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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) JUNE 7, 1999
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SHARPER IMAGE CORPORATION
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(Exact name of registrant as specified in charter)
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<S> <C> <C>
DELAWARE 0-15827 94-2493558
(State of incorporation or organization) (Commission File Number) (IRS Employer Identification No.)
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650 DAVIS STREET, SAN FRANCISCO, CALIFORNIA 94111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 445-6000
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NONE
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On June 7, 1999, the Board of Directors of Sharper Image Corporation
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock (the "Common Stock"), par
value $0.01 per share, of the Company. The dividend is payable on June 22, 1999
to the stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share (a "Unit") of
Series A Junior Participating Preferred Stock, par value $0.01per share (the
"Series A Preferred Stock"), of the Company at a price of $ 47.00 per Unit (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement dated as of June 7, 1999 (the "Rights
Agreement") between the Company and ChaseMellon Shareholder Services, L.L.C. as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the first
date of a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial ownership of 15% or
more of the outstanding Common Stock or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the Close of Business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on June 22, 2009 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Units of Series A
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series A Preferred Stock, (ii) upon the grant to
holders of the Units of Series A Preferred Stock of certain rights or warrants
to subscribe for or purchase Units of Series A Preferred Stock at a price, or
securities convertible into Units of Series A Preferred Stock with a conversion
price, less than the then current market price of the Units of Series A
Preferred Stock or (iii) upon the distribution to holders of the Units of Series
A Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Units of Series A Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of Units of Series A
Preferred Stock issuable upon exercise of each Rights are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Units of Series A Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each Unit of Series A Preferred Stock will be
entitled to an aggregate dividend of 1,000 times the dividend declared per share
of Common Stock. In the event of liquidation, the holders of the Units of Series
A Preferred Stock will be entitled to an aggregate payment of 1,000 times the
payment made per share of Common Stock. Each Unit of Series
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A Preferred Stock will have 1,000 votes, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged, each Unit of Series A Preferred Stock will
be entitled to receive 1,000 times the amount received per share of Common
Stock. These rights are protected by customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights,
the value of the Series A Preferred Stock, the Units of Series A Preferred Stock
purchasable upon exercise of each Rights should approximate the value of one
share of Common Stock.
In the event that, after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction with an Acquiring
Person or an affiliate thereof, or 50% or more of its consolidated assets or
earning power are sold to an Acquiring Person or an affiliate thereof, proper
provision will be made so that each holder of a Rights will thereafter have the
right to receive, upon exercise thereof at the then current exercise price of
the Rights, that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times the
exercise price of the Rights.
In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common Stock , proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of Common Stock or Units of Series A Preferred Stock (or
cash, other securities or property) having a market value of two times the
exercise price of the Rights.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of Common Stock and prior to the acquisition by such person or group of
50% or more of the outstanding Common Stock, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or group
which have become void), in whole or in part, at an exchange ratio of one Unit
of Series A Preferred Stock (subject to adjustment) which shall equal, subject
to adjustment to reflect stock splits, stock dividends and similar transactions
occurring after the date hereof, that number obtained by dividing the Purchase
Price by the then current per share market price per Unit of Series A Preferred
Stock on the earlier of (i) the date on which any Person becomes an Acquiring
Person and (ii) the date on which a tender or exchange offer is announced by any
Person, if upon consummation thereof such Person would be the Beneficial Owner
of 15% or more of the shares of Company Common Stock then outstanding.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Series A Preferred Stock will be
issued (other than fractions which are integral multiples of one one-thousandth
of a share of Series A Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Units of Series
A Preferred Stock on the last trading day prior to the date of exercise.
At any time on or prior to the close of business on the first date of a
public announcement that a person or group of affiliated or associated persons
acquire beneficial ownership of 15% or more of the outstanding Common Stock
(unless the Board of Directors extends such ten-day period), the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.001 per Right (the "Redemption Price). The redemption of the rights
may be made effective at such time on such basis and with such conditions as the
Board of Directors in its sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The Rights are also redeemable under other circumstances as specified in the
Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights except that from and
after a Distribution Date no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at the
Redemption Price prior to the occurrence of a Distribution Date.
The Rights Agreement, dated as of June 7, 1999, between the Company and
the Rights Agent, specifying the terms of the Rights, is attached hereto as an
exhibit and is incorporated herein by reference. The foregoing description of
the Rights is qualified in its entirety by reference to such exhibit. The
Certificate of Designation for the Series A Junior Participating Preferred Stock
is attached hereto as an exhibit. The foregoing description of the Series A
Junior Participating Preferred Stock is qualified in its entirety by reference
to such exhibit.
Item 7. Financial Statements and Exhibits.
