SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20449
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 9, 1999
Delta Woodside Industries, Inc.
(Exact Name of Registrant as Specified in Its Charter)
South Carolina 001-10095 57-0535180
(State of Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
233 North Main Street, Hammond Square, Suite 200,
Greenville, South Carolina 29601
(Address of Principal Executive Offices) (Zip Code)
(864) 232-8301
(Registrant's Telephone Number
Including Area Code)
Not Applicable
(Former Name or Former Address,
if Changed Since Last Report)
Copies to:
Eric B. Amstutz & Eric K. Graben
Wyche, Burgess, Freeman & Parham, P.A.
44 East Camperdown Way (29601)
P.O. Box 728
Greenville, SC 29602-0728
(864) 242-8200
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Item 5. Other Events.
This report relates to certain announcements made by the Registrant in the
Press Release, dated December 10, 1999 filed as Exhibit 99.1 hereto and
incorporated herein by reference.
COMMON STOCK PURCHASE RIGHT DIVIDEND.
On December 9, 1999, the Board of Directors of Delta Woodside Industries,
Inc. (the "Company") declared a dividend distribution of one common stock
purchase right (a "Right") for each outstanding share of the Company's common
stock, par value $0.01 per share (the "Common Stock"), to stockholders of record
at the close of business on December 22, 1999. Each Right entitles the
registered holder to purchase from the Company one quarter share of the Common
Stock, at a cash exercise price of $5.00 per quarter share (equivalent to $20.00
per whole share), subject to adjustment. The description and terms of the Rights
are set forth in a Shareholder Rights Agreement (the "Rights Agreement") between
the Company and First Union National Bank, as Rights Agent.
The following summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
A copy of the Rights Agreement (which incudes as Exhibit A the form of Rights
Certificates and as Exhibit B the Summary of Rights to Purchase Common Stock)
has been included as Exhibit 4.1 hereto and is incorporated herein by reference.
Certificates; Separation of Rights from Common Stock
Initially, the Rights will not be exercisable, will be attached to all
outstanding shares of the Common Stock, and no separate Right certificates will
be distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earliest of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") (other than an Exempt Person as defined in the Rights
Agreement) has acquired beneficial ownership of 20% or more of the outstanding
shares of the Common Stock (the date of this announcement being referred to as
the "Share Acquisition Date") and (ii) 10 business days following the
commencement of a tender offer or exchange offer that would result in a person
or group owning 20% or more of the outstanding shares of the Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), (a) the Rights will be evidenced by the Common Stock certificates and
will be transferred only with such the Common Stock certificates, (b) new the
Common Stock certificates issued after December 22, 1999 will contain a notation
incorporating the Rights Agreement by reference, and (c) the surrender for
transfer of any certificates for the Common Stock will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of
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business on December 22, 2009 unless previously redeemed or exchanged for the
Common Stock by the Company as described below.
As soon as practicable after the Distribution Date, Right certificates will
be mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, only shares of the Common Stock issued prior to the Distribution Date
will be issued with Rights.
Flip-In Rights
In the event that (i) a Person acquires beneficial ownership of 20% or more
of the Company's common stock, (ii) the Company is the surviving corporation in
a merger with an Acquiring Person or any Affiliate or Associate of an Acquiring
Person and the Common Stock is not changed or exchanged, (iii) an Acquiring
Person engages in one of a number of self-dealing transactions specified in the
Shareholder Rights Agreement, or (iv) an event occurs that results in an
Acquiring Person's ownership interest being increased by more than 1%, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive upon exercise thereof at then current exercise price, that
number of shares of the Common Stock (or in certain circumstances, cash,
property, or other securities of the Company) having a market value of two times
such exercise price. However, the Rights are not exercisable following the
occurrence of any of the events set forth above until the time the Rights are no
longer redeemable as set forth below. Notwithstanding any of the foregoing, upon
any of the events set forth above, rights that are or were beneficially owned by
an Acquiring Person shall become null and void.
Flip-Over Rights
In the event that, at any time following the Share Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction or
(ii) 50% or more of the Company's assets or earning power is sold, each holder
of a Right shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a market value equal to two times the
exercise price of the Right.
Exchange of Common Stock for Rights at Option of the Board
At any time after any person becomes an Acquiring Person and prior to the
time such Person, together with its Affiliates and Associates, becomes the
Beneficial Owner of 50% or more of the outstanding the Common Stock, the Board
of Directors of the Company may exchange the Rights (other than Rights that have
become void), in whole or in part, at the exchange rate of one quarter share of
the Common Stock per Right, subject to adjustment as provided in the Rights
Agreement.
Adjustment of Exercise Price and Underlying Shares in Certain Events
The exercise price payable, and the number of shares of the Common Stock or
other
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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 Common
Stock, (ii) if all holders of the Common Stock are granted certain rights or
warrants to subscribe for the Common Stock or securities convertible into the
Common Stock at less than the current market price of the Common Stock, or (iii)
upon the distribution to all holders of the Common Stock of evidence of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
Notwithstanding the foregoing, no adjustment will be made to the exercise price
payable, and the number of shares of the Common Stock or other securities or
property issuable, upon exercise of the Rights in connection with the expected
spin-off of the Duck Head Apparel Company division or the Delta Apparel Company
division of the Company provided such spin-off is consummated by March 31, 2000.
With certain exceptions, no adjustment in the exercise price will be
required until cumulative adjustments amount to at least 1% of the exercise
price. No fractional shares of the Common Stock will be issued upon exercise of
a Right and, in lieu thereof, a payment, in cash will be made based on the fair
market value of the Common Stock on the last trading date prior to the date of
exercise.
Redemption of Rights
The Rights may be redeemed in whole, but not in part, at a price of $.001
per Right (payable in cash, the Common Stock or other consideration deemed
appropriate by the Board of Directors) by the Board of Directors at any time
prior to the earlier of the close of business on the tenth day after the Share
Acquisition Date or the final expiration Date of the Rights (whichever is
earlier). After the redemption period has expired, the Company's right of
redemption may be reinstated upon the approval of the Board of Directors if an
Acquiring Person reduces his beneficial ownership to 10% or less of the
outstanding shares of the Common Stock in a transaction or series of
transactions not involving the Company and there are no other Acquiring Persons.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights and without any notice, the Rights will terminate and thereafter the only
right of the holders of Rights will be to receive the redemption price.
No Rights of Stockholder Until Exercise
Until a Right is exercised, the holder will have no rights as a stockholder
of the Company (beyond those as an existing stockholder), including the right to
vote or to receive dividends.
Amendment of Rights Agreement
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement, other than those
relating to the principal economic terms of the Rights, may be amended by the
Board to cure any ambiguity, defect or inconsistency, to make changes that do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement. Amendments adjusting time periods may, under certain
circumstances be limited.
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Tax Considerations
While the distribution of the Rights will not be taxable to stockholders or
to the Company, stockholders may, depending on the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
(or other consideration) of the Company or for common stock of the acquiring
company as set forth above.
Anti-Takeover Effects
The Rights may have anti-takeover effects, though they will not prevent a
take-over. The Rights will cause substantial dilution to a person or group of
persons that acquires beneficial ownership of 20% or more of the outstanding
shares of the Common Stock without the Rights having been redeemed. However, the
Rights should not interfere with any merger or other business combination that
is in the best interests of the Company and its stockholders because the Rights
may be redeemed by the Board of Directors.
AMENDMENTS TO BYLAWS.
On December 9, 1999, the Company adopted amended and restated bylaws (the
"New Bylaws"). The amendments contained in the New Bylaws (1) update the
existing bylaws of the Company to synchronize them with the most current
provisions of the South Carolina Business Corporation Act of 1988, as amended,
(2) adopt certain notice procedures for shareholder proposals and nominees for
directors and (3) do not contain a provision opting out of applicability of the
South Carolina Control Share Acquisition Act.
REPURCHASE OF SHARES
On December 9, 1999, the Board approved a plan to purchase from time to
time up to an aggregate of 5,000,000 shares of the Company's outstanding stock
at prices and at times at the discretion of the Company's top management. This
stock repurchase plan replaces the 2,500,000 share stock purchase plan announced
by the Company in September 1998, pursuant to which the Company acquired an
aggregate of approximately 979,000 shares.
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Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired: Not Applicable.
(b) Pro forma financial information: Not Applicable.
(c) Exhibits.
3.1 Amended and Restated Bylaws of the Company adopted December 9, 1999.
4.1 Rights Agreement, dated as of December 10, 1999, between the Company
and First Union National Bank, which includes as Exhibit A the Form of
Rights Certificate and, as Exhibit B, the Summary of Rights to
Purchase Common Stock.
99.1 Press Release dated December 10, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
DELTA WOODSIDE INDUSTRIES, INC.
Date: December 15, 1999 By: /s/ E. Erwin Maddrey, II
- ----------------------- ----------------------------
E. Erwin Maddrey, II
President & Chief Executive Officer
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AMENDED AND RESTATED
BYLAWS OF
DELTA WOODSIDE INDUSTRIES, INC.
Page
ARTICLE I.
PURPOSE AND OFFICES.................................................1
Section 1.2 Business Office....... ...........................1
Section 1.3 Registered Office.................................1
ARTICLE II.
SHAREHOLDERS........................................................1
Section 2.1 Annual Meeting....................................1
Section 2.2 Special Meetings..................................2
Section 2.3 Place of Meeting; Conduct of Meeting..............2
Section 2.4 Notice of Meeting.................................2
Section 2.5 Fixing of Record Date.............................4
Section 2.6 Shareholder List..................................4
Section 2.7 Quorum and Voting Requirements....................5
Section 2.8 Increasing Either Quorum or Voting Requirements...6
Section 2.9 Proxies.......................................... 6
Section 2.10 Voting of Shares; Polls...........................6
Section 2.11 Corporation's Acceptance of Votes.................7
Section 2.12 Informal Action by Shareholders...................8
Section 2.13 Notice of Shareholder Nominations.................8
Section 2.14 Procedures for Submission of Shareholder
Proposals at Annual Meeting......................10
Section 2.15 Shareholders' Rights to Inspect Corporate
Records..................................... 11
Section 2.16 Financial Statements Shall be Furnished to
the Shareholders........................... 12
Section 2.17 Dissenters' Rights...............................12
ARTICLE III.
BOARD OF DIRECTORS.................................................12
Section 3.1 General Powers...................................12
Section 3.2 Number, Tenure and Qualifications of Directors...13
Section 3.3 Regular Meetings.................................13
Section 3.4 Special Meetings.................................13
Section 3.5 Notice of Special Meeting........................13
Section 3.6 Director Quorum................................ .14
Section 3.7 Manner of Acting.................................14
Section 3.8 Action Without a Meeting.........................14
Section 3.9 Removal of a Director............................15
Section 3.10 Vacancies........................................15
Section 3.11 Compensation.....................................15
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Section 3.12 Committees........................................16
ARTICLE IV.
OFFICERS .................................................17
Section 4.1 Number...........................................17
Section 4.2 Appointment and Term of Office...................17
Section 4.3 Removal..........................................17
Section 4.4 The President....................................17
Section 4.5 The Vice-Presidents..............................18
Section 4.6 The Secretary....................................18
Section 4.7 The Treasurer....................................18
Section 4.8 Assistant Secretaries and Assistant Treasurers...19
Section 4.9 Salaries.........................................19
ARTICLE V.
INDEMNIFICATION OF DIRECTORS, OFFICERS,
AGENTS, AND EMPLOYEES..............................................19
Section 5.1 Indemnification. ...............................19
Section 5.2 Request for Indemnification; Determination of
Entitlement
Thereto; When Paid...............................19
Section 5.3 No Challenge to Validity.........................20
Section 5.4 Nonexclusivity...................................20
Section 5.5 Severability.....................................20
Section 5.6 Notices..........................................20
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER.........................20
Section 6.1 Certificates for Shares..........................20
Section 6.2 Registration of the Transfer of Shares...........21
Section 6.3 Restrictions on Transfer of Shares Permitted.....22
Section 6.4 Acquisition of Shares............................22
ARTICLE VII.
DISTRIBUTIONS......................................................22
Section 7.1 Distributions....................................22
ARTICLE VIII.
CORPORATE SEAL.....................................................22
Section 8.1 Corporate Seal...................................22
ARTICLE IX.
FISCAL YEAR........................................................22
Section 9.1 Fiscal Year......................................22
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ARTICLE X.
EMERGENCY BYLAWS...................................................23
Section 10.1 Emergency Bylaws.................................23
ARTICLE XI.
AMENDMENTS.........................................................24
Section 11.1 Amendments.......................................24
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ARTICLE I.
PURPOSE AND OFFICES
Section 1.1 Purpose.
The purpose of the Corporation, certain rights and powers of the
Corporation and of its directors and stockholders, the location of its
registered office in the State of South Carolina and its capital stock shall all
be as set forth in the Articles of Incorporation of the Corporation; and the
management of the business and the conduct of the affairs of the Corporation
shall be subject to the provisions of the said Articles, which is hereby made a
part of these Bylaws. In case of any irreconcilable inconsistency between the
Articles of Incorporation and these Bylaws, provisions in the Articles of
Incorporation shall prevail.
