied by payment of the Purchase
Price for each one one-hundredth of a share of Preferred Stock to be purchased
and an amount equal to any applicable tax or charge required to be paid by the
holder of the Rights pursuant hereto in accordance with Section 9 hereof by
certified check, bank draft or money order payable to the order of the Company
or the Rights Agent, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) either (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes any such transfer agent
to comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depository, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs such depositary agent to comply with all such requests,
(ii) promptly after receipt of such certificates or depositary receipts cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, (iii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iv) after receipt of any such cash, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate, (v) when
appropriate, requisition from the Company the amount of cash or securities
issuable upon exercise of a Right pursuant to the adjustment provisions of
Section 11 or the exchange provisions of Section 24, and (vi) after receipt of
any such cash or securities, promptly deliver such cash or securities to or upon
the order of the registered holder of such Right Certificate, of any such cash
or securities.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, upon the first occurrence of a Section 11(b) Event or a Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or
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<PAGE> 14
Affiliate) to holders of equity interests in such Acquiring Person (or any such
Associate or Affiliate) or to any Person with whom such Acquiring Person (or
such Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, shares of Company Common Stock
or the Company or (B) a transfer which a majority of the Board of Directors has
determined to be part of an agreement, arrangement or understanding which has as
a primary purpose or effect the avoidance of this Section 7(e), shall be null
and void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) are complied
with (including notifying the Rights Agent thereof), but neither the Company nor
the Rights Agent shall have any liability to any holder of Rights or any other
Person as a result of the Company' s failure to make any determination under
this Section 7(e) or Section 4(b) with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Rights 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 the certificate
contained in the appropriate form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise shall have
been properly completed and duly executed by the registered holder thereof and
the Company or the Rights Agent shall have been provided with 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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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<PAGE> 15
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 its authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights and, after the occurrence
of a Section 11(b) Event or a Section 13 Event, shall so reserve and keep
available a sufficient number of shares of Preferred Stock, Common Stock and/or
other securities which may be required to permit the exercise in full of the
Rights pursuant to this Rights Agreement.
(b) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock and/or
other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of an event which would establish the
Distribution Date, a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the
Expiration Date. The Company will also take such action as may be appropriate
under the "blue sky laws" of the various states.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock and/or other securities upon the exercise of
Rights. The Company shall not, however, be required to pay any tax or charge
which may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates or
depositary receipts for Preferred Stock and/or other securities in a name other
than that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates or depositary receipts for shares of Preferred Stock and/or
other securities upon the exercise of any Rights until any such tax or charge
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax or charge is due.
Section 10. Preferred Stock Record Date. Each Person (other than
the Company) in whose name any certificate for shares of Preferred Stock (or
other securities) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Stock (or other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes or
charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or other securities) transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
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<PAGE> 16
succeeding Business Day on which the Preferred Stock (or other securities)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and identity of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) In the event the Company shall at any time after the date of
this Rights Agreement (i) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (ii) subdivide the outstanding Preferred Stock, (iii)
combine the outstanding Preferred Stock into a smaller number of shares or (iv)
issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11, the Purchase Price in effect at the
time of the record date for such dividend or the time of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock, including Preferred Stock, issuable upon exercise of a
Right, shall be proportionately adjusted so that the holder of any Right
exercised after such time, upon payment of the aggregate consideration such
holder would have had to pay to exercise such Right prior to such time, shall be
entitled to receive the aggregate number and kind of shares of capital stock,
including Preferred Stock, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.
(b) In the event any Person becomes an Acquiring Person ("Section
11(b) Event"), then proper provision shall be made so that each holder of a
Right, subject to Section 7(e) and Section 24 hereof and except as provided
below, shall after the later of the occurrence of such event and the effective
date of an appropriate registration statement pursuant to Section 9 hereof, have
a right to receive, upon exercise thereof at the then current Purchase Price,
multiplied by the then number of one one-hundredths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms of
this Rights Agreement, in lieu of shares of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (y)
multiplying the then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (z) 50% of the current market price per
one share of Common Stock (determined pursuant to Section 11(f) hereof on the
date of the occurrence of the Section 11(b) Event) (such number of shares being
referred to as the "number of Adjustment Shares").