Exhibit 4 Rights Agreement, dated as of June 7, 1999, between the Company
and ChaseMellon Shareholder Services, L.L.C, which includes the
form of Certificate of Designation for the Series A Junior
Participating Preferred Stock as Exhibit A, the form of Rights
Certificate as Exhibit B and the Summary of Rights to Purchase
Series A Preferred Shares as Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates will not be mailed until as
soon as practicable after the earlier of (i) the close of
business on the first date of a public announcement that a person
or group has acquired beneficial ownership of 15% or more of the
shares of Common Stock or (ii) the tenth (10th) business day (or
such later date as may be determined by action of the Board of
Directors) after a person commences, or announces its intention
to commence, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or
group of 15% or more of the shares of Common Stock.(1)
Exhibit 20(a) Press Release dated June 8, 1999
Exhibit 20(b) Form of Letter to Stockholders of Sharper Image Corporation
regarding the adoption of the Rights Plan pursuant to the Rights
Agreement.
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(1) Incorporated by reference to Amendment No. 1 to Registration
Statement No. 333-79211 on Form S-2, as filed with the Securities and Exchange
Commission on June 17, 1999.
3.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SHARPER IMAGE CORPORATION
DATE: June 21, 1999 By: /s/ TRACY Y. WAN
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Name: Tracy Y. Wan
Title: President, Chief Operating Officer
and Corporate Secretary
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EXHIBIT INDEX
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EXHIBIT
NUMBER DOCUMENT DESCRIPTION
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4 Rights Agreement, dated as of June 7, 1999, between the Company
and ChaseMellon Shareholder Services, L.L.C, which includes the
form of Certificate of Designation for the Series A Junior
Participating Preferred Stock as Exhibit A, the form of Rights
Certificate as Exhibit B and the Summary of Rights to Purchase
Series A Preferred Shares as Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates will not be mailed until as
soon as practicable after the earlier of (i) the close of
business on the first date of a public announcement that a person
or group has acquired beneficial ownership of 15% or more of the
shares of Common Stock or (ii) the tenth (10th) business day (or
such later date as may be determined by action of the Board of
Directors) after a person commences, or announces its intention
to commence, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or
group of 15% or more of the shares of Common Stock.(1)
20(a) Press Release dated June 8, 1999.
20(b) Form of Letter to Stockholders of Sharper Image Corporation
regarding the adoption of the Rights Plan pursuant to the Rights
Agreement.
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(1) Incorporated by reference to Amendment No. 1 to Registration
Statement No. 333-79211 on Form S-2, as filed with the Securities and Exchange
Commission on June 17, 1999.
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Exhibit 20(a)
PRESS RELEASE
CONTACT: Jeffrey P. Forgan, Senior Vice President and Chief Financial Officer
FOR IMMEDIATE RELEASE
SHARPER IMAGE CORPORATION
ADOPTS SHAREHOLDER RIGHTS PLAN
San Francisco, CA; June 8, 1999 -- Sharper Image Corporation
(Nasdaq: SHRP) announced today that its Board of Directors adopted a Stockholder
Rights Plan in which preferred stock purchase rights will be distributed as a
dividend at the rate of one Right for each share of Common Stock held as of the
close of business on June 22, 1999. The stockholder rights plan has become a
standard measure that has been adopted by a substantial number of public
companies.
Each Right will entitle Stockholders to buy one one-thousandth of
a share of Series A Preferred Stock of the Company at an Exercise Price of
$47.00. The Rights are designed to guard against partial tender offers and other
abusive and coercive tactics that might be used in an attempt to gain control of
the Company or to deprive Stockholders of their interest in the long-term value
of the Company. The Rights will not prevent a takeover attempt, but should
encourage anyone seeking to acquire the Company to negotiate with the Board
prior to attempting a takeover.
The Rights will be exercisable only if a person or group, other
than Richard J. Thalheimer, the Founder, Chairman and Chief Executive Officer
and a significant stockholder of the Company, his affiliates and his associates,
acquires 15% or more of the Company's Common Stock or announces a tender offer
the consummation of which would result in ownership by a person or group of 15%
or more of the Company's Common Stock. Each Right will entitle stockholders to
buy one one-thousandth of a share of a new series of junior participating
preferred stock at an exercise price of $47.00 upon certain events.
If a person or group acquires 15% or more of the Company's
outstanding Common Stock, or a holder of 15% or more of the Company's Common
Stock engages in certain self-dealing transactions or a merger transaction in
which the Company is the surviving corporation and its Common Stock remains
outstanding, then each Right not owned by such person or certain related parties
will entitle its holder to purchase, at the Right's then-current exercise price,
units of the Company's Series A Preferred Stock (or, in certain circumstances,
Company Common Stock, cash, property or other securities of the Company) having
a market value equal to twice the then-current exercise price. In addition, if,
after the Rights become exercisable, Sharper Image Corporation is acquired in a
merger or other business combination
1.
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transaction, or sells 50% or more of its assets or earnings power, each Right
will entitle its holder to purchase, at the Right's then-current price, a number
of the acquiring company's common shares having a market value at the time of
twice the Right's exercise price.
At any time on or prior to the close of business on the first
date of a public announcement that a person or group has acquired beneficial
ownership of 15% or more of the Company's Common Stock, the Rights are
redeemable for $0.001 per Right at the option of the Board of Directors.