All references in these Bylaws to the Articles of Incorporation shall be
construed to mean the Articles of Incorporation of the Corporation as from time
to time amended. All references in these Bylaws to the masculine gender shall
include the feminine and neutral gender.
In the event of any conflict between these Bylaws and applicable law,
applicable law shall govern.
Section 1.2 Business Office.
The original principal office of the Corporation shall be within the State
of South Carolina and shall be located in Greenville County. The board of
directors may change the location of the principal office. The Corporation shall
maintain at its principal office a copy of certain records, as specified in Sec.
2.15. The Corporation may have such other offices, either within or without the
State of South Carolina, as the board of directors may designate or as the
business of the Corporation may require.
Section 1.3 Registered Office.
The registered office of the Corporation, required by Sec. 33-5-101, of the
South Carolina Business Corporation Act of 1988, as amended (hereinafter the
"Act") (or any succeeding statute of like or similar tenor or effect) may be,
but need not be, identical with the principal office in the State of South
Carolina, and the address of the registered office may be changed from time to
time by the Corporation.
ARTICLE II.
SHAREHOLDERS
Section 2.1 Annual Meeting.
The annual meeting of the shareholders shall be held on such date as may be
designated by the board of directors for the purpose of electing directors and
for the transaction of such other business as may come before the meeting. No
other matters may be brought before
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the meeting by any shareholder unless written notice of such matters, together
with an adequate description thereof, shall have been provided to the
Corporation in compliance with Sec. 2.13 or Sec. 2.14.
Section 2.2 Special Meetings.
Special meetings of the shareholders, for any purpose or purposes described
in the meeting notice (which may be limited to one or more specific purposes),
may be called by the President or by the board of directors. Only such business
shall be conducted at a special shareholder meeting as shall have been brought
before such meeting pursuant to the Corporation's notice of meeting given in
accordance with Sec. 2.4.
Section 2.3 Place of Meeting; Conduct of Meeting.
The board of directors may designate any place as the place of meeting for
any annual or special meeting of the shareholders, which may be either within or
without the State of South Carolina. If no designation is made, the place of
meeting shall be the principal office of the Corporation. Every meeting of
shareholders shall be chaired by the Chairman of the board of directors, or, in
the absence thereof, such person as the Chairman of the board of directors shall
appoint, or, in the absence thereof or in the event that the Chairman of the
board of directors shall fail to make such appointment, such person as shall be
appointed by vote of the Nominating Committee of the board of directors, or, in
the absence thereof or in the event that such Committee fails to make such
appointment, any officer of the Corporation elected by the board of directors.
Section 2.4 Notice of Meeting.
(a) Required Notice.
Written notice stating the place, date and hour of any annual or special
shareholder meeting shall be delivered not less than ten nor more than sixty
days before the date of the meeting, either personally or by mail, by or at the
direction of the President or the board of directors. Only the President or the
board of directors shall have the authority to set the place, date and hour of
any special meeting. Such notice shall be given to each shareholder of record
entitled to vote at such meeting and to any other shareholder entitled by the
Act or the Articles of Incorporation to receive notice of the meeting.
Notice shall be deemed to be effective at the earlier of: (1) when
deposited in the United States mail, addressed to the shareholder at his address
as it appears on the stock transfer books of the Corporation, with postage
thereon prepaid, (2) on the date shown on the return receipt if sent by
registered or certified mail, return receipt requested, and the receipt is
signed by or on behalf of the addressee, (3) when received, or (4) 5 days after
deposit in the United States mail, if mailed postpaid and correctly addressed,
to an address other than that shown in the Corporation's current stock transfer
books.
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Any previously scheduled meeting of the shareholders may be postponed, and
any special meeting of the shareholders may be canceled, by resolution of the
board of directors upon public notice given prior to the date previously
scheduled for such meeting of shareholders.
(b) Adjourned Meeting.
If any shareholder meeting is adjourned to a different date, time, or
place, notice need not be given of the new date, time or place, if the new date,
time and place is announced at the meeting before adjournment. If a new record
date for the adjourned meeting is, or must be, fixed (see Sec. 2.5) then notice
must be given pursuant to the requirements of paragraph (a) of this Sec. 2.4, to
those persons who are shareholders as of the new record date.
(c) Waiver of Notice.
The shareholders may waive notice of any meeting (or any notice required by
the Act, Articles of Incorporation, or Bylaws), by a writing signed by the
shareholders entitled to the notice, that is delivered to the Corporation
(either before or after the date and time stated in the notice) for inclusion in
the minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; and
(2) waives objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder objects to considering the matter when it is
presented.
(d) Contents of Notice.
The notice of each special shareholder meeting shall include a description
of the purpose or purposes for which the meeting is called. Except as provided
in this Sec. 2.4(d), or as provided in the Corporation's Articles of
Incorporation, or otherwise in the Act, the notice of an annual shareholder
meeting need not include a description of the purpose or purposes for which the
meeting is called.
If a purpose of any shareholder meeting is to consider either: (1) a
proposed amendment to the Articles of Incorporation (including any restated
Articles requiring shareholder approval); (2) a plan of merger or share
exchange; (3) the sale, lease, exchange or other disposition of all or
substantially all of the Corporation's property; (4) the adoption, amendment or
repeal of a Bylaw; (5) dissolution of the Corporation; or (6) removal of a
director, the notice must so state and be accompanied by respectively a copy or
summary of the: (1) articles of amendment; (2) plan of merger or share exchange;
(3) transaction for disposition of all the
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corporation's property; or (4) Bylaw proposal. If the proposed corporate action
creates dissenters' rights, the notice must state that shareholders are, or may
be, entitled to assert dissenters' rights, and must be accompanied by a copy of
Chapter 13 of the Act or any succeeding statute of like or similar tenor and
effect. In addition, with or before the notice of each shareholders' meeting,
the Corporation shall provide the information, if any, required pursuant to Sec.
33-16-210 of the Act, or any succeeding statute of like or similar tenor or
effect.
Section 2.5 Fixing of Record Date.
For the purpose of determining shareholders of any voting group entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of any distribution or dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors may fix in advance a date as the record date. Such record date shall
not be more than seventy days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. If no record date
is so fixed by the board for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or shareholders entitled to
receive a share dividend or distribution, the record date for determination of
such shareholders shall be at the close of business on:
(a) With respect to an annual shareholders' meeting or any special
shareholders' meeting called by the board or any person specifically
authorized by the board or these Bylaws to call a meeting, the day before
the first notice is delivered to shareholders;
(b) With respect to the payment of a share dividend, the date the
board authorizes the share dividend;
(c) With respect to actions taken in writing without a meeting, the
date the first shareholder signs a consent; and
(d) With respect to a distribution to shareholders (other than one
involving purchase or reacquisition of shares), the date the board
authorizes the distribution.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the board of directors fixes a new
record date, which it must do if the meeting is ad journed to a date more than
120 days after the date fixed for the original meeting.
Section 2.6 Shareholder List.
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make a complete record of the shareholders entitled to
vote at each meeting of shareholders thereof, arranged in alphabetical order,
with the address of and the number of shares held by each. The list must be
arranged by voting group, if such exists, and within each voting
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group by class or series of shares. The shareholders' list must be available for
inspection by any shareholder, beginning not later than the fifth business day
following the date on which notice of the meeting is given for which the list
was prepared and continuing through the meeting. The list shall be available at
the Corporation's principal office or at a place identified in the meeting
notice in the city where the meeting is to be held. A shareholder, his agent or
attorney is entitled on written demand to inspect, and subject to the
requirements of Sec. 2.15, to copy the list at his expense during regular
business hours, and during the period it is available for inspection. The
Corporation shall maintain the shareholder list in written form or in another
form capable of conversion into written form within a reasonable time.
Section 2.7 Quorum and Voting Requirements.
(a) General. Unless the Articles of Incorporation or the Act provide
otherwise, the presence at any meeting, in person or by proxy, of the holders of
record of a majority of the shares then issued and outstanding and entitled to
vote shall be necessary and sufficient to constitute a quorum for the
transaction of business.
(b) Voting Groups. If the Articles of Incorporation or the Act provides for
voting by a single voting group on a matter, action on that matter is taken when
voted upon by that voting group. Shares entitled to vote as a separate voting
group may take action on a matter at a meeting only if a quorum of those shares
exists with respect to that matter. Unless the Articles of Incorporation or the
Act provides otherwise, a majority of the votes entitled to be cast on the
matter by the voting group constitutes a quorum of that voting group for action
on that matter.
If the Articles of Incorporation or the Act provides for voting by two or
more voting groups on a matter, action on that matter is taken only when voted
upon by each of those voting groups counted separately. Action may be taken by
one voting group on a matter even though no action is taken by another voting
group entitled to vote on the matter.
(c) Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of the meeting unless a new record date is or must be set under the
Act for the adjourned meeting. If a quorum exists, action on a matter (other
than the election of directors) is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act require a greater number of affirmative
votes.
(d) Adjournment. The Chairman of the meeting or a majority of the shares
represented at the meeting in person or by proxy and entitled to vote thereat
may adjourn the meeting from time to time, whether or not there is a quorum,
unless otherwise proscribed by law. The shareholders present at a duly called
meeting at which a quorum is present, and at any adjournment thereof, may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
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Section 2.8 Increasing Either Quorum or Voting Requirements.
For purposes of this Sec. 2.8 a "supermajority" quorum is a requirement
that more than a majority of the votes of the voting group be present to
constitute a quorum; and a "super majority" voting requirement is any
requirement that requires the vote of more than a majority of the affirmative
votes of a voting group at a meeting.
The Articles of Incorporation may provide for a "supermajority" quorum or
"super majority" voting requirement.
An amendment to the Articles of Incorporation that adds, changes, or
deletes a "supermajority" quorum or voting requirement for shareholders must
meet the same quorum requirement and be adopted by the same vote and voting
groups required to take action under the quorum and voting requirement then in
effect or proposed to be adopted, whichever is greater.
Section 2.9 Proxies.
At all meetings of shareholders, a shareholder may vote in person, or vote
by proxy that is executed in writing by the shareholder or that is executed by
his duly authorized attorney-in-fact. Such proxy shall be dated and filed with
the Secretary of the Corporation or other person authorized to tabulate votes
before or at the time of the meeting. Unless a time of expiration is otherwise
specified, a proxy is valid for eleven months. A proxy is revocable unless
executed in compliance with Sec. 33-7-220(d) of the Act, or any succeeding
statute of like or similar tenor or effect. A shareholder shall not sell his
vote to any person, nor shall he issue a proxy to vote for any sum of money or
anything of value, except so far as the Act authorizes irrevocable proxies.
Section 2.10 Voting of Shares; Polls.
Unless otherwise provided in the Articles of Incorporation, each
outstanding share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of shareholders.
Absent special circumstances, outstanding shares of the Corporation are not
entitled to vote if they are owned directly or indirectly by another corporation
in which the Corporation owns, directly or indirectly, a majority of the shares
entitled to vote for the election of directors of the other corporation;
provided, however, this provision shall not limit the power of this Corporation
to vote its own shares held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
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At any meeting of shareholders, the Chairman of the meeting shall fix and
announce at the meeting the date and time of the opening and closing of the
polls for each matter upon which the shareholders will vote at the meeting.
Section 2.11 Corporation's Acceptance of Votes.
(a) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the Corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, or proxy appointment and
give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the Corporation, if acting
in good faith, is never theless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if:
(1) the shareholder is an entity as defined in the Act and the name
signed purports to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an administrator, executor,
guardian, or conservator representing the shareholder and, if the
Corporation requests, evidence of fiduciary status acceptable to the
Corporation has been presented with respect to the vote, consent, waiver,
or proxy appointment;
(3) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the Corporation requests, evidence of
this status acceptable to the Corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment;
(4) the name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the Corporation
requests, evidence acceptable to the Corporation of the signatory's
authority to sign for the shareholder has been presented with respect to
the vote, consent, waiver, or proxy appointment;
(5) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all
the co-owners; and
(6) any other requirement of Sec. 33-7-240(b) of the Act, or any
succeeding statute of like or similar tenor or effect, is met.
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(c) The Corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the Secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about
the validity of the signature on it or about the signatory's authority to
sign for the shareholder.
(d) The Corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance
with the standards of this section or the Act are not liable in damages to
the shareholder for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a
court of competent jurisdiction determines otherwise.
Section 2.12 Informal Action by Shareholders.
Any action required or permitted by the Act to be taken at a meeting of the
shareholders may be taken without a meeting if the action is taken by all the
shareholders entitled to vote on the action. The action must be evidenced by one
or more consents in writing, setting forth the action so taken, shall be signed
by all of the shareholders entitled to vote with respect to the subject matter
thereof and shall be delivered to the Corporation for inclusion in the minute
book or filing with the corporate records. If the Act requires that notice of
the proposed action be given to non-voting shareholders and the action is to be
taken by unanimous written consent of the voting shareholders, the Corporation
shall give the non-voting shareholders written notice of the proposed action at
least 10 days before the action is taken, which notice shall contain or be
accompanied by the same material that would have been required to be sent to
nonvoting shareholders in a notice of meeting if a formal meeting had been
called to consider the action. A consent signed under this section has the
effect of a meeting vote and may be described as such in any document. Every
written consent shall bear the date of signature of each shareholder who signs
the consent.