(c) In the event that there shall not be sufficient Treasury
shares or authorized but unissued shares of Common Stock to permit the exercise
in full of the Rights in accordance with the foregoing Section 11(b), and the
Rights become so exercisable, notwithstanding any other provision of this Rights
Agreement, to the extent necessary and permitted by applicable
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<PAGE> 17
law and any agreements in effect on the date hereof to which the Company is a
party, each Right shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price, multiplied by the then number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Rights Agreement, a number of
shares, or units of shares, of (y) Common Stock, and (z) preferred stock (or
other equity securities) of the Company, including, but not limited to Preferred
Stock, equal in the aggregate to the number of Adjustment Shares where the Board
of Directors shall have in good faith deemed such shares or units, other than
the shares of Common Stock, to have at least the same value and voting rights as
the Common Stock (a "common stock equivalent"); provided, however, if there are
unavailable sufficient shares (or fractions of shares) of Common Stock and/or
common stock equivalents, then the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock or common stock
equivalents for issuance upon exercise of the Rights, including the calling of a
meeting of shareholders; and provided, further, that if the Company is unable to
cause sufficient shares of Common Stock and/or common stock equivalents to be
available for issuance upon exercise in full of the Rights, then the Company, to
the extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date thereof to which it is a party, shall make
provision to pay an amount in cash equal to twice the Purchase Price (as
adjusted pursuant to this Section 11), in lieu of issuing shares of Common Stock
and/or common stock equivalents. To the extent that the Company determines that
some action needs to be taken pursuant to this Section 11(c), the Board of
Directors by action of at least a majority of its members then in office may
suspend the exercisability of the Rights for a period of up to sixty (60) days
following the date on which the Section 11(b) Event shall have occurred, in
order to decide the appropriate form of distribution to be made pursuant to this
Section 11(c) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement (with prompt notice
thereof to the Rights Agent) stating that the exercisability of the Rights has
been temporarily suspended. The Board of Directors may, but shall not be
required to, establish procedures to allocate the right to receive Common Stock
and common stock equivalents upon exercise of the Rights among holders of
Rights, which such allocation may be, but is not required to be, pro-rata.
(d) If the Company shall fix a record date for the issuance of
rights or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 90 calendar days after such record date) to subscribe for
or purchase Preferred Stock (or securities having the same or more favorable
preferences, limitations or relative rights as the Preferred Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or equivalent
preferred stock, at a price per share of Preferred Stock or per share of
equivalent preferred stock or having a conversion or exercise price per share,
as the case may be, less than the current market price (as defined in Section
11(f) hereof) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock or
equivalent preferred stock to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or
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<PAGE> 18
equivalent preferred 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 value of such consideration shall
be as determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent.
Shares of Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(e) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price for one share of Preferred Stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors, 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 convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such current
market price for one share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(f) (i) For the purpose of any computation hereunder, the
"current market price" of any security (a "Security" for purposes of
this Section 11(f)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the 30
consecutive Trading Days (as hereinafter defined) immediately prior to
but not including such date; provided, however, that in the event that
the current market price per share of such Security is determined
during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into shares of such
Security or (B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of 30 Trading Days after but
not including the ex-dividend date for such dividend or distribution or
the record date for such subdivision, combination or reclassification,
then, and in each such case, the "current market price" shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to
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<PAGE> 19
securities listed or admitted to trading on the New York Stock Exchange
or, if the Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national securities
exchange, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") National Market
System, or if the Security is not listed or admitted to trading on any
national securities exchange or included in the Nasdaq National Market
System, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system
then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by a majority of the Board of Directors. If on any
such date no market maker is making a market in the Security, the fair
value of such Security on such date as determined in good faith by a
majority of the Board of Directors shall be used. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open
for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange a day on which
the Nasdaq National Market System is open for the transaction of
business or, if the Security is not listed or admitted to trading on
any national securities exchange or included in the Nasdaq National
Market System, a Business Day. If the Security is not publicly held or
not so listed or traded, "current market price" shall mean the fair
value as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share (or one one-hundredth of a share) of
Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this Section 11(f) (other
than the last sentence thereof). If the current market price per share
(or one one-hundredth of a share) of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(f), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
100 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Rights Agreement)
multiplied by the current market price per share of the Common Stock
and the "current market price" per one one-hundredth of a share of
Preferred Stock shall be equal to the current market price per share of
the Common Stock (as appropriately adjusted). If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"current market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.
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<PAGE> 20
(g) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(g) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten thousandth of a
share, as the case may be. Notwithstanding the first sentence of this Section
11(g), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.
(h) In the event that at any time, as a result of an adjustment
made pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of Preferred Stock, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in Section 11
hereof, inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the shares of Preferred Stock shall apply on like terms to any
such other shares.
(i) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock or other capital stock of the Company purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment of the Purchase Price.
(j) Unless the Company shall have exercised its election as
provided in Section 11(k) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Section 11(d) and (e) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest ten
thousandth) obtained by (i) multiplying (A) the number of one one-hundredths of
a share of Preferred Stock covered by a Right immediately prior to the
adjustment by (B) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(k) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares 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-hundredths of a
share of Preferred Stock for which such Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-hundredth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement (with prompt notice thereof to the Rights Agent) of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on
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<PAGE> 21
which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(k), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(l) Irrespective of any adjustment or change in the Purchase 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 Purchase Price and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Common Stock or other securities and below one one-hundredth of the then par
value, if any, of the Preferred Stock, issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of such Preferred Stock, Common Stock or
other securities at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and common stock
equivalents, a portion of the consideration paid upon such exercise, equal to at
least the then par value of a share of Common Stock of the Company, shall be
allocated as the payment for each share of Common Stock of the Company so
received.
(n) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (with prompt notice thereof to
the Rights Agent) until the occurrence of such event the issuing to the holder
of any Right exercised after such record date the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(o) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i)
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<PAGE> 22
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any Preferred Stock at less than the then current market price, (iii)
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable for Preferred Stock, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred Stock,
shall not be taxable to such shareholders.