The dividend distribution will be made on June 22, 1999 payable
to stockholders of record on that date. The Rights will expire on June 22, 2009.
The initial distribution of Rights is not taxable to stockholders.
The Sharper Image is a specialty retailer that is nationally and
internationally renowned as a leading source of new, innovative, high-quality
products that make life easier and more enjoyable. A significant and growing
proportion of sales are of proprietary products created by the company's product
development group, Sharper Image Design. The company operates 89 stores
throughout the United States and mails millions of its award-winning catalogs
each month. Additionally, the company's products may be purchased online via its
Internet store at sharperimage.com. The company also has launched an auction
site, where consumers can place a "bid to win" Sharper Image products. The
auction site can be accessed from the home page of the company's website,
sharperimage.com.
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EXHIBIT 20(b)
[Letterhead of Sharper Image Corporation]
June 22, 1999
To Our Stockholders:
On June 7, 1999, your Board of Directors declared a dividend
distribution of Preferred Stock Purchase Rights (the "Rights"). The Rights were
issued on June 22, 1999 to stockholders of record on that date and will expire
in ten years. This letter and its attachment summarize certain key features of
the Stockholder Rights Plan and the Board of Directors' reasons for adopting it.
These documents are being provided for your information only and no action is
required on your part.
The Rights contain provisions that should, along with certain
charter and by-law provisions and certain provisions of the Delaware General
Corporation Law, help protect the stockholders of Sharper Image Corporation (the
"Company") in the event of an unsolicited attempt to acquire the Company,
including a gradual accumulation of shares in the open market, a partial or
two-tier tender offer that does not treat all stockholders equally, a
squeeze-out merger and other coercive or unfair takeover tactics. These tactics
can unfairly pressure stockholders, squeeze them out of their investment without
giving them any real choice and deprive them of the full value of their shares,
and the Board of Directors does not believe they are in the best interests of
the Company's stockholders.
Over 1,700 companies, including approximately half the Fortune
500 companies and two-thirds of the Fortune 200 companies, have issued similar
rights to protect their stockholders against these tactics. We consider the
Rights to be very valuable in protecting both your right to retain your equity
investment in the Company and the full value of that investment, while not
foreclosing a fair acquisition bid for the Company.
Your Board of Directors was aware when it acted that some people
have advanced arguments that securities of the sort we are issuing deter
legitimate acquisition proposals. We carefully considered these views and
concluded that the arguments are speculative and do not justify leaving
stockholders without any protection during the next year. Your Board of
Directors believes that these Rights represent a sound and reasonable means of
addressing the complex issues of corporate policy.
The Rights are not intended to prevent an acquisition of the
Company and will not do so. However, they should deter any attempt to acquire
the Company in a manner or on terms not approved by the Board of Directors. The
Rights may be redeemed by the Board of Directors at a price of $0.001 per Right
prior to the first public announcement of the accumulation, through
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To Our Stockholders Page 2
June 22, 1999
open-market purchases, a tender offer or otherwise, of 15% or more of the
combined number of the Company's shares of Common Stock by a single acquiror or
group, and thereafter in certain circumstances. Thus, the Rights should not
interfere with any merger or business combination approved by the Board of
Directors prior to that time.
Issuance of the Rights does not in any way weaken the financial
strength of the Company or interfere with its business plans. The issuance of
the Rights has no dilutive effect, will not affect reported earnings per share
and will not change the way in which you can presently trade the Company's
shares.
The Rights will expire June 22, 2009, which should give the
Company adequate time to determine whether any further protection is required.
The Board of Directors has been advised by legal counsel for the
Company that the distribution of the Rights will not be taxable to you or to the
Company. However, stockholders may recognize taxable income upon the occurrence
of certain subsequent taxable events.
In declaring the Rights dividend, we have expressed our
confidence in the future of the Company and our determination that you, our
stockholders, be given every opportunity to participate in that future.
On behalf of
The Sharper Image
/s/ TRACY Y. WAN
Tracy Y. Wan
President,
Chief Operating Officer and
Corporate Secretary
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SHARPER IMAGE CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
On June 7, 1999 the Board of Directors of Sharper Image
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock (the "Common
Stock"), par value $0.01 per share, of the Company. The dividend is payable on
June 22, 1999 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-thousandth of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $0.01 per share (the "Series A Preferred Stock"), of the
Company at a price of $47.00 per Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of June 7, 1999 (the "Rights Agreement") between the Company
and ChaseMellon Shareholder Services, LLC, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the
first date of a public announcement that a person or group of affiliated or
associated persons, other than Richard J. Thalheimer, the Founder, Chairman and
Chief Executive Officer and a significant stockholder of the Company and his
affiliates and associates (an "Acquiring Person") have acquired beneficial
ownership of 15% or more of the outstanding Common Stock or (ii) 10 business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of such outstanding Common Stock
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Stock certificates
outstanding as of the Record Date, by such Common Stock certificate with a copy
of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the Close of Business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on June 6, 2009 (the "Final
Expiration Date"), unless the Final Expiration
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Date is extended or unless the Rights are earlier redeemed or exchanged