Section 2.13 Notice of Shareholder Nominations.
(a) Only persons who are nominated in accordance with the procedures set
forth in this Sec. 2.13 shall be eligible for election as directors of the
Corporation. Nomination of persons for election to the board of directors of the
Corporation may be made (i) by or at the direction of the board of directors or
(ii) by any shareholder of the Corporation entitled to vote for the election of
directors at such meeting who complies with the procedures set forth in this
Sec. 2.13.
(b) All nominations by shareholders shall be made pursuant to timely notice
in proper written form to the Secretary of the Corporation.
(1) To be timely, a shareholder's notice shall be personally delivered
to or mailed, postage prepaid, and received at the principal executive
offices of the Corporation not later than (i) with respect to an election
to be held at an annual meeting of shareholders, 120 days prior to the
first anniversary date of the immediately preceding annual meeting and (ii)
with respect to an election to be held at a special meeting of shareholders
for the election of directors, the
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close of business on the tenth day following the date on which notice of
such meeting shall first be given to shareholders.
(2) To be in proper written form, such shareholder's notice shall set
forth in writing:
(a) the name and address of the shareholder who intends to make
the nomination and of the person or persons to be nominated;
(b) the class and number of shares held of record, beneficially
owned and represented by proxy by such shareholder as of the record
date of the meeting (if such a date has been established) and as of
the date of such notice, the name in which those shares are
registered, and a representation that the shareholder intends to
appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice;
(c) a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder;
(d) such other information regarding each nominee proposed by
such stockholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had each nominee been nominated, or intended to be
nominated, by the board of directors of the Corporation;
(e) the consent in writing of each nominee to serve as a director
of the Corporation if so elected; and
(f) such other information as the Corporation may reasonably
request.
The officer or other person presiding over the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
(c) At the request of the board of directors, any person nominated by
the board of directors for election as a director shall furnish to the
Secretary of the Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee.
(d) In the event that a shareholder seeks to nominate one or more
directors, the Secretary shall appoint two inspectors, who shall not be
affiliated with the Corporation, to determine whether a shareholder has
complied with this Sec. 2.13. If the inspectors shall determine that a
shareholder has not complied with this Sec. 2.13, the inspectors shall
direct the Chairman of
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the meeting to declare to the meeting that the nomination was not made in
accordance with the procedures prescribed by the Bylaws of the Corporation,
and the Chairman shall so declare to the meeting and the defective
nomination shall be disregarded.
(e) Notwithstanding the foregoing provisions of this Sec. 2.13, a
shareholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder with respect to the matters set forth in
this Sec. 2.13.
(f) Nothing in this Sec. 2.13 shall be deemed to affect any rights of
holders of any series of preferred stock to elect directors under specified
circumstances.
Section 2.14 Procedures for Submission of Shareholder Proposals at
Annual Meeting.
(a) At any annual meeting of the shareholders of the Corporation, only such
business shall be conducted as shall have been brought before the meeting (i) by
or at the direction of the board of directors or (ii) by any shareholder of the
Corporation entitled to vote for the election of directors at such meeting who
complies with the procedures set forth in this Sec. 2.14.
(b) For business properly to be brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation and such business must
otherwise be a proper matter for shareholder action.
(1) To be timely, a shareholder's notice must be personally delivered
to or mailed, postage prepaid, and received at the principal executive
offices of the Corporation not later than 120 days prior to the first
anniversary date of the immediately preceding annual meeting or not later
than 10 days after notice or public disclosure of the date of the annual
meeting shall be given or made to stockholders, whichever date shall be
earlier.
(2) To be in proper written form, a shareholder's notice to the
Secretary shall set forth in writing as to each matter the shareholder
proposes to bring before the annual meeting:
(i) a description of such item of business, the reasons for
conducting it at such meeting and, in the event that such item of
business shall include a proposal to amend either the Articles of
Incorporation or these Bylaws, the text of the proposed amendment;
(ii) the name and address of the shareholder proposing such item
of business, as they appear on the Corporation's books, and the
beneficial owner, if any, on whose behalf the proposal is made;
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(iii) the class and number of shares held of record, beneficially
owned and represented by proxy by such shareholder as of the record
date for the meeting (if such a date has been established) and as of
the date of such notice, the name in which those shares are registered
and a representation that the shareholder intends to appear in person
or by proxy at the meeting to propose such item of business;
(iv) any material interest of the shareholder in such item of
business;
(v) a description of all arrangements and understandings between
the shareholder and any other person or persons (naming such person or
persons) pursuant to which the proposal is made by the shareholder;
and
(vi) such other information as the Corporation shall reasonably
request.
(c) Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this Sec.
2.14. The Chairman of an annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was
not properly brought before the meeting in accordance with the
provisions of this Sec. 2.14, and, if he should so determine, he
shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
(d) Notwithstanding the foregoing provisions of this Sec.
2.14, a shareholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Sec.
2.14.
Section 2.15 Shareholders' Rights to Inspect Corporate Records.
(a) Minutes and Accounting Records.
The Corporation shall keep as permanent records minutes of all meetings of
its shareholders and board of directors, a record of all actions taken by the
shareholders or board of directors without a meeting, and a record of all
actions taken by a committee of the board of directors in place of the board of
directors on behalf of the Corporation. The Corporation shall maintain
appropriate accounting records.
(b) Absolute Inspection Rights of Records Required at Principal Office.
If he gives the Corporation written notice of his demand at least five
business days before the date on which he wishes to inspect and copy, and
otherwise meets the requirements of Sec. 33-16-102(a) of the Act (or any
succeeding provision of like or similar tenor or effect) a shareholder of the
Corporation (or his agent or attorney) has the right to inspect and copy, during
regular business hours, the records of the Corporation described in Sec.
33-16-101(e) of the Act (or any succeeding provision of like or similar tenor or
effect).
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(c) Conditional Inspection Right.
In addition, if he gives the Corporation a written demand made in good
faith and for a proper purpose at least five business days before the date on
which he wishes to inspect and copy, he describes with reasonable particularity
his purpose and the records he desire to inspect, the records are directly
connected with his purpose, and the shareholder meets any other requirements
imposed by Sec. 33-16-102(c) of the Act (or any succeeding provision of like or
similar tenor or effect), a shareholder of the Corporation (or his agent or
attorney) is entitled to inspect and copy, during regular business hours at a
reasonable location specified by the Corporation, the records of the Corporation
described in Sec. 33-16-102(b) of the Act or any succeeding provision of like or
similar tenor or effect.
(d) Copy Costs.
The right to copy records includes, if reasonable, the right to receive
copies made by photographic, xerographic, or other means. The Corporation may
impose a reasonable charge, covering the costs of labor and material, for copies
of any documents provided to the shareholder (or his agent or attorney). The
charge may not exceed the estimated cost of production or reproduction of the
records.
Section 2.16 Financial Statements Shall be Furnished to the Shareholders.
(a) The Corporation shall furnish its shareholders annual financial
statements, which may be consolidated or combined statements of the Corporation
and one or more of its subsidiaries, as appropriate, that comply with the
requirements of Sec. 33-16-200 of the Act or any succeeding statute of like or
similar tenor or effect.
Section 2.17 Dissenters' Rights.
Each shareholder shall have the right to dissent from, and obtain payment
for, his shares when so authorized by the Act, Articles of Incorporation, these
Bylaws, or in a resolution of the board of directors.
ARTICLE III.
BOARD OF DIRECTORS
Section 3.1 General Powers.
Unless the Articles of Incorporation have dispensed with or limited the
authority of the board of directors by describing who will perform some or all
of the duties of a board of directors, all corporate powers shall be exercised
by or under the authority of, and the business and affairs of the Corporation
shall be managed under the direction of, the board of directors.
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Section 3.2 Number, Tenure and Qualifications of Directors.
The number of directors of the Corporation shall be the number designated
by the directors at their initial or organizational meeting. Thereafter, the
number of directors may be increased or decreased by action of the board or
shareholders at any board meeting or annual meeting of shareholders. No decrease
in the number of directors, however, shall have the effect of shortening the
term of any incumbent director. Each director shall hold office until the next
annual meeting of shareholders or until removed. However, if his term expires,
he shall continue to serve until his successor shall have been elected and
qualified or until there is a decrease in the number of directors. Directors
need not be residents of the State of South Carolina or shareholders of the
Corporation unless so required by the Articles of Incorporation.
Section 3.3 Regular Meetings.
A regular meeting of the board of directors shall be held without other
notice than this Bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The board of directors may provide, by resolution, the
time and place for the holding of additional regular meetings without other
notice than such resolution and it shall be the duty of each director to attend
such regular meetings without additional notice.
Section 3.4 Special Meetings.
Unless otherwise provided in the Articles, special meetings of the board of
directors may be called by or at the request of the Chairman of the board, the
President or a majority of the board of directors. The person authorized to call
special meetings of the board of directors may fix any place as the place for
holding any special meeting of the board of di rectors.
Section 3.5 Notice of Special Meeting.
Notice of any special meeting of directors shall be given to each director
at his business or residence in writing by hand delivery, first-class or
overnight mail or courier service, telegram or facsimile or similar
transmission, orally by telephone or by any other usual means of communication.
If mailed by first-class mail, such notice shall be deemed adequately delivered
when deposited in the United States mails so addressed, with postage thereon
prepaid, at least 48 hours before such meeting. If by telegram, overnight mail
or courier service, such notice shall be deemed adequately delivered when the
telegram is delivered to the telegraph com pany or the notice is delivered to
the overnight mail or courier service company at least twenty- four (24) hours
before such meeting. If by facsimile or similar transmission, such notice shall
be deemed adequately delivered when the notice is transmitted at least twelve
(12) hours before such meeting. If by telephone or by hand delivery, the notice
shall be given at least twelve (12) hours prior to the time set for the meeting.
If by other usual means of communication, as much advance notice as is
practicable under the circumstances shall be given. Any director may waive
notice of any meeting. Except as provided in the next sentence, the waiver must
be in writing, signed by the director entitled to the notice, and filed with the
minutes or corporate records. The
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attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business and at the beginning of the
meeting (or promptly upon his arrival) objects to holding the meeting or
transacting business at the meeting, and does not thereafter vote for or assent
to action taken at the meeting.
Section 3.6 Director Quorum.
A majority of the number of directors in office immediately before the
meeting begins shall constitute a quorum for the transaction of business at any
meeting of the board of directors.
Section 3.7 Manner of Acting.
(a) Required Vote.
The act of the majority of the directors present at a meeting at which a
quorum is present when the vote is taken shall be the act of the board of
directors unless the Articles of Incorporation require a greater percentage.
(b) Telephone Meeting.
Any or all directors may participate in a regular or special meeting by, or
conduct the meeting through the use of, any means of communication by which all
directors participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting and may be described as such in any document.
(c) Failure to Object to Action.
A director who is present at a meeting of the board of directors or a
committee of the board of directors when corporate action is taken is deemed to
have assented to the action taken unless: (1) he objects at the beginning of the
meeting (or promptly upon his arrival) to holding it or transacting business at
the meeting; or (2) his dissent or abstention from the action taken is entered
in the minutes of the meeting; or (3) he delivers written notice of his dissent
or abstention to the presiding officer of the meeting before its adjournment or
to the Corporation immediately after adjournment of the meeting. The right of
dissent or abstention is not available to a director who votes in favor of the
action taken.
Section 3.8 Action Without a Meeting.
Action required or permitted by the Act to be taken at a board of
directors' meeting may be taken without a meeting if the action is assented to
by all members of the board.
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The action may be evidenced by one or more written consents describing the
action taken, signed by each director, and included in the minutes or filed with
the corporate records reflecting the action taken. Action evidenced by written
consents under this section is effective when the last director signs the
consent, unless the consent specifies a different effective date. A consent
signed under this section has the effect of a meeting vote and may be described
as such in any document.
Section 3.9 Removal of a Director.
The shareholders may remove one or more directors at a meeting called for
that purpose if notice has been given that a purpose of the meeting is such
removal. The removal may be with or without cause, unless the Articles of
Incorporation provide that directors may be removed only for cause. If a
director is elected by a voting group of shareholders, only the shareholders of
that voting group may participate in the vote to remove him. A director may be
removed for cause only if the number of votes cast to remove him exceeds the
number of votes cast not to remove him.
Section 3.10 Vacancies.
Unless the Articles of Incorporation provide otherwise, if a vacancy occurs
on the board of directors, including a vacancy resulting from an increase in the
number of directors, the vacancy may be filled by a majority of the remaining
directors, even though less than a quorum, by the sole remaining director or by
the shareholders of the Corporation.
If the vacant office was held by a director elected by a voting group of
shareholders, only the holders of shares of that voting group are entitled to
vote to fill the vacancy if it is filled by the shareholders.
A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected. However, if his term
expires, he shall continue to serve until his successor is elected and qualifies
or until there is a decrease in the number of directors.
Section 3.11 Compensation.