(p) In the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in any
such case (y) the number of one one-hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (z) each
share of Common Stock outstanding immediately after such event shall have issued
with respect to it that number of Rights which each share of Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(q) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with, (ii) merge with or into, or (iii) sell or
transfer, 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) to, any other Person, if at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(r) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Sections 23 and 24 hereof,
take any action the purpose or effect of which is to diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 or 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts and computations accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (c) include a brief summary thereof in a mailing to each holder of a Right
Certificate in accordance with Section 26 hereof, or prior to the Distribution
Date, disclose a brief summary in a filing under the Exchange Act. The Rights
Agent shall be fully protected in relying on any
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<PAGE> 23
such certificate and on any adjustments therein contained. 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 and shall
not be deemed to have knowledge of any adjustment unless and until it shall have
received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, directly or indirectly, at any time after a
Person has become an Acquiring Person, (x) the Company shall consolidate with,
or merge with and into, any other Person, (y) any Person shall consolidate with
or merge with and into the Company, and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all or
part of the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (z) the Company shall sell, or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person other
than to the Company or one or more of its wholly-owned Subsidiaries, then, and
in each such case, proper provision shall be made so that (i) each holder of a
Right, subject to Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price multiplied
by the then number of one one-hundredths of a share of Preferred Stock for which
a Right is then exercisable (or if a Section 11(b) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such one
one-hundredths of a share for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(b) Event by the Purchase Price in effect
immediately prior to such first occurrence) in accordance with the terms of this
Rights Agreement, in lieu of Preferred Stock, such number of shares of freely
tradable Common Stock of the Principal Party (as hereinafter defined), free and
clear of liens, rights of call or first refusal, encumbrances or other adverse
claims, as shall be equal to the result obtained by (A) multiplying the then
current Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable (or if a Section 11(b)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-hundredths of a share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(b)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product by (B) 50% of the current market price
per share of the Common Stock of such Principal Party (determined in the manner
described in Section 11(f) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the 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 Rights Agreement; (iii) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof, except for the provisions of 11(b), shall apply
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the authorization and reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) in connection with
such consummation as may be necessary to assure that the provisions hereof shall
thereafter be
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<PAGE> 24
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a) hereof, the Person that is
the issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person, including the Company, that is
the other party to the merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions; provided,
however, that in any case described in clause (i) or (ii) in this
Section 13(b), (x) if the Common Stock of such Person is not at such
time and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary or Affiliate of another Person,
"Principal Party" shall refer to such other Person; (y) in case such
Person is a Subsidiary, directly or indirectly, or Affiliate of more
than one Person, the Common Stocks of all of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value, and (z) in case such Person is, or is owned directly or
indirectly by, a partnership or joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (x) and (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and
the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of shares of its authorized Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and each Principal
Party and each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under
the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, will
use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
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(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the
"blue sky laws" of such jurisdictions as may be necessary or
appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(b) Event, the Rights which have not theretofore been exercised shall
thereafter also become exercisable in the manner described in Section 13(a)
hereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, as reported by the Nasdaq National Market System or, if the
Rights are not listed or admitted to trading on any national securities exchange
or included in the Nasdaq National Market System, the last quoted price, or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by a majority of the Board
of Directors. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
a majority of the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the
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Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the preferences, limitations and relative rights to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders 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 current market value of one one-hundredths of a
share of Preferred Stock. For purposes of this Section 14(b), the current market
value of one one-hundredth of a share of Preferred Stock shall be one
one-hundredth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(f)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive common stock
equivalents (other than Preferred Stock) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, the Company may pay
to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such common stock equivalent or other
securities. For purposes of this Section 14(c), the current market value shall
be determined in the manner set forth in Section 11(f) hereof for the Trading
Day immediately prior to the date of such exercise and, if such common stock
equivalent is not traded, each such common stock equivalent shall have the value
of one one-hundredth of a share of Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14, the
holder of a Right by the acceptance of the Right expressly waives such holder's
right to receive any fractional Rights or any fractional share upon exercise of
Rights.
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, except for rights of action given to the Rights Agent
under Section 18 or Section 20 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights 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 Rights Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations
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<PAGE> 27
of, the obligations of any Person subject to this Rights Agreement. Holders of
Rights shall be entitled to recover from the Company the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Rights Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the stockholder services office of the Rights Agent or such office 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 Certificate 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 Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock, Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent 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, execution, delivery and
amendment of this Rights 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
(each as determined by a court of competent jurisdiction), for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
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<PAGE> 28
administration of this Rights Agreement, including the costs and expenses of
defending against any claim of liability. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect, consequential or incidental loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage. Any liability of the Rights
Agent under this Rights Agreement will be limited to the amount of fees paid by
the Company to the Rights Agent.
(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 its acceptance and administration of this Rights Agreement
in reliance upon any Right Certificate or certificate for Preferred Stock,
Common 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 or Change of Name of Rights
Agent.