Unless otherwise provided in the Articles of Incorporation or by resolution
of the board of directors, each director may be paid his expenses, if any, of
attendance at each meeting of the board of directors, and may be paid a stated
salary or receive other consideration for service as director or receive a fixed
sum for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the Corporation in any capacity
and receiving compensation therefor.
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Section 3.12 Committees.
(a) Creation of Committees.
Unless the Articles of Incorporation provide otherwise, the board of
directors may create one or more committees and appoint members of the board of
directors to serve on them or the President, if so delegated by the board, may
appoint members to serve on committees created by the board. Each committee must
have two or more members, who serve at the pleasure of the board of directors.
(b) Selection of Members.
The creation of a committee and appointment of members to it must be
approved by the greater of (1) a majority of all the directors in office when
the action is taken or (2) the number of directors required by the Articles of
Incorporation to take such action (or, if not specified in the Articles, the
numbers required by Sec. 3.7 to take action).
(c) Required Procedures.
Sec. 3.4, 3.5, 3.6, 3.7 and 3.8, which govern meetings, action without
meetings, notice and waiver of notice, quorum and voting requirements of the
board of directors, apply to committees and their members.
(d) Authority.
Unless limited by the Articles of Incorporation or the Act, each committee
may exercise those aspects of the authority of the board of directors that the
board of directors confers upon such committee in the resolution creating the
committee. Provided, however, a committee may not:
(1) authorize distributions;
(2) approve or propose to shareholders action that the Act requires be
approved by shareholders;
(3) fill vacancies on the board of directors or on any of its
committees;
(4) amend the Articles of Incorporation pursuant to the authority of
directors;
(5) adopt, amend, or repeal Bylaws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares, except according to
a formula or method prescribed by the board of directors; or
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(8) authorize or approve the issuance or sale or contract for sale of
shares, or determine the designation and relative rights, preferences, and
limitations of a class or series of shares, except that the board of
directors may authorize a committee (or a senior executive officer of the
Corporation) to do so within limits specifically prescribed by the board of
directors.
ARTICLE IV.
OFFICERS
Section 4.1 Number.
The officers of the Corporation shall be a President, a Secretary, and a
Treasurer, each of whom shall be appointed by the board of directors. Such other
officers and assistant officers as may be deemed necessary, including any
vice-presidents, may be appointed by the board of directors. If specifically
authorized by the board of directors, an officer may appoint one or more
officers or assistant officers. The same individual may simultaneously hold more
than one office in the Corporation.
Section 4.2 Appointment and Term of Office.
The officers of the Corporation shall be appointed by the board of
directors for a term as determined by the board of directors. The designation of
a specified term grants to the officer no contract rights, and the board can
remove the officer at any time prior to the termination of such term. If no term
is specified, they shall hold office until they resign or die, or until they are
removed in the manner provided in Sec. 4.3. The officers of the Corporation
shall have such authority and perform such duties as may be provided herein or
by action of the board of directors not inconsistent herewith. In addition, they
shall have such other duties as are usually imposed upon such officers of public
companies and such as are required by law.
Section 4.3 Removal.
Unless appointed by the shareholders, any officer or agent may be removed
by the board of directors at any time, with or without cause. Any officer or
agent appointed by the shareholders may be removed by the shareholders entitled
to elect that officer. Such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Appointment of an officer or agent
shall not of itself create contract rights.
Section 4.4 The President.
The President shall be the principal executive officer of the Corporation
and, subject to the control of the board of directors, shall in general
supervise and control all of the business and affairs of the Corporation. He
shall see that all orders and resolutions of the board of directors are carried
out. He shall, when present, preside at all meetings of the shareholders and of
the board of directors, unless a Chairman of the board of directors shall have
been designated by the board. He may sign, with the Secretary or any other
proper officer of the
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Corporation thereunto authorized by the board of directors, certificates for
shares of the Corporation and deeds, mortgages, bonds, contracts or other
instruments which the board of directors has authorized to be executed, except
in cases where the signing and execution thereof shall be delegated by the board
of directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
The President shall have general supervision and direction of all the other
officers of the Corporation and shall see that their duties are properly
performed. He shall report on the operation of the Corporation to the directors
and shareholders from time to time concerning all matters within his knowledge
relating to the business and affairs of the Corporation.
Section 4.5 The Vice-Presidents.
If appointed, in the absence of the President or in the event of his death,
inability or refusal to act, the Vice President (or, in the event there be more
than one Vice-President, the Vice-Presidents in the order designated at the time
of their election, or in the absence of any designation, then in the order of
their appointment) shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. (If there is no Vice-President, then the Treasurer shall perform
such duties of the President.) Any Vice-President may sign, with the Secretary
or an Assistant Secretary, certificates for shares of the Corporation the
issuance of which have been authorized by resolution of the board of directors;
and shall perform such other duties as from time to time may be assigned to him
by the President or by the board of directors.
Section 4.6 The Secretary.
The Secretary shall: (a) keep the minutes of the proceedings of the
shareholders and of the board of directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of any seal of the Corporation and if there is a seal of
the Corporation, see that it is affixed to all documents the execution of which
on behalf of the Corporation under its seal is duly authorized; (d) when
requested or required, authenticate any records of the Corporation; (e) keep a
register of the post office address of each shareholder that shall be furnished
to the Secretary by such shareholder; (f) sign with the President, or a Vice-
President, certificates for shares of the Corporation, the issuance of which
shall have been authorized by resolution of the board of directors; (g) have
general charge of the stock transfer books of the Corporation; and (h) in
general perform all duties incident to the office of secretary and such other
duties as from time to time may be assigned to him by the President or by the
board of directors.
Section 4.7 The Treasurer.
The Treasurer shall: (a) have charge and custody of and be responsible for
all funds and securities of the Corporation; (b) receive and give receipts for
moneys due and payable
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to the Corporation from any source whatsoever, and deposit all such moneys in
the name of the Corporation in such banks, trust companies or other depositories
as shall be selected by the board of directors and (c) in general perform all of
the duties incident to the office of treasurer and such duties as from time to
time may be assigned to him by the President or by the board of directors. The
President or Treasurer, or such other person or persons as may be designated by
the board of directors only, shall have authority to sign checks of the
Corporation.
If required by the board of directors, the Treasurer shall give the
Corporation a bond in a form and in a sum with surety satisfactory to the board
of directors for the faithful performance of the duties of his office and for
the restoration to the Corporation in case of his death, resignation or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind and nature in his possession belonging to the Corporation.
Section 4.8 Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries, when authorized by the board of directors, may
sign with the President or a Vice-President certificates for shares of the
Corporation the issuance of which shall have been authorized by a resolution of
the board of directors. The Assistant Treasurers shall respectively, if required
by the board of directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the board of directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the board of directors.
Section 4.9 Salaries.
The salaries of the officers shall be fixed from time to time by the board
of directors.
ARTICLE V.
INDEMNIFICATION OF DIRECTORS,
OFFICERS, AGENTS, AND EMPLOYEES
Section 5.1 Indemnification.
The Corporation shall, to the fullest extent permitted by law, indemnify
its officers and directors (and other individuals) as and to the extent provided
by the Corporation's Articles of Incorporation. The Corporation is authorized,
to the fullest extent permitted by law and the Corporation's Articles of
Incorporation, to maintain such insurance as it may deem necessary or desirable
for the benefit of its officers, directors and other individuals.
Section 5.2 Request for Indemnification; Determination of
Entitlement Thereto; When Paid.
To obtain indemnification under this Bylaw, a claimant shall comply with
the applicable provisions of the Corporation's Articles of Incorporation and
submit to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is
reasonably necessary to determine whether and
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to what extent the claimant is entitled to indemnification. Upon written request
by a claimant for indemnification pursuant to the first sentence of this Sec.
5.2, a determination with respect to the claimant's entitlement thereto shall be
made in accordance with Sec. 33-8-550 of the Act, or any succeeding statute of
like or similar tenor or effect.
Section 5.3 No Challenge to Validity.
The Corporation shall be precluded from asserting in any judicial
proceeding commenced to obtain the indemnification described in this Article V
or in the Corporation's Articles of Incorporation that the procedures and
presumptions of this Bylaw are not valid, binding and enforceable and shall
stipulate in such proceeding that the Corporation is bound by all the provisions
of this Bylaw and the Corporation's Articles of Incorporation.
Section 5.4 Nonexclusivity.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Bylaw shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Articles of Incorporation,
Bylaws, agreement, vote of shareholders or directors or otherwise. No repeal or
modification of this Bylaw shall in any way diminish or adversely affect the
rights of any director, officer, employee or agent of the Corporation hereunder
in respect of any occurrence or matter arising prior to any such repeal or
modification.
Section 5.5 Severability.
If any provision or provisions of this Bylaw shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (1) the validity, legality
and enforceability of the remaining provisions of this Bylaw (including, without
limitation, each portion of any Section of this Bylaw containing any such
provision held to be invalid, illegal or unenforceable, that is not itself held
to be invalid, illegal or unenforceable) shall not in any way be affected or
impaired thereby; and (2) to the fullest extent possible, the provisions of this
Bylaw (including, without limitation, each such portion of any section of this
Bylaw containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
Section 5.6 Notices.
Any notice, request or other communication required or permitted to be
given to the Corporation under this Bylaw shall be in writing and either
delivered in person or sent by telecopy, telex, telegram, overnight mail or
courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 6.1 Certificates for Shares.
(a) Content.
Certificates representing shares of the Corporation shall at minimum, state
on their
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face the name of the issuing Corporation and that it is formed under the laws of
South Carolina; the name of the person to whom issued; and the number and class
of shares and the designation of the series, if any, the certificate represents;
and be in such form as determined by the board of directors. Such certificates
shall be signed (either manually or by facsimile) by the President or a
Vice-President and by the Secretary or an Assistant Secretary and may be sealed
with a corporate seal or a facsimile thereof. Each certificate for shares shall
be consecutively numbered or otherwise identified.
(b) Legend as to Class or Series.
If the Corporation is authorized to issue different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state con spicuously on its front or back that the Corporation
will furnish the shareholder this information on request in writing and without
charge.
(c) Shareholder List.
The name and address of the person to whom the shares represented thereby
are issued, with the number of shares and date of issue, shall be entered on the
stock transfer books of the Corporation.
(d) Transferring Shares.
All certificates surrendered to the Corporation for transfer shall be
canceled and no new certificate shall be issued until the former certificate for
a like number of shares shall have been surrendered and canceled, except that in
case of a lost, destroyed or mutilated certificate a new one may be issued
therefor upon such terms and indemnity to the Corporation as the board of
directors may prescribe.
Section 6.2 Registration of the Transfer of Shares.
Registration of the transfer of shares of the Corporation shall be made
only on the stock transfer books of the Corporation. In order to register a
transfer, the record owner shall surrender the shares to the Corporation for
cancellation, properly endorsed by the appropriate person or persons with
reasonable assurances that the endorsements are genuine and effective. Subject
to the provisions of Sec. 33-7-300(d) of the Act (relating to shares held in a
voting trust) (or any succeeding provision of like or similar tenor or effect),
and unless the Corporation has established a procedure by which a beneficial
owner of shares held by a nominee is to be recognized by the Corporation as the
owner, the person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
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Section 6.3 Restrictions on Transfer of Shares Permitted.
Restrictions may be imposed pursuant to Sec. 33-6-270 of the Act or any
succeeding provision of like or similar tenor or effect on the transfer or
registration of transfer of shares (including any security convertible into, or
carrying a right to subscribe for or acquire shares).
Section 6.4 Acquisition of Shares.
The Corporation may acquire its own shares and, unless otherwise provided
in the Articles of Incorporation, the shares so acquired constitute authorized
but unissued shares.
If the Articles of Incorporation prohibit the reissue of acquired shares,
the number of authorized shares shall be reduced by the number of shares
acquired, effective upon amendment of the Articles of Incorporation, which
amendment shall be adopted by the shareholders or the board of directors without
shareholder action.
ARTICLE VII.
DISTRIBUTIONS
Section 7.1 Distributions.
Distributions (including dividends on its outstanding shares) may be paid
to the fullest extent provided by law, as and to the extent, in the manner and
upon the terms and condi tions declared from time to time by resolution of the
board of directors of the Corporation.
ARTICLE VIII.
CORPORATE SEAL
Section 8.1 Corporate Seal.
The board of directors may provide a corporate seal which may be circular
in form and have inscribed thereon any designation including the name of the
Corporation, South Carolina as the state of Incorporation, and the words
"Corporate Seal."
ARTICLE IX.
FISCAL YEAR
Section 9.1 Fiscal Year.
The fiscal year of the Corporation shall be as determined by the board of
directors.
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ARTICLE X.
EMERGENCY BYLAWS
Section 10.1 Emergency Bylaws.
Unless the Articles of Incorporation provide otherwise, the following
provisions of this Sec. 10.1 "Emergency Bylaws" shall be effective during an
emergency which is defined as when a quorum of the Corporation's directors
cannot be readily assembled because of some catastrophic event.
During such emergency:
(a) Notice of Board Meetings.
Any one member of the board of directors or any one of the following
officers: President, any Vice-President, Secretary, or Treasurer, may call
a meeting of the board of direc tors. Notice of such meeting need be given
only to those directors whom it is practicable to reach, and may be given
in any practical manner, including by publication and radio. Such notice
shall be given at least six hours prior to commencement of the meeting.
(b) Temporary Directors and Quorum.
One or more officers of the Corporation present at the emergency board
meeting, as is necessary to achieve a quorum, shall be considered to be
directors for the meeting, and shall so serve in order of rank, and within
the same rank, in order of seniority. In the event that less than a quorum
(as determined by Sec. 3.6) of the directors are present (including any
officers who are to serve as directors for the meeting), those directors
present (including the officers serving as directors) shall constitute a
quorum.
(c) Actions Permitted to Be Taken.
The board may as constituted in paragraph (b), and after notice as set
forth in paragraph (a):
(1) Officer's Powers.
Prescribe emergency powers to any officer of the Corporation;
(2) Delegation of any Power.
Delegate to any officer or director, any of the powers of the
board of directors;
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(3) Lines of Succession.
Designate lines of succession of officers and agents, in the
event that any of them are unable to discharge their duties;
(4) Relocate Principal Place of Business.
Relocate the principal place of business, or designate successive
or simultaneous principal places of business;
(5) All Other Action.
Take any other action, convenient, helpful, or necessary to carry
on the business of the Corporation.
ARTICLE XI.
AMENDMENTS
Section 11.1 Amendments.
The Corporation's board of directors may amend or repeal any of the
Corporation's Bylaws unless:
(a) the Articles of Incorporation or the Act reserve this power
exclusively to the shareholders in whole or in part; or
(b) the shareholders in adopting, amending, or repealing a particular
bylaw provide expressly that the board of directors may not amend or repeal
that bylaw.
Any amendment that changes the voting or quorum requirement for the
shareholders must comply with Article II Sec. 2.8.
The Corporation's shareholders may amend or repeal the Corporation's Bylaws
even though the Bylaws may also be amended or repealed by its board of
directors. Any notice of a meeting of shareholders at which Bylaws are to be
adopted, amended, or repealed shall state that the purpose, or one of the
purposes, of the meeting is to consider the adoption, amendment or repeal of
Bylaws and contain or be accompanied by a copy or summary of the proposal.
Adopted as of December 9, 1999.
24
DELTA WOODSIDE INDUSTRIES, INC.
and
FIRST UNION NATIONAL BANK
as Rights Agent
SHAREHOLDER RIGHTS AGREEMENT
December 10, 1999
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Table of Contents
Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................5
Section 3. Issue of Right Certificates......................................5
Section 4. Form of Right Certificates.......................................7
Section 5. Countersignature and Registration................................8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.....................................................8
Section 7. Exercise of Rights; Exercise Price; Final Expiration Date
of Rights................................... 9
Section 8. Cancellation and Destruction of Right Certificates..............10
Section 9. Reservation and Availability of Common Stock....................11
Section 10. Common Stock Record Date...................................... 12
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights................................................12
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.... 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................ 21
Section 14. Fractional Rights and Fractional Shares........................23
Section 15. Rights of Action...............................................24
Section 16. Agreement of Right Holders.....................................25
Section 17. Right Certificate Holder Not Deemed a Shareholder..............25
Section 18. Concerning the Rights Agent....................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent......26
Section 20. Duties of Rights Agent.........................................27
Section 21. Change of Rights Agent.........................................29
Section 22. Issuance of New Right Certificates.............................30
Section 23. Redemption.....................................................30
Section 24. Exchange.......................................................32
Section 25. Notice of Certain Events.......................................33
Section 26. Notices........................................................33
Section 27. Supplements and Amendments.....................................34
Section 28. Successors.....................................................35
Section 29. Determinations and Actions by the Board of Directors...........35
Section 30. Benefits of this Agreement.....................................35
Section 31. Severability...................................................35
Section 32. Governing Law..................................................36
Section 33. Counterparts...................................................36
Section 34. Descriptive Headings...........................................36
Exhibit A -- Form of Right Certificate
Exhibit B -- Form of Summary of Rights
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SHAREHOLDER RIGHTS AGREEMENT
Shareholder Rights Agreement (as the same may from time to time be amended
or supplemented, this "Agreement"), dated as of December 10, 1999, between Delta
Woodside Industries, Inc., a South Carolina corporation (the "Company"), and
First Union National Bank, a national bank, (the "Rights Agent", which term
shall include any successor Rights Agent hereunder).
W I T N E S S E T H
WHEREAS, on December 9, 1999 the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each whole share of Common Stock, $0.01 par value per share, of the
Company (the "Common Stock") outstanding as of the Close of Business on December
22, 1999 (the "Record Date") and authorized the issuance of one Right for each
whole share of Common Stock of the Company which is issued or which becomes
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one quarter of
a share of Common Stock, upon the terms and conditions set forth herein (the
"Rights");
WHEREAS, First Union National Bank has agreed to serve as Rights Agent;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall on any date hereafter, be
the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the
Company, and (iii) any employee benefit plan of the Company or any of its
Subsidiaries. The Persons described in clauses (i) through (iii) above are
referred to herein as "Exempt Persons". Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of an acquisition of Common
Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
(together with all Affiliates and Associates of such Person) to 20% or more of
the Common Stock of the Company then outstanding; provided, however, that if any
Person, (together with all Affiliates and Associates of such Person, (other than
Exempt Persons) shall become the Beneficial Owner of 20% or more of the Common
Stock of the Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional shares of Common Stock of the Company, then
such Person shall be deemed to be an "Acquiring Person." In calculating
beneficial ownership for purposes of determining whether a Person is an
Acquiring Person, shares held for or pursuant to the terms of an employee
benefit plan of the Company or any of its Subsidiaries shall not be counted.
(b) "Adjustment Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii).
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(d) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement; provided, however,
that no Exempt Person shall be deemed an Affiliate or an Associate.
(e) 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 own, 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 of this Agreement) or has the right
to dispose of;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or after the passage of time)
pursuant to any agreement, arrangement or understanding, upon the exercise
of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially own" (1)
securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; (2) securities issuable
upon exercise of Rights at any time prior to the occurrence of an
Adjustment Event; or (3) securities issuable upon exercise of Rights from
and after the occurrence of an Adjustment Event, if such Rights were
acquired by such Person or such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(a) or Section 22 or pursuant
to Section 11(a)(i) in connection with an adjustment made with respect to
any of the Rights heretofore specified in this clause (3); or (B) the right
to vote pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under this
clause (B) if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given to such Person or
any of such Person's Affiliates or Associates in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act, or (2)
is made in connection with, or is to otherwise participate in, a proxy or
consent solicitation made or to be made pursuant to, and in accordance
with, the applicable rules and regulations promulgated under the Exchange
Act, in the case of either clause (1) or (2) of this proviso whether or not
such agreement, arrangement or understanding is 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 (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing), for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (B) of Section 1(e)(ii) hereof) or disposing of any
securities of the Company; provided, however, that (1) no Person engaged in
business as an underwriter of securities shall be deemed the Beneficial
Owner of any securities acquired through such Person's participation as an
underwriter or selling group member in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such
acquisition; (2) no Person who is a director or an officer of the Company
shall be deemed the Beneficial Owner of any securities of the Company that
are beneficially owned by any other director or officer of the Company
solely as a result of his or her position as director or officer of the
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Company; (3) any agreement, arrangement or understanding (whether or not in
writing), or any communication or discussion, among two or more Persons
with respect to any matter relating to the management, operation or conduct
of the business of the Company, including any discussion or agreement on,
or any communication with respect to, a position with respect to any such
matter and the disclosure of such communication, discussion, agreement or
position to other Persons (including shareholders of the Company) or to the
Company shall not constitute an agreement, arrangement or understanding
contemplated by Section 1(e)(ii)(B).
(f) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of South Carolina are authorized
or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., Eastern
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Eastern time, on the next succeeding Business Day.
(h) "Common Stock" shall mean the Common Stock, $0.01 par value per share,
of the Company, except that "common stock" when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest)
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 of another Person, the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(i) "Current Per Share Market Price" shall have the meaning set forth in
Section 11(d).
(j) "Current Value" shall have the meaning set forth in Section 11(a)(iii).
(k) "Disinterested Director" shall mean (i) any member of the Company's
Board of Directors who is unaffiliated with an Acquiring Person, or an Affiliate
or Associate of any such Person and was a member of the Company's Board of
Directors prior to the time that an Acquiring Person became such, and any
successor of a Disinterested Director who is unaffiliated with an Acquiring
Person, or any Affiliate or Associate of any such Person and is recommended to
succeed a Disinterested Director by a majority of the Disinterested Directors
then on the Company's Board of Directors.
(l) "Distribution Date" shall have the meaning defined in Section 3(a)
hereof.
(m) "Equivalent Common Stock" shall have the meaning set forth in Section
11(a)(iii) hereof.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(o) "Exchange Rate" shall have the meaning set forth in Section 24(a)
hereof
(p) "Exercise Price" shall have the meaning set forth in Section 4 hereof.
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(q) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(r) "Group" shall mean two or more Persons acting as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring, holding or
disposing of the Common Stock.
(s) "Person" shall mean any individual, firm, corporation, partnership or
other entity or Group, and shall include any successor (by merger or otherwise)
thereof; provided, however, that when two or more Persons act as a partnership,
limited partnership, syndicate or other Group for the purpose of acquiring,
holding disposing of the Common Stock, such partnership, limited partnership,
syndicate or other Group shall be deemed to be a single Person.
(t) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(u) "Record Date" shall have the meaning set forth in the recital clause of
this Agreement.
(v) "Redemption Date" shall have the meaning set forth in Section 7(a).
(w) "Rights" shall have the meaning set forth in the recital clause of this
Agreement.
(x) "Right Certificate" shall have the meaning set forth in Section 3(a).
(y) "Section 11(a)(ii) Adjustment Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(z) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A), (B), or (C) hereof.
(aa) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(bb) "Share Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(cc) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(dd) "Subsidiary" of any Person shall mean any other corporation or other
entity of which a majority of the voting equity securities or voting interests
is owned, directly or indirectly, by such Person, or which is otherwise
controlled by such Person.
(ee) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ff) "Summary of Rights" shall have the meaning set forth in Section 3(b).
(gg) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
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Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise and shall in no event be liable
for, the acts or omissions of any such co-Rights Agent. In the event the Company
appoints one or more co-Rights Agents, the respective duties of the Rights Agent
and any co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates
(a) Until the earlier of (i) the Close of Business on the 10th calendar day
after the Share Acquisition Date, (ii) the Close of Business on the 10th
Business Day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person shall become an
Acquiring Person) after the date of (x) the commencement, by any Person, other
than an Exempt Person, of, or (y) the first public announcement of the intention
of any Person (other than an Exempt Person) to commence, a tender or exchange
offer if, upon consummation thereof, such Person would be an Acquiring Person,
including any such date which is after the date of this Agreement and prior to
the issuance of the Rights (the earliest of such dates being herein referred to
as the "Distribution Date"), the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and the Rights will be transferable only in connection
with the transfer of the underlying shares of Common Stock. The Board of
Directors of the Company may defer the date set forth in clause (ii) in the
preceding sentence to a specified later date or to an unspecified later date to
be determined by action of the Directors of the Company. As soon as practicable
after the Company has notified the Rights Agent of the occurrence of the
Distribution Date, the Rights Agent will send, by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates, in substantially the form
attached hereto as Exhibit A (the "Right Certificates"), evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided
herein. As of and after the Close of Business on the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or thereafter, the Company will send a notification
of the existence of the Rights, by 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 of the Redemption Date or the Final Expiration
Date, the Rights will be evidenced by such certificates for the Common Stock
with or without a copy of the Summary of Rights in the form attached hereto as
Exhibit B (the "Summary of Rights") attached thereto, and the registered holders
of the Common Stock shall also be the registered holders of the associated
Rights. Until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the transfer of any of the certificates for the
Common Stock outstanding on the Record Date, even without a copy of the Summary
of Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
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(c) Certificates for the Common Stock issued after the Record Date, but
prior to the earlier of the Distribution Date, the Redemption Date or the Final
Expiration Date, shall be deemed also to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Shareholder Rights Agreement between Delta
Woodside Industries, Inc. and First Union National Bank, as Rights Agent,
dated as of December 10, 1999 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of Delta Woodside Industries, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. Delta Woodside Industries, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances, Rights issued to Acquiring Persons
or any Affiliates or Associates thereof (as defined in the Rights
Agreement) and any subsequent holder of such Rights may become null and
void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date or the earlier of the Redemption Date or the Final
Expiration Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the transfer of
any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates. In the event
that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed cancelled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock
which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall each be
substantially in the form of Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, 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
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date, and on
their face shall entitle the holders thereof to Purchase such number of shares
of Common Stock as shall be set forth therein at the price set forth therein
(the "Exercise Price"), but the number of such shares and the Exercise Price
shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights
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pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or of such Affiliate or Associate) to holders of
equity interests in such Acquiring Person (or of such Affiliate or
Associate) or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights, or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 11
hereof, and any Right Certificate issued pursuant to Section 6 or Section
11 upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
an Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). This Right Certificate and the Rights represented hereby
may become null and void under certain circumstances as specified in
Section 11 of the Rights Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or any Associate or
Affiliate thereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President 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 any Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificates may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at one of its offices designated as the appropriate place for surrender
of Right Certificates upon exercise or transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 4(b), Section 11, Section 14 and
Section 24 hereof, at any time after the Close of Business on the Distribution
Date, and at, or prior to, the Close of Business on the earlier of the
Redemption Date or the Final Expiration Date, any Right Certificate or
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certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Certificates, entitling the registered holder to purchase a
like number of shares of Common Stock (or following an Adjustment Event, other
securities, cash or other assets as the case may be) as the Right Certificate or
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 Certificates to be transferred, split up,
combined or exchanged, with the form of assignment and certificate duly
executed, at the office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 11 and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Right Certificate or
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will execute and deliver a new Right Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Final Expiration Date of
Rights.