(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
corporate trust powers or business or the stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights 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 Rights Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Rights 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:
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(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 Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of current market price) be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, Chief Executive Officer, President, Chief Financial
Officer or any Vice President and by the Treasurer or any Assistant Treasurer or
the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and 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 or suffered in good faith by it under the provisions of this
Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights 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 have any liability for or be under
any responsibility in respect of the validity of this Rights 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 Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Sections 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 actual notice to the Rights Agent of 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 or other
securities to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock or other securities
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
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<PAGE> 30
(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, Chief Executive Officer, President, Chief Financial
Officer, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered or omitted to be taken by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, affiliate
officer, employee, agent or representative 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 Rights
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 resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Rights Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1, clause 2
and/or, in the case of the certificate attached to the form of election to
purchase, clause 3 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail or, prior to the Distribution Date, through any
filing made by the Company pursuant to the Exchange Act. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such
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<PAGE> 31
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 (which holder
shall, with such notice, submit such holder's Right Certificate for inspection
by the Company), then the registered holder of any Right Certificate may apply
to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation or other entity organized and doing business
under the laws of the United States or of any state, in good standing, having an
office in the States of New York or Kentucky, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority, or (b) an affiliate of
a corporation or other entity described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates or, prior to the Distribution Date, through any filing
made by the Company pursuant to the Exchange Act. Failure to give any notice
provided for this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
(a) Notwithstanding any of the provisions of this Rights 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 a
majority of the Board of Directors then in office to reflect any adjustment or
change in the Purchase Price 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 Rights Agreement.
(b) In addition, in connection with the issuance or sale of Common
Stock following the Distribution Date and prior to the redemption, exchange or
expiration of the Rights, the Company (a) shall with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee benefit plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors, issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Right
Certificates shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificates would be issued, and (ii) no Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
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Section 23. Redemption and Termination.
(a) A majority of the Board of Directors then in office may, at
its option, at any time prior to the earlier of (i) the Close of Business on the
Stock Acquisition Date or (ii) the Close of Business on the Final Expiration
Date, elect to redeem all but not less than all of the then outstanding Rights
at a redemption price of $0.005 per Right, as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the action of a majority of the Board of
Directors then in office electing to redeem the Rights, evidence of which shall
be promptly filed with the Rights Agent, or, when appropriate, immediately upon
the time or satisfaction of such conditions as the Board of Directors may have
established, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public disclosure of any such redemption; provided, however, that the
failure to give, or any defect in, any such disclosure shall not affect the
validity of such redemption. Within ten days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and 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 such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
(c) Neither the Company nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23 or Section 24 hereof
and other than in connection with the purchase of Common Stock prior to the
Distribution Date.
Section 24. Exchange.
(a) The Board of Directors 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
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect adjustments in the number of Rights pursuant
to Section 11 of this Rights Agreement (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan or compensation arrangement of the Company or any such Subsidiary,
or any entity holding securities of the Company to the extent organized,
appointed or established by the Company or any such Subsidiary for or pursuant
to the terms of any such employee benefit plan or compensation arrangement),
together with all
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<PAGE> 33
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Voting Power of the Company.
(b) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to paragraph (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only rights thereafter of 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
promptly shall give public notice of any such exchange (with prompt 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 Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Stock (or equivalent preferred stock, as
such term is defined in Section 11(d) hereof) for Common Stock exchangeable for
Rights, at the initial rate of one one-hundredth of a share of Preferred Stock
(or equivalent preferred stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock (or equivalent preferred stock) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock or
Preferred Stock (or equivalent preferred stock) for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of Common
Stock or to distribute certificates which evidence fractional shares of Common
Stock. In lieu of such fractional shares of Common Stock, 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 (e), the current market value
of a whole share of Common Stock shall be the current market price of a share of
Common Stock (as determined pursuant to the second sentence of Section 11(f)(i)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
Section 25. Notice of Proposed Actions.
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<PAGE> 34
(a) In case the Company shall propose at any time after the
Distribution Date (a) to pay any dividend payable in stock of any class to the
holders of the Preferred Stock or to make any other distribution to the holders
of the Preferred Stock (other than a regular periodic cash dividend out of
earnings or retained earnings of the Company), (b) to offer to the holders of
the Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any other class or
any other securities, rights or options, (c) to effect any reclassification of
the Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), (d) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sales or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, (e) to effect the liquidation, dissolution or winding up of the Company,
or (f) to declare or pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in Common
Stock), then, in each such case, the Company shall give to each holder of a
Right and the Rights Agent, in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend, distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock and/or Preferred Stock, if any such
date is to be fixed. Such notice shall be so given in the case of any action
covered by clauses (a) or (b) above at least ten days prior to the record date
for determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least ten days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 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 a Section 11(b) Event shall occur, then the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(b) hereof.
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
NS Group, Inc.
Ninth & Lowell Streets
Newport, Kentucky 41072
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or
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<PAGE> 35
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:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attention: Ms. Diane Sayek
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time
to time supplement or amend this Rights Agreement without the approval of any
holders of Right Certificates in order (a) to cure any ambiguity, (b) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (c) to shorten or lengthen any
time period hereunder (including without limitation to extend the Final
Expiration Date), (d) to increase or decrease the Purchase Price, or (e) to
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable; provided, however, that from and after such
time as any Person becomes an Acquiring Person, this Rights Agreement shall not
be amended in any manner which would adversely affect the interests of the
holders of Rights; provided further that this Rights Agreement may not be
supplemented or amended to lengthen pursuant to clause (c) of this sentence, (A)
the time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period, unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of the Rights; provided further that the
Company shall have the right to make unilaterally any changes necessary to
facilitate the appointment of a successor Rights Agent, which such changes shall
be set forth in a writing by the Company or by the Company and such successor
Rights Agent. Without limiting the foregoing, the Company may at any time prior
to such time as any Person becomes an Acquiring Person amend this Rights
Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) hereof
from 20% to not less than the greater of (i) any percentage greater than the
largest percentage of the Voting Power of the Company then known by the Company
to be beneficially owned by any Person (other than the Company, any Subsidiary
of the Company, or any employee benefit plan or compensation arrangement of the
Company or any Subsidiary of the Company, and any entity holding securities of
the Company to the extent organized, appointed or established by the Company or
any such Subsidiary for or pursuant to the terms of any such employee benefit
plan or compensation arrangement) together with all Affiliates and Associates of
such Person and (ii) 10%. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27 and such supplement or amendment
does not increase the Rights Agent's duties, liabilities or obligations, the
Rights Agent shall execute such supplement or amendment.