(a) Subject to Section 11(a)(ii) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9, Section 11(a)(iii) and Section 23(a)), in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase and the certificate set
forth on the reverse side thereof completed and duly executed, to the Rights
Agent at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Exercise Price for the total number of
shares of Common Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercised, at or prior to
the earlier of (i) the Close of Business on December 22, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date") or (iii) the time which such Rights
are exchanged as provided in Section 24. Except as set forth in Section 11(a)
hereof and notwithstanding any other provision of this Agreement, any Person who
prior to the Distribution Date becomes a record holder of shares of Common Stock
may exercise all of the rights of a registered holder of a Right Certificate
with respect to the Rights associated with such shares of Common Stock in
accordance with the provisions of this Agreement, as of the date such Person
becomes a record holder of shares of Common Stock.
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(b) The Exercise Price for each quarter share of Common Stock pursuant to
the exercise of a Right shall initially be $5.00 (equivalent to $20.00 for each
share of Common Stock), shall be subject to adjustment from time to time
provided in Section 11 and Section 13 hereof, and shall be payable in lawful
money of the United States of America in accordance with Section 7(c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate set forth on the
reverse side thereof completed and duly executed, accompanied by payment of the
Exercise Price for the shares (or, following an Adjustment Event, other
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax (as determined by the Rights Agent)
in cash, or by certified check or bank draft payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i)(A) requisition from any transfer agent of the shares of Common
Stock (or make available, if the Rights Agent is the transfer agent therefor)
certificates for the number of shares of Common Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of shares of Common Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of shares of Common Stock as are to be purchased (in
which case certificates for the shares of Common Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section 14
hereof, (iii) promptly after receipt of such certificates or depository
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Company is obligated to issue other
securities of the Company, pay cash or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
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combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common 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 Common Stock (and,
following the occurrence of an Adjustment Event, other securities or out of its
authorized and issued shares held in its treasury) the number of shares of
Common Stock (and, following the occurrence of an Adjustment Event, other
securities) that, as provided in this Agreement will be sufficient to permit the
exercise in full of all outstanding Rights; provided, that such action need not
be taken with respect to shares of Common Stock (or other securities) issuable
upon occurrence of an Adjustment Event until the occurrence of such event.
(b) If at the time the Rights become exercisable, the then outstanding
shares of Common Stock are listed on any national or regional securities
exchange or are quoted on the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or any successor thereto or other
comparable quotation system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares of Common
Stock (and, following the occurrence of an Adjustment Event, other securities)
reserved for issuance upon such exercise to be quoted on such system or listed
on such exchange, as the case may be.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event as of which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with this
Agreement, or as soon as required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock or other
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus that at all times meets the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the date of the expiration of
the Rights. The Company will also take such action as may be appropriate under,
and which will ensure compliance with, the securities or blue sky laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon such suspension,
the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. Notwithstanding any such
provision of
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this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.
(d) The Company covenants and agrees that it will take all such action as
may be reasonably necessary to ensure that all shares of Common Stock (and,
following the occurrence of an Adjustment Event, other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Exercise Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that, subject to Section 6, it
will pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the Right
Certificates or of any certificates for shares of Common Stock (or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or in respect of the issuance or delivery of securities in a name other
than that of, the registered holder of the Right Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for securities
in a name other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Common Stock Record Date. Each Person in whose name any
certificate for Common Stock is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares of Common
Stock represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Stock transfer books of the Company are open. Prior to the exercise of the Right
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Common Stock payable in shares of Common
Stock, (B) subdivide the outstanding Common Stock, (C) combine the outstanding
Common Stock into a smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, except as otherwise
provided in this Section 11(a), the Exercise Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
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combination or reclassification, and the number and kind of shares of Common
Stock or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
Common Stock or capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Common Stock (or
other capital stock, as the case may be) transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of the Company issuable upon the exercise thereof. If an event occurs
which would require an adjustment under both Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or Affiliate of any Acquiring
Person, at any time after the date of this Agreement, directly or indirectly,
(1) shall merge into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall remain outstanding and not
changed into or exchanged for stock or other securities of any other Person or
the Company or cash or any other property, (2) shall, in one or more
transactions, transfer any assets to the Company in exchange (in whole or in
part) for shares of any equity security of the Company or any of its
Subsidiaries or for securities exercisable for or convertible into shares of any
equity security of the Company or any of its Subsidiaries or otherwise obtain
from the Company, with or without consideration, any additional shares of any
equity security of the Company or securities exercisable for or convertible into
shares of any equity security of the Company or any of its Subsidiaries (other
than as part of a pro rata distribution to all holders of Common Stock), (3)
shall sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise
dispose (in one or more transactions), to, from or with, as the case may be, the
Company or any of its Subsidiaries, assets on terms and conditions less
favorable to the Company than the Company would be able to obtain in
arm's-length negotiation with an unaffiliated third Person, (4) shall engage in
any transaction with the Company involving the sale, purchase, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a series
of transactions), other than incidental to the lines of business currently
engaged in as of the date hereof by the Company and such Acquiring Person, or
Associate or Affiliate, of assets having an aggregate fair market value of more
than $5,000,000, (5) shall receive any compensation from the Company or any of
the Company's Subsidiaries other than compensation for full time employment as a
regular employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (6) shall receive the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans other than in
the ordinary course of business), advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage provided by the
Company or any of its Subsidiaries, or
(B) any Person (other than an Exempt Person), shall become an Acquiring
Person, or
(C) during such time as there is an Acquiring Person, there shall be any
reclassification of securities (including any reverse stock split),
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or recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction or series of
transactions (whether or not with or into or otherwise involving an Acquiring
Person) which has the effect, directly or indirectly, of increasing by more than
1% the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries which is directly or
indirectly owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, then, and in each such case, proper provision shall be made so
that each holder of a Right, except as provided in this paragraph (ii), shall
thereafter have a right to receive, upon exercise of such Right at the then
current Exercise Price in accordance with the terms of this Agreement, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Exercise Price by the then number
of one quarter shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event and (y)
dividing that product (which, following such first occurrence, shall thereafter
be referred to as the "Exercise Price" for each Right and for all purposes of
this Agreement) by 50% of the Current Per Share Market Price of the Common Stock
(determined pursuant to Section 11(d)) on the date of the occurrence of any one
of the events listed above in this Section 11(a)(ii) (such number of shares is
herein called the "Adjustment Shares"); provided, however, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the provisions of
Section 13 shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii). The Company shall not enter into any transaction of the kind listed
in this Section 11(a)(ii) if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary, from and after
the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned
by (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 11(a), shall become null
and void without any further action and no holder or beneficial owner 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 11(a) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
or beneficial owner of Right Certificates or any other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or any
Affiliates and Associates thereof or any transferee of any of them hereunder.
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's articles of organization but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in
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accordance with Section 11(a)(ii), the Company shall: (A) determine the excess
of (1) the value of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Exercise Price (such excess is herein called
the "Spread"), and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable Exercise
Price, (1) cash, (2) a reduction in the Exercise Price, (3) Common Stock or
other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock which the Board has deemed to have the
same value as shares of Common Stock (such shares or units of shares of
preferred stock are herein called "Equivalent Common Stock")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board based upon the advice of a
competent investment banking firm selected by the Board; provided, however, if
the Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Adjustment Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Exercise Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares or
cash have an aggregate value equal to the Spread. If the Board shall determine
in good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section 11(a)(ii) Adjustment Date,
in order that the Company may seek stockholder approval for the authorization of
such additional shares (such thirty (30) day period, as it may be extended, is
herein called the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first or second
sentence of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 11(a)(ii) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek an authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. For the purpose of this Section 11(a)(iii), the value of Adjustment
Shares shall be the Current Per Share Market Price of the Common Stock on the
Section 11(a)(ii) Adjustment Date, and the per share or per unit value of any
Equivalent Common Stock shall be deemed to equal the Current Per Share Market
Price of the Common Stock on such date.
(b) If the Company shall fix a record date for the issuance of rights
(other than the Rights), options or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Stock or Equivalent Common Stock or
securities convertible into Common Stock or Equivalent Common Stock at a price
per share of Common Stock or per share of Equivalent Common Stock (or having a
conversion price per share, if a security convertible into Common Stock or
Equivalent Common Stock) less than the Current Per Share Market Price (as
determined pursuant to Section 11(d) hereof) of the Common Stock on such record
date, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date, plus the number of shares of
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Common Stock which the aggregate offering price of the total number of shares of
Common Stock or Equivalent Common Stock to be offered (and the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Per Share Market Price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date, plus the
number of additional shares of Common Stock or Equivalent Common Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of the Company issuable upon the exercise
thereof. In case such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration
shall be the Current Per Share Market Price thereof determined in accordance
with Section 11(d) hereof. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a distribution
to all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular periodic
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or options, subscription rights or
warrants (excluding those referred to in Section 11(b)), the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Per Share Market Price (as
determined pursuant to Section 11(d) hereof) of Common Stock on such record
date, less the Current Per Share Market Price (as determined pursuant to Section
11(d) hereof) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such options, subscription rights or warrants applicable
to one share of Common Stock and the denominator of which shall be the Current
Per Share Market Price (as determined pursuant to Section 11(d) hereof) per one
share of Common Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of the Company issuable upon the exercise
thereof. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would be in effect
if such record date had not been fixed. Notwithstanding any other provision of
this Rights Agreement to the contrary, there shall be no adjustment or
alteration to the Exercise Price in connection with any distribution to the
holders of the Common Stock of capital stock of any subsidiary of the Company
(either existing as of the date hereof or subsequently created) owning the
majority of assets of the Duck Head Apparel Company division or the Delta
Apparel Company division of the Company provided that such distribution is
consummated prior to March 31, 2000.
(d) For the purpose of this Agreement, the "Current Per Share Market Price"
of any share of Common Stock or any other stock or any Right or other security
or any other property shall be determined as provided in this Section 11(d).
(i) In the case of a publicly-traded stock or other security
(hereinafter in this Section 11(d)(i) a "Security"), the Current Per Share
Market
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Price on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that for the purpose of computations made pursuant to
Section 11(a)(iii) hereof, the Current Per Share Market Price on any date
shall be deemed to be the average of the daily closing prices per share of
such Security for the ten (10) consecutive Trading Days immediately
following such date; and provided further, that in the event that the
Current Per Share Market Price of any Security is determined during a
period following the announcement by the issuer of such Security of (x) a
dividend or distribution on such Security payable in shares of such
Security or securities convertible into shares of such Security (other than
the Rights) or (y) any subdivision, combination or reclassification of such
Security, and prior to the expiration of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the Current Per Share Market Price shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which such Security is
listed or admitted to trading; or, if not listed or admitted to trading on
any national securities exchange, the last quoted price (or, if not so
quoted, the average of the last quoted high bid and low asked prices) in
the over-the-counter market, as reported by NASDAQ or such other system
then in use; or, if, on any such date no bids for such Security are quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such
Security selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in such Security, the Current Per
Share Market Price of such Security on such date shall be determined
reasonably and with good faith to the holders of the Rights by the Board of
Directors of the Company, including, if at the time of such determination
there is an Acquiring Person, a majority of the Disinterested Directors
then in office, or if there are no Disinterested Directors, by a competent
investment banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the holders of the Rights. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which such Security is listed or admitted to trading
is open for the transaction of business or, if such Security is not listed
or admitted to trading on any national securities exchange, a Business Day.
(ii) If a Security is not publicly held or not so listed or traded,
"Current Per Share Market Price" shall mean the fair value per share of
stock or per other unit of such Security, determined reasonably and with
utmost good faith to the holders of the Rights by the Board of Directors of
the Company, including, if at the time of such determination there is an
Acquiring Person, a majority of the Disinterested Directors then in office,
or if there are no Disinterested Directors, by a competent investment
banking firm selected by the Board of Directors, which determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights.