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Section 28. Successors. All the covenants and provisions of this
Rights 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 Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. It is the intent of the parties hereto to enforce the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement to the maximum extent permitted by law.
Section 31. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of Kentucky and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
Section 32. Counterparts. This Rights 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 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
Attest: NS GROUP, INC.
By /s/ Jack W. Mehalko By: /s/ John R. Parker
----------------------------- ------------------------------------
Name: Jack W. Mehalko Name: John R. Parker
Title: Vice President and Secretary Title: Vice President and Treasurer
Attest: REGISTRAR AND TRANSFER COMPANY
By /s/ Diane Sayek By: /s/ William P. Tatler
---------------------------------- -----------------------------------
Name: Diane Sayek Name: William P. Tatler
Title: Asst. Vice President Title: Vice President
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<PAGE> 38
Exhibit A
FORM OF
ARTICLES OF AMENDMENT TO
THE AMENDED AND RESTATED ARTICLES
OF INCORPORATION
OF
NS GROUP, INC.
Pursuant to Section 271B.6-020 of The Kentucky Business
Corporation Act, these Articles of Amendment to the Amended and Restated
Articles of Incorporation of NS Group, Inc. (the "Company") are hereby adopted
and are being delivered to the Kentucky Secretary of State for filing. The
information required by KRS 271B.6-020(4) is as follows:
FIRST: The name of the Company is NS Group, Inc.
SECOND: These Articles of Amendment amend current ARTICLE IV by
establishing a new series of Junior Participating Preferred Stock. As amended, a
new paragraph (c) shall be added to the end of Article IV, which paragraph (c)
shall read in its entirety as follows:
(c) Series B Junior Participating Preferred Stock. Of the
2,000,000 shares of Class A Preferred Stock authorized by Article IV, paragraph
(b), 1,000,000 shares shall be designated Series B Junior Participating
Preferred Stock (the "Series B Preferred Stock"). Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided that no
decrease shall reduce the number of shares of Series B Preferred Stock to a
number less than that of the shares then outstanding plus the number of shares
issuable upon the exercise of outstanding rights, options, or warrants or upon
the conversion of outstanding securities issued by the Company.
Section 1. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the Company ranking prior and superior to
the Series B Preferred Stock with respect to dividends, the holders of
shares of Series B Preferred Stock, in preference to the holders of
shares of Common Stock, no par per share (the "Common Stock"), of the
Company, and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on any
regular quarterly dividend payment date as shall be established by the
Board of Directors (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction
of a share of Series B Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock
<PAGE> 39
since the immediately preceding Quarterly Dividend Payment Date or,
with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series B
Preferred Stock. In the event the Company shall at any time after
November 17, 1998 (the "Rights Declaration Date") declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series B Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series B Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may, in accordance with
applicable law, fix a record date for the determination of holders of
shares of Series B Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
not more than such number of days prior to the date fixed for the
payment thereof as may be allowed by applicable law.
Section 2. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) (A) Each share of Series B Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Company. In
2
<PAGE> 40
the event the Company shall at any time after the Rights Declaration Date
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes to which
holders of shares of Series B Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series B Preferred Stock, the holders of shares of Common Stock, and
the holders of shares of any other capital stock of the Company having general
voting rights, shall vote together as one class on all matters submitted to a
vote of shareholders of the Company.
(C) Except as otherwise set forth herein, and except as otherwise
provided by law, holders of Series B Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 3. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series B
Preferred Stock as provided in Section 1 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series B Preferred Stock outstanding shall have been paid in full, the
Company shall not:
(i) declare or pay dividends 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 B Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except dividends paid ratably on the Series B
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) except as permitted in Section 3(A)(iv) below, 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 B Preferred 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 (either as to dividends or upon dissolution,
liquidation or winding up) to the Series B Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any
shares of
3
<PAGE> 41
Series B Preferred Stock, or any shares of stock ranking on a
parity with the Series B Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 3,
purchase or otherwise acquire such shares at such time and in such manner.
Section 4. Reacquired Shares.
Any shares of Series B Preferred Stock purchased or otherwise
acquired by the Company in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. The Company shall cause all such shares
upon their cancellation to be authorized but unissued shares of Class A
Preferred Stock that may be reissued as part of a new series of Class A
Preferred Stock, subject to the conditions and restrictions on issuance set
forth herein or in any other Articles of Amendment creating a series of Class A
Preferred Stock or as otherwise required by law.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company ranking prior and superior to the
Series B Preferred Stock with respect to liquidation, upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Company, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock unless, prior thereto, the holders of shares of Series
B Preferred Stock shall have received $100.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series B Liquidation Preference"). Following
the payment of the full amount of the Series B Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series B
Preferred Stock, unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series B Liquidation Preference by (ii)
100 (as appropriately adjusted as set forth in subparagraph C below to reflect
such events as stock dividends, and subdivisions, combinations and
consolidations with respect to the Common Stock) (such number in clause (ii)
being referred to as the "Adjustment Number"). Following the payment of the full
amount of the Series B Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series B Preferred Stock and Common Stock,
respectively, holders of Series B Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Series B Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event there are not sufficient assets available to
permit payment in full of the Series B Liquidation Preference and the
liquidation preferences of all other series of
4
<PAGE> 42
preferred stock, if any, which rank on a parity with the Series B Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation preferences. In
the event there are not sufficient assets available to permit payment in full of
the Common Adjustment, then such remaining assets shall be distributed ratably
to the holders of Common Stock.
(C) In the event the Company shall at any time after the Rights
Declaration Date declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 6. 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 the shares of Series B Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Company shall at any time after the
Rights Declaration Date declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series B Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that are outstanding immediately prior to such
event.
Section 7. Redemption.
The shares of Series B Preferred Stock shall not be redeemable.
Section 8. Ranking.
The Series B Preferred Stock shall rank junior to all other series
of the Company's Class A Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
Section 9. Fractional Shares.
Series B Preferred Stock may be issued in fractions of a share
which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive
5
<PAGE> 43
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series B Preferred Stock."
THIRD: Notwithstanding the date that these Articles of Amendment
to the Company's Amended and Restated Articles of Incorporation are filed by the
Secretary of State, the date that these Articles of Amendment will be effective
is November 17, 1998.
FOURTH: These Articles of Amendment were duly adopted by the
Company's Board of Directors at a meeting held on November 5, 1998 without
shareholder approval. Shareholder action was not required.
IN WITNESS WHEREOF, on behalf of NS Group, Inc., the undersigned
has executed these Articles of Amendment, effective as of the 17th day of
November, 1998.
By:_________________________
Name: [NAME OF OFFICER]
Title: [OFFICE]
Attest
By:_________________________
Name: [NAME OF OFFICER]
Title: [OFFICE]
6
<PAGE> 44
Exhibit B
[Form of Right Certificate]
Certificate No. R-___________ ____ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT
THE OPTION OF THE COMPANY, THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $0.005 PER RIGHT OR
EXCHANGE FOR COMMON STOCK, UNDER THE
CIRCUMSTANCES AND ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO
WAS AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON. THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
ARE VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Right Certificate
NS GROUP, INC.
This certifies that________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of November 17, 1998 (the "Rights Agreement") between NS
Group, Inc., a Kentucky corporation (the "Company"), and Registrar and Transfer
Company, a New York corporation (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 p.m. Newport, Kentucky time on the
Expiration Date, as that term is defined in the Rights Agreement, at the
stockholder services office (or such office designated for such purpose) of the
Rights Agent, or its successor as Rights Agent, one one-hundredth of a fully
paid, nonassessable share of the Series B Junior Participating Preferred Stock,
par value $10.00 per share ("Preferred Stock"), of the Company, at a purchase
price of $40.00 per one one-hundredth of a share (the "Purchase Price") upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise of
each Right) and the Purchase Price set forth above, are the number and Purchase
Price as of _________, _____based on the shares of Preferred Stock of the
Company as constituted at such date.
__________________
* The portion of the legend in brackets shall be inserted only if applicable.
<PAGE> 45
The Purchase Price and the number of shares of Preferred Stock
which may be purchased upon the exercise of each of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the happening
of certain events as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the Company and the above-mentioned office
of the Rights Agent and are also available upon written request to the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the stockholder services office (or such office designated for
such purpose) of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of 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 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 at a
redemption price of $0.005 per Right on or prior to the Stock Acquisition Date
(as defined in the Rights Agreement). In addition, subject to the provisions of
the Rights Agreement, each Right evidenced by this Certificate may be exchanged
by the Company at its option for one share of Common Stock following the Stock
Acquisition Date and prior to the time an Acquiring Person, as that term is
defined in the Rights Agreement, owns 50% or more of the Voting Power, as that
term is defined in the Rights Agreement, of the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts). In lieu of
fractions of a share, a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
2
<PAGE> 46
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of __________, _____.
Attest: NS GROUP, INC.
By_______________________ By_______________________
Name:____________________ Name:____________________
Title:_____________________ Title:_____________________
Countersigned:
REGISTRAR AND TRANSFER COMPANY
By:________________________
Authorized signature
3
<PAGE> 47
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED_____________________________________________
hereby sells, assigns and transfers unto
_____________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________ Attorney to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:_________________
____________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
4
<PAGE> 48
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:______________ __________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
5
<PAGE> 49
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To NS Group, Inc.:
The undersigned hereby irrevocably elects to exercise_____________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
Name:_____________________
Address:__________________
__________________
Social security
or taxpayer identification
number:___________________
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:
Name:_____________________
Address:__________________
__________________
Social security
or taxpayer identification
number:___________________
Dated:_______________
___________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
6
<PAGE> 50
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_______________
____________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
NOTICE
------
The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the form of
Assignment or the form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored as described in Section
7(e) of the Rights Agreement.