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(iii) In the case of property other than securities, the Current Per
Share Market Price thereof shall be determined reasonably and with utmost
good faith to the holders of Rights by the Board of Directors of the
Company, including, if at the time of such determination there is an
Acquiring Person, a majority of the Disinterested Directors then in office,
or if there are no Disinterested Directors, by a competent investment
banking firm selected by the Board of Directors, which determination shall
be described in a statement filed with the Rights Agent and shall be
binding upon the Rights Agent and the holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least l% in the Exercise Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Exercise Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Section 11(a) through
(c), (e), (g) through (k), and (m), inclusive, and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Common Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares (or fractions
thereof) of Common Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares of Common Stock
(calculated to the nearest one ten-thousandth) obtained by (i) multiplying (x)
the number of shares covered by a Right immediately prior to this adjustment by
(y) the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price, and (ii) dividing the product so obtained by the Exercise Price
in effect immediately after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by
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dividing the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment of
the Exercise Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Exercise Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Exercise Price) and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of shares of Common Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Exercise Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below the then par value, if any, of the number of shares of
Common 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 Common Stock at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the number
of shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of shares of
Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Common Stock, issuance wholly
for cash of any shares of Common Stock at less than the Current Per Share Market
Price, issuance wholly for cash of shares of Common Stock or securities which by
their terms are convertible into or exchangeable for shares of Common Stock,
stock dividends or issuance of rights, options or warrants referred to
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hereinabove in this Section 11, hereafter made by the Company to holders of its
Common Stock, shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with, (ii) merge with or into, or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries taken as a whole, to any other Person or Persons if (x) at the time
of or immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments outstanding or agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale the shareholders of a
Person who constitutes, or would constitute, the "Principal Party" for the
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that after the Distribution Date it
will not, except as permitted by Section 23 or Section 24 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, on or after the Share Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which is
not prohibited by Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger (y) any
Person (other than a Subsidiary of the Company in a transaction which is not
prohibited by Section 11(o) hereof) shall consolidate with the Company, or merge
with and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company
shall sell, mortgage or otherwise transfer (or one or more of its Subsidiaries
shall sell, mortgage or otherwise transfer), in one transaction or a series of
related transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which is not prohibited by Section
11(o) hereof)
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then, and in each such case, proper provision shall be made so that: (i) each
holder of a Right, except as provided otherwise herein, shall have the right to
receive, upon the exercise thereof at the then current Exercise Price in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid and nonassessable shares of freely tradeable Common Stock
of the Principal Party (as hereinafter defined in Section 13(b)), free and clear
of rights of call or first refusal, liens, encumbrances or other adverse claims,
as shall be equal to the result obtained by (1) multiplying the then current
Exercise Price by the number of one quarter shares of Common Stock for which a
Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of one quarter shares
of Common Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Exercise Price in effect
immediately prior to such first occurrence) and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as
the "Exercise Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the Current Per Share Market Price (determined pursuant to Section
11(d) hereof) of the Common Stock of such Principal Party on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
to permit exercise of all outstanding Rights in accordance with this Section
13(a)) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights. The Company shall not enter into any transaction of
the kind set forth in this subsection if at the time of the consummation of such
transaction there are any options, warrants, rights, conversion or exchange
provisions or securities outstanding or any agreements or arrangements in effect
which, as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. If,
in the case of a transaction of the kind described in clause (z) of the first
sentence of this subsection, the Person or Persons to whom assets or earning
power are sold or otherwise transferred are individuals, then the preceding
sentences of this subsection shall be inapplicable, and the Company shall
require as a condition to such sale or transfer that such Person or Persons pay
to each holder of a Rights Certificate, upon its surrender to the Rights Agent
and in exchange therefor (without requiring payment by such holder), cash in the
amount determined by multiplying the then current Exercise Price by the number
of one quarter shares of Common Stock for which a Right is then exercisable.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to the merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the party receiving the
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greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (x) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other Person; and
(y) in case such Person is a Subsidiary, directly or indirectly, or more than
one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value of shares
outstanding.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless prior thereto (x) the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13, and (y) the Company and each Principal Party and each
other Person who may become a Principal Party as a result of such consolidation,
merger, sale or transfer shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Section 13(a) and
(b) and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned in Section 13(a),
the Principal Party at its own expense will
(i) prepare and file a registration statement under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain effective (with
a prospectus that at all times meets the requirements of the Securities Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws of
such jurisdictions as may be necessary or appropriate;
(iii) use its best efforts to list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for quotation on
NASDAQ; and
(iv) deliver to holders of the Rights historical financial statements for
the Principal Party and each of its Affiliates which comply in all material
respects with the requirements for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. If any Section 13 Event shall occur
at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which
have not theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
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
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of such fractional Rights, there may be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price per Right for the Trading Day
immediately prior to such date on which fractional Rights would have been
otherwise issuable. The closing price for any Trading Day shall be the last sale
price, regular way, or, in case no such sale takes place on such Trading Day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last quoted price
(or, if not so quoted, the average of the last quoted high bid and low asked
prices) in the over-the-counter market, as reported by NASDAQ or such other
system then in use; or, if, on any such Trading Day no bids for the Rights are
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Rights the current market value of the Rights on
such Trading Day shall be determined reasonably and with utmost good faith to
the holders of the Rights by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value per share of
Common Stock. For purposes of this Section 14(b), the current market value per
share of Common Stock shall be the closing price per share of Common Stock
determined pursuant to Section 11(d) hereof for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and prior to the Distribution Date, the registered holders of the
Common 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 his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Right evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
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obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and with the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be transferable only
simultaneously and together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
offices of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) subject to Sections 6 and 11, the Company and the Rights Agent may deem
and treat the person in whose name a Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as the result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligations; provided, however, that the Company must use its reasonable best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of 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,
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on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent and its
directors, officers, employees and agents for, and to hold each of them harmless
against any loss, liability, or expense, incurred without gross negligence,
recklessness, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent or such other indemnified party
in connection with the acceptance and administration of this Agreement or the
performance of the Rights Agent's duties hereunder, including the costs and
expenses of defending against any claim of liability arising therefrom, directly
or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement or the performance of the Rights Agent's duties
hereunder in reliance upon any Right Certificate or certificate for Common Stock
or other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or in reliance upon the advice of counsel as set
forth in Section 20.
(c) The indemnity provided in this Section 18 shall survive the expiration
of the Rights and the termination of the Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by it (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 as
to any action taken or omitted by it in good faith and in accordance with such
advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Per Share 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
any duly authorized officer of the Company and delivered to the Rights Agent;
and such certificate shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good faith in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, recklessness, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a) hereof) or any adjustment
required under the provisions of Sections 3, 11, 13, 23 or 24 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12 hereof), nor shall it be responsible for any
determination by the Board of Directors of the Company of current market value
of the Rights or Common Stock pursuant to the provisions of Section 14 hereof;
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable; nor shall it be under any obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more of the registered
holders of the Rights Certificates shall furnish the Rights Agent with security
and indemnity to its satisfaction for any costs and expenses which may be
incurred; nor shall it be liable for any failure to perform any duties except as
specifically set forth herein and no
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implied covenants or obligations shall be read into this Agreement against the
Rights Agent, whose duties and obligations shall be determined solely by the
express provisions hereof.
(f) The Company agrees that it will inform the Rights Agent promptly upon
the Company's determination that a Person has become an Acquiring Person, and
the Rights Agent will not be responsible for making such determination or be
deemed to have knowledge thereof prior to such notice by the Company. The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any duly authorized
officer of the Company, and is authorized to apply to any such officer for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal included in
such application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
vested in it or perform any of its duties hereunder either directly 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 attorney or
agent or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided the Rights Agent was not grossly negligent in
the selection or continued employment of such agent.
(j) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause (1) or clause (2)
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
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(k) Anything in this Agreement to the contrary not withstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits).
(l) No provision in this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common 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 (with or without cause) upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation or trust company
organized and doing business under the laws of the United States or of the State
of State of South Carolina (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of South Carolina), in good standing, which is authorized under such laws
to exercise shareholder services or corporate trust powers and is subject to
supervision or examination by federal or state authority or (b) an Affiliate of
a corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Exercise Price and the number or kind or class of shares of stock or other
securities or property purchasable under the Right Certificates made in
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accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the person to whom such Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the earlier of (x) the Close of Business on the tenth day following the
Share Acquisition Date (or, if the Share Acquisition Date shall have occurred
prior to the Record Date, the Close of Business on the tenth day following the
Record Date), or (y) the Final Expiration Date, redeem all but not less than all
of the then outstanding Rights at a redemption price of $.001 per Right, as such
amount may be appropriately adjusted, as determined by the Board of Directors,
to reflect any transaction of the kind described in clauses (A) through (D) of
Section 11(a)(i) occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). In considering whether to
redeem the Rights, the Board of Directors of the Company may consider the best
long-term and short-term interests of the Company, including, without
limitation, the effects of the redemption of the Rights upon employees,
suppliers and customers of the Company or any Subsidiary of the Company and
communities in which offices or other establishments of the Company or any
Subsidiary of the Company are located and all other pertinent factors, including
without limitation the factors set forth in the Company's Articles of
Incorporation as amended from time to time. The redemption of the Rights by the
Board of Directors may be effective at such time, on such basis and with such
conditions as such Board of Directors in its sole discretion may establish. In
addition to the right of redemption reserved in the first sentence of this
subsection, the Board of Directors may redeem all, but not less than all, of the
then outstanding Rights at the Redemption Price after the occurrence of a Share
Acquisition Date, but prior to the occurrence of any transaction of the kind
described in Section 11(a)(ii)(A) or (C) or Section 13(a), if either (i) a
Person who is an Acquiring Person shall have transferred or otherwise disposed
of a number of shares of Common Stock in one transaction or series of
transactions, not directly or indirectly involving the Company or any of its
Subsidiaries and which did not result in the occurrence of any transaction of
the kind described in Section 11(a)(ii)(A) or (C) or Section 13(a), as shall
result in such Person thereafter being a Beneficial Owner of 10% or less of the
outstanding shares of Common Stock of the Company, and after such transfer or
other disposition there are no other Acquiring Persons, or (ii) in connection
with any transaction of the kind described in Section 11(a)(ii)(A) or Section
13(a) in which all holders of the Common Stock of the Company are treated the
same and which shall not involve an Acquiring Person, an Affiliate or Associate
of an Acquiring Person, any other Person in which such Acquiring Person,
Affiliate or Associate has any interest or any other Person acting, directly or
indirectly, on behalf of or in association with such Acquiring Person, Affiliate
or Associate. Notwithstanding any other provision of this Agreement, the Rights
shall not be exercisable after
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the first occurrence of an event specified in Section 11(a)(ii) until such time
as the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to the Rights Agent and to all such holders at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Transfer Agent
for the Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase of value any Rights at any time in
any manner other than that specifically set forth in this Section 23, or in
connection with the purchase, acquisition or redemption of shares of Common
Stock prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Per Share Market Price of the
Common Stock as of the time of redemption) or any other form of consideration
deemed appropriate by the Board.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person shall have become an Acquiring Person, exchange all or any part
of the then outstanding and exercisable Rights (which shall not include Rights
which have become void pursuant to the provisions of Section 11(a)(ii)) for
Common Stock of the Company at an exchange rate of one quarter share of Common
Stock per Right, appropriately adjusted to reflect any transaction specified in
clauses (A) through (D), inclusive, of Section 11(a)(i) occurring after the date
hereof (such exchange rate being hereinafter called the "Exchange Rate");
provided, however, that the Board of Directors shall not be empowered to effect
such an exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, shall have become
the Beneficial Owner of 50% or more of the Common Stock of the Company then
outstanding.
(b) Immediately after any action by the Board of Directors of the Company
directing the exchange of any Rights pursuant to subsection (a) of this Section
24, notice of which shall be filed with the Rights Agent, and without any
further action and without any notice, the right to exercise such Rights shall
terminate and each registered holder of such Rights shall thereafter be entitled
to receive only the number of shares of Common Stock which shall equal the
number of Rights held by such registered holder multiplied by the Exchange Rate.
The Company shall give prompt public notice of any exchange directed pursuant to
such subsection (a); provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such exchange. Within 10
days after action by such Board of Directors directing the exchange of such
Rights, the Company shall mail a notice of exchange to all registered holders of
such Rights at their last addresses appearing 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
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provided shall be deemed given, whether or not received by the registered holder
to whom sent; provided, however, that the failure to give, or any defect in, any
such notice shall not affect the validity of any such exchange. Each such notice
shall 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 among the
registered holders of the Rights based upon the number of Rights held (excluding
Rights which have become void pursuant to the provisions of Section 11(a)(ii));
and in such case, a new Rights Certificate evidencing the Rights not being
exchanged shall be prepared and executed by the Company and countersigned and
delivered by the Rights Agent to the registered holder of such Rights subject to
the provisions of Section 14.
(c) In the event that there shall be an insufficient number of shares of
Common Stock authorized but unissued or issued and held in the treasury of the
Company to permit an exchange of Rights directed by the Board of Directors of
the Company, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon such exchange of
the Rights. In any such exchange, the Company may, at its option, substitute
Equivalent Common Stock for some or all of the Common Stock otherwise
exchangeable for the Rights.
(d) The Company shall not be required to issue fractional shares of Common
Stock in exchange for Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company shall pay to the registered holders of the Rights with respect to
which such fractional Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the Current Per Share Market Value of Common Stock
(as determined as provided in Section 11(d)) for the Trading Day immediately
prior to the date of such exchange.