7
<PAGE> 51
Exhibit C
---------
NS GROUP, INC.
SUMMARY OF PREFERRED STOCK
PURCHASE RIGHTS
On November 5, 1998, the Board of Directors of NS Group, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, no par value, of the Company (the
"Common Stock"). The dividend distribution is payable on November 17, 1998 (the
"Record Date") to the shareholders of record as of the close of business on that
date. Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series B Junior Participating Preferred Stock, par
value $10.00 per share (the "Preferred Stock") of the Company at a price of
$40.00 per one one-hundredth of a share of Preferred Stock (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a 1998 Rights Agreement dated as of November 17, 1998, as the same may
be amended from time to time (the "Rights Agreement"), between the Company and
Registrar and Transfer Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the
tenth business day following the date of public announcement or the date on
which the Company first has notice or determines that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) (an "Acquiring Person") has
acquired, or obtained the right to acquire, 20% or more of the outstanding
shares of voting stock of the Company without the prior express written consent
of the Company executed on behalf of the Company by a duly authorized officer of
the Company following express approval by action of at least a majority of the
members of the Board of Directors then in office (the "Stock Acquisition Date")
or (ii) the close of business on the tenth business day (or such later date as
may be determined by action of the Board of Directors but not later than the
Stock Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or any employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 20%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary
<PAGE> 52
of Rights, 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 Common Stock as of the
close of business on the Distribution Date and such separate certificates alone
will then evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire, if not previously exercised, on November 17, 2008 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable and will be junior to any other series of
preferred stock the Company may issue (unless otherwise provided in the terms of
such stock). Each share of Preferred Stock will have a preferential dividend in
an amount equal to 100 times any dividend declared on each share of Common
Stock. In the event of liquidation, the holders of the Preferred Stock will
receive a preferred liquidation payment of equal to the greater of $100 and 100
times the payment made per share of Common Stock. Each share of Preferred Stock
will have 100 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount and type of consideration received per share of
Common Stock. The rights of the Preferred Stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary of
the Company or any employee benefit plan of the Company) acquires 20% or more of
the Company's
2
<PAGE> 53
outstanding voting stock without the prior written consent of the Board of
Directors, each Right, except those held by such persons, would entitle each
holder of a Right to acquire such number of shares of the Company's Common Stock
as shall equal the result obtained by multiplying the then current Purchase
Price by the number of one one-hundredths of a share of Preferred Stock for
which a Right is then exercisable and dividing that product by 50% of the then
current per-share market price of Company Common Stock.
If any person or group (other than the Company, any subsidiary of
the Company or any employee benefit plan of the Company) acquires more than 20%
but less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Company Common Stock is exchanged or changed or 50% or more of the
Company's assets or earnings power is sold in one or several transactions
without the prior written consent of the Board of Directors, each Right would
entitle the holders thereof (except for the Acquiring Person) to receive such
number of shares of the acquiring company's common stock as shall be equal to
the result obtained by multiplying the then current Purchase Price by the number
of one one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current market price
per share of the common stock of the acquiring company on the date of such
merger or other business combination transaction.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.005 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including, but not limited to, an amendment to lower certain thresholds
described above to not less than the greater of (i) any percentage greater than
the largest percentage of the voting power of all securities of the Company then
known to the Company to be beneficially owned by any person or group of
affiliated or associated persons (other than an excepted person) and (ii) 10%,
except that from and after such time as any person or group of affiliated or
associated persons becomes an
3
<PAGE> 54
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, as the same may
be amended from time to time, which is hereby incorporated herein by reference.
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Exhibit 2
[NS GROUP, INC. letterhead]
November 17, 1998
To Our Shareholders:
NS Group's Board of Directors adopted a Shareholder Rights Plan on
November 5, 1998, to succeed a plan adopted by the Company in 1988. The Plan is
designed to provide our shareholders with assurance that they will benefit from
the long term prospects and increases in value of the Company. The Board of
Directors declared a dividend distribution of one Preferred Stock Purchase Right
for each outstanding share of the Company's Common Stock to holders of record as
of the close of business on November 17, 1998.
Each Right will entitle you, under certain conditions, to purchase
one one-hundredth of a share of Series B Junior Participating Preferred Stock.
Although you are the owner of the Right as of November 17, 1998, under the terms
of the Plan no certificate evidencing the Right will be issued to you at this
time. At the present time, the summary description referred to in the
immediately succeeding paragraph of this letter, and a legend appearing on the
backs of Common Stock certificates issued after November 17, 1998, are the only
evidence you will receive or require with respect to your ownership of the
Rights.
This letter describes the Board's reasons for issuing the Rights.
In addition, we are enclosing a Summary description which outlines the principal
features of the new Plan, and we urge you to read it carefully.
Over 3,000 U.S. and Canadian publicly-held companies currently
have similar plans. The Board considers the Plan to be an appropriate means to
protect your equity investment in the Company and the full value of that
investment.
The Plan is designed to protect shareholders against abusive
takeover tactics. We believe that such tactics can unfairly deprive shareholders
of their opportunity to profit from the long term potential of the Company, and
can pressure shareholders to act hastily by threatening to squeeze them out of
their investments at less than fair value.
The Board was aware when it approved the Rights Plan that some
people have advanced arguments that such plans deter legitimate acquisition
proposals. The Board carefully considered those views and concluded that such
arguments are speculative and unconvincing and certainly do no justify leaving
shareholders with less effective protection against unfair treatment by an
acquirer who, after all, would be seeking to further its own interests, and not
yours.
It must be emphasized that the Shareholder Rights Plan is not
intended to prevent a tender offer or other acquisition proposal for the Company
which is fair and equitable to all
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shareholders. The Rights should not affect any prospective offeror who is
willing to negotiate with your Board of Directors and to make an offer for all
of the Company's stock at a full and fair price. Furthermore, the Plan will not
in any way prevent an individual shareholder from exercising his or her right to
vote for a change in the management or operation of the Company.
The distribution of the Rights is not taxable to you or to the
Company and does not in any way weaken the financial strength of the Company or
interfere with its business plans. If the Rights should become exercisable,
shareholders, depending upon the particular circumstances then applicable, may
realize taxable income at that time. The Rights are not dilutive and will not
affect reported earnings per share, nor will the Rights affect the manner in
which you may presently buy or sell the Company's shares.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission and is available free of charge from either the Company
or the Rights Agent, Registrar and Transfer Company, 10 Commerce Drive,
Cranford, New Jersey 07016 Attention: Investor Relations Department. The Rights
Agent can also be reached at (800) 368-5948.
In conclusion, your Board believes that the Shareholder Rights
Plan represents a sound and reasonable means of providing shareholders
protection against takeovers that do not provide fair value. Your Board and
management are enthusiastic about the potential for your Company and are
committed to serving the best interests of its shareholders. Accordingly, we
take great satisfaction in providing these new Rights to you in order to
preserve for you the long-term value of your investment in the Company.
Sincerely,
Clifford R. Borland
Chairman and Chief Executive Officer
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NS GROUP, INC.
SUMMARY OF PREFERRED STOCK
PURCHASE RIGHTS
On November 5, 1998, the Board of Directors of NS Group, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, no par value, of the Company (the
"Common Stock"). The dividend distribution is payable on November 17, 1998 (the
"Record Date") to the shareholders of record as of the close of business on that
date. Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series B Junior Participating Preferred Stock, par
value $10.00 per share (the "Preferred Stock") of the Company at a price of
$40.00 per one one-hundredth of a share of Preferred Stock (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a 1998 Rights Agreement dated as of November 17, 1998, as the same may
be amended from time to time (the "Rights Agreement"), between the Company and
Registrar and Transfer Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the
tenth business day following the date of public announcement or the date on
which the Company first has notice or determines that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) (an "Acquiring Person") has
acquired, or obtained the right to acquire, 20% or more of the outstanding
shares of voting stock of the Company without the prior express written consent
of the Company executed on behalf of the Company by a duly authorized officer of
the Company following express approval by action of at least a majority of the
members of the Board of Directors then in office (the "Stock Acquisition Date")
or (ii) the close of business on the tenth business day (or such later date as
may be determined by action of the Board of Directors but not later than the
Stock Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or any employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 20%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights, 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
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<PAGE> 4
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate certificates alone will then evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire, if not previously exercised, on November 17, 2008 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable and will be junior to any other series of preferred stock
the Company may issue (unless otherwise provided in the terms of such stock).
Each share of Preferred Stock will have a preferential dividend in an amount
equal to 100 times any dividend declared on each share of Common Stock. In the
event of liquidation, the holders of the Preferred Stock will receive a
preferred liquidation payment of equal to the greater of $100 and 100 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
100 votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are converted
or exchanged, each share of Preferred Stock will be entitled to receive 100
times the amount and type of consideration received per share of Common Stock.
The rights of the Preferred Stock as to dividends, liquidation and voting, and
in the event of mergers and consolidations, are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary of
the Company or any employee benefit plan of the Company) acquires 20% or more of
the Company's outstanding voting stock without the prior written consent of the
Board of Directors, each Right, except those held by such persons, would entitle
each holder of a Right to acquire such number
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<PAGE> 5
of shares of the Company's Common Stock as shall equal the result obtained by
multiplying the then current Purchase Price by the number of one one-hundredths
of a share of Preferred Stock for which a Right is then exercisable and dividing
that product by 50% of the then current per-share market price of Company Common
Stock.
If any person or group (other than the Company, any subsidiary of
the Company or any employee benefit plan of the Company) acquires more than 20%
but less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Company Common Stock is exchanged or changed or 50% or more of the
Company's assets or earnings power is sold in one or several transactions
without the prior written consent of the Board of Directors, each Right would
entitle the holders thereof (except for the Acquiring Person) to receive such
number of shares of the acquiring company's common stock as shall be equal to
the result obtained by multiplying the then current Purchase Price by the number
of one one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current market price
per share of the common stock of the acquiring company on the date of such
merger or other business combination transaction.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.005 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors
of the Company without the consent of the holders of the Rights, including, but
not limited to, an amendment to lower certain thresholds described above to not
less than the greater of (i) any percentage greater than the largest percentage
of the voting power of all securities of the Company then known to the Company
to be beneficially owned by any person or group of affiliated or associated
persons (other than an excepted person) and (ii) 10%, except that from and after
such time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
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Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, as the same may
be amended from time to time, which is hereby incorporated herein by reference.
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