Section 25. Notice of Certain Events
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Common Stock or to make any other distribution to the holders of Common Stock
(other than a regular periodic cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Common Stock rights
or warrants to subscribe for or to purchase any additional shares of Common
Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Common Stock (other than
a reclassification involving only the subdivision of outstanding shares of
Common Stock), or (iv) to effect any consolidation or merger into or with, or to
effect any sale, non-ordinary course mortgage or other transfer (or to permit
one or more of its Subsidiaries to effect any sale, non-ordinary course mortgage
or other transfer), in one transaction or a series of related transactions, of
50% or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other person (other than a Subsidiary of the Company
in one or more transactions each of which is not prohibited by Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to be
fixed, and such notice shall be so given, in the case of any action covered by
clause (i) or (ii) above, at
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least ten (10) days prior to the record date for determining holders of the
shares of Common Stock for purposes of such action, and in the case of any such
other action, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Common Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each
registered holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Delta Woodside Industries, Inc.
233 North Main Street
Hammond Square, Suite 200
Greenville, South Carolina 29601
Attn: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
First Union National Bank
1525 West W.T. Harris Boulevard, 3C3
Charlotte, North Carolina 28288-1153
Attention: Shareholder Services Group
Notices or demands authorized by this Agreement to be given or made by the
company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
Company and the Rights Agent shall, if so directed by the Company, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing Common Stock. From and after the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holder of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect, as
determined solely by the Company, the interests of the holders of the Rights or
the Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended pursuant to clause (iii) of this sentence (A) to
lengthen any time period unless such lengthening is for the purpose of
protecting, enhancing or
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clarifying the rights of, and/or the benefits to, registered holders of the
Rights, or (B) to lengthen any time period relating to when the Rights may be
redeemed if at such time the Rights are not then redeemable. Upon the delivery
of such certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made on or after the Distribution Date which
changes the Redemption Price, the Final Expiration Date, the Exercise Price or
the number of shares (or portions thereof) of Common Stock for which a Right is
exercisable, and no supplement or amendment that changes the rights and duties
of the Rights Agent under this Agreement shall be effective without the consent
of the Rights Agent. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect on the date hereof. The Board of Directors of the
Company (with, where specifically provided for herein, the approval of a
majority of the Disinterested Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for herein,
the approval of a majority of the Disinterested Directors) or to the Company, or
as may be necessary or advisable in the administration of this Agreement,
including without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board of Directors (or, where specifically provided for herein, by a
majority of the Disinterested Directors) in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject any member of the Board of
Directors or any of the Disinterested Directors to any liability to the holders
of the Rights or to any other person.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions,
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covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
the Agreement would adversely affect the purpose or effect of the Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the Close of Business on the tenth day following the date of
such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of South Carolina and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
to be made and to be performed entirely within South Carolina.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SIGNATURES ON FOLLOWING PAGE
33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Shareholder Rights
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
ATTEST: DELTA WOODSIDE INDUSTRIES, INC.
By: /s/David R. Palmer By: /s/ E. Erwin Maddrey II
Name: David R. Palmer E. Erwin Maddrey, II,
Controller President
ATTEST: FIRST UNION NATIONAL BANK
By: /s/ Francis S, Beam By: /s/ Patrick J. Edwards
Name: Francis S. Beam Name: Patrick J. Edwards
Title: Vice President Title: Vice President
34
<PAGE>
Exhibit A
[Form of Right Certificate]
Certificate No. R-______________ __________ Rights
NOT EXERCISABLE AFTER DECEMBER 22, 2009 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.] [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME VOID UNDER CERTAIN CIRCUMSTANCES AS SPECIFIED IN SECTION 11(a) OF THE
RIGHTS AGREEMENT.]
RIGHT CERTIFICATE
DELTA WOODSIDE INDUSTRIES, INC.
This certifies that ________________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Shareholder Rights Agreement dated as of December10, 1999 (the "Rights
Agreement") between Delta Woodside Industries, Inc. (the "Company"), and First
Union National Bank (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to the Close of Business on December 22, 2009, at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one quarter of a fully paid and nonassessable share
of common stock, $0.01 par value per share (the "Common Stock"), of the Company,
at an exercise price of $5.00 per quarter share (the "Exercise Price")
equivalent to $20.00 for each share), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase and the related
Certificate duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above and the Exercise Price per share set forth above, are
the number and Exercise Price as of _________________, based on the Common Stock
as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Affiliate or Associate, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of a
Person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Right shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Exercise Price and the number of
shares of Common Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
1
<PAGE>
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal offices of the
Company and the Rights Agent and are also available upon written request to the
Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Right
Certificate or Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Board of Directors of the Company at its
option at a redemption price of $.001 per Right (payable in cash, Common Stock
or other consideration deemed appropriate by the Board of Directors), or may be
exchanged, in whole or in part, for Common Stock.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder, as such, of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ____________, 20__.
ATTEST: DELTA WOODSIDE INDUSTRIES, Inc.
By:________________________ By:________________________
Secretary President
2
<PAGE>
Countersigned:
FIRST UNION NATIONAL BANK
as Rights Agent
By: _______________________________
Title: ____________________________
3
<PAGE>
[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: _________________ 20___ ______________________________
Signature
Signature Guaranteed:____________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate __ are __ are not being
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned __ did __ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: ____________, 20___ ______________________________
Signature
NOTICE The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
4
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the
Rights represented by the Right Certificate.)
To: Delta Woodside Industries, Inc.:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Right Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
______________________________________________________________________________
(Please print name and address)
___________________________________
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
______________________________________________________________________________
(Please print name and address)
___________________________________
(Please insert social security or other identifying number)
Dated: ____________, 20___
____________________________________
Signature
Signature Guaranteed:______________________
5
Exhibit B
<PAGE>
DELTA WOODSIDE INDUSTRIES, INC.
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On December 9, 1999, the Board of Directors of Delta Woodside Industries,
Inc. (the "Company") declared a dividend distribution of one Common Stock
Purchase Right for each outstanding share of Common Stock of the Company to
stockholders of record at the close of business on December 22, 1999. Each Right
entitles the registered holder to purchase from the Company one quarter share of
Common Stock, $0.01 par value per share (the "Common Stock"), at a cash exercise
price of $5.00 per quarter share, subject to adjustment. The description and
terms of the Rights are set forth in a Shareholder Rights Agreement between the
Company and First Union National Bank, as Rights Agent.
Initially, the Rights will not be exercisable, will be attached to all
outstanding shares of Common Stock, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earliest of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") (other than an Exempt Person as defined in the Agreement) has acquired
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the date of this announcement being referred to as the "Share Acquisition
Date") and (ii) 10 business days following the commencement of a tender offer or
exchange offer that would result in a Person or group owning 20% or more of the
outstanding shares of Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), (a) the Rights will be evidenced by the Common Stock certificates and
will be transferred only with such Common Stock certificates, (b) new Common
Stock certificates issued after December 22, 1999 will contain a notation
incorporating the Shareholder Rights Agreement by reference, and (c) the
surrender for transfer of any certificates for Common Stock will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 22, 2009 unless previously redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Right Certificates will
be mailed to holders of record of Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that (i) a Person acquires beneficial ownership of 20% or more
of the Company's Common Stock, (ii) the Company is the surviving corporation in
a merger with an Acquiring Person or any Affiliate or Associate of an Acquiring
Person and the Common Stock is not changed or exchanged, (iii) an Acquiring
Person engages in one of a number of self-dealing transactions specified in the
Shareholder Rights Agreement, or (iv) an event occurs that results in an
Acquiring Person's ownership interest being increased by more than 1%, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive upon exercise thereof at the then current exercise price, that
1
<PAGE>
number of shares of Common Stock (or in certain circumstances, cash, property,
or other securities of the Company) having a market value of two times such
exercise price. However, the Rights are not exercisable following the occurrence
of any of the events set forth above until the time the Rights are no longer
redeemable as set forth below. Notwithstanding any of the foregoing, upon any of
the events set forth above, rights that are or were beneficially owned by an
Acquiring Person shall become null and void.
In the event that, at any time following the Share Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction or
(ii) 50% or more of the Company's assets or earning power is sold, each holder
of a Right shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a market value equal to two times the
exercise price of the Right.
At any time after any person becomes an Acquiring Person and prior to such
the time such Person, together with its Affiliates and Associates, becomes the
Beneficial Owner of 50% or more of the outstanding Common Stock, the Board of
Directors of the Company may exchange the Rights (other than Rights that have
become void), in whole or in part, at the exchange rate of one quarter share of
Common Stock per Right, subject to adjustment as provided in the Rights
Agreement.
The exercise price payable, and the number of shares of Common 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 Common
Stock, (ii) if all holders of the Common Stock are granted certain rights or
warrants to subscribe for Common Stock or securities convertible into Common
Stock at less than the current market price of the Common Stock, or (iii) upon
the distribution to all holders of the Common Stock of evidence of indebtedness
or assets (excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
With certain exceptions, no adjustment in the exercise price will be
required until cumulative adjustments amount to at least 1% of the exercise
price. No fractional shares of Common Stock will be issued upon exercise of a
Right and, in lieu thereof, a payment in cash will be made based on the fair
market value of the Common Stock on the last trading date prior to the date of
exercise.
The Rights may be redeemed in whole, but not in part, at a price of $.001
per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by the Board of Directors at any time
prior to the close of business on the tenth day after the Share Acquisition Date
or the final expiration Date of the Rights (whichever is earlier). After the
redemption period has expired, the Company's right of redemption may be
reinstated upon the approval of the Board of Directors if an Acquiring Person
reduces his beneficial ownership to 10% or less of the outstanding shares of
Common Stock in transaction or series of transactions not involving the Company
and there are no other Acquiring Persons. Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will terminate
and thereafter the only right of the holders of Rights will be to receive the
redemption price.
Until a Right is exercised, the holder will have no rights as a stockholder
of the Company (beyond those as an existing stockholder), including the right to
vote or to receive dividends.
2
<PAGE>
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement, other than those
relating to the principal economic terms of the Rights, may be amended by the
Board to cure any ambiguity, defect or inconsistency, to make changes that do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement. Amendments adjusting time periods may, under certain
circumstances, be limited.
While the distribution of the Rights will not be taxable to stockholders or
to the Company, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
(or other consideration) of the Company or for common stock of an acquiring
company as set forth above.
A copy of the Shareholder 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 Shareholder Rights
Agreement.
3
David R. Palmer
(864) 232-8301
DELTA WOODSIDE INDUSTRIES, INC.
ADOPTS SHAREHOLDER RIGHTS PLAN AND
STOCK PURCHASE PLAN
Delta Woodside Industries, Inc. (NYSE-DLW) announced today that its Board
of Directors has adopted a Shareholder Rights Plan pursuant to which stock
purchase rights will be distributed as a dividend to its common stockholders at
a rate of one Right for each share of common stock held of record as of December
22, 1999.
In addition, Delta Woodside Industries, Inc. announced today that its Board
approved a plan to purchase from time to time up to an aggregate of 5,000,000
shares of the Company's outstanding stock at prices and at times at the
discretion of the Company's top management. This stock repurchase plan replaces
the 2,500,000 stock purchase plan announced by the Company in September 1998,
pursuant to which the Company acquired an aggregate of approximately 979,000
shares. The Company has approximately 23,864,000 shares currently outstanding.
The Company believes that, at times, its stock price is undervalued and that
such purchases would enhance shareholder value.
The Rights Plan is designed to enhance the Board's ability to prevent any
person interested in acquiring control of the Company from depriving
stockholders of the long-term value of their investment and to protect
shareholders against attempts to acquire the Company by means of unfair or
abusive takeover tactics that have been prevalent in many unsolicited takeover
attempts. The Board has adopted the Rights Plan at this time because the
Company's shares are trading at their lowest levels in the Company's history.
Under the Rights Plan, the Rights will initially represent the right to
purchase one-quarter of a share of the Company's common stock for $5. The Rights
will become exercisable only if a person or a group acquires ownership or voting
power or commences a tender offer for 20% or more of the Company's common stock.
Until they become exercisable, the Rights attach to and trade with the Company's
common stock. The rights will expire December 22, 2009. The Rights may be
redeemed by the Board of Directors at $.001 per Right under certain
circumstances outlined in the Plan. Prior to their exercise, the Rights will not
be taxable to the Company's shareholders.
<PAGE>
Page 2
In the event that a person or group (an "Acquiring Person") acquires
ownership or voting power with respect to 20% of the Company's common stock, the
Rights would then be modified to represent the right to receive for the exercise
price Company common stock having a value worth twice the exercise price. In the
event that the Company is involved in a merger or other business combination at
any time after an Acquiring Person has acquired 20% or more of the Company's
common stock and the Company is not the surviving entity, the Rights will be
modified to entitle a holder to buy a number of shares of common stock of the
acquiring entity having a market value of twice the exercise price of each
Right.
All Rights held or acquired by an Acquiring Person acquiring 20% or more of
the Company's shares are void.
Delta Woodside Industries, Inc., headquartered in Greenville, South
Carolina, manufactures and sells a wide variety of textile and apparel products.
The Company, which employs about 5,000 people, operates 15 plants and 24 garment
outlet stores. These facilities are located in 12 states, Costa Rica and
Honduras.
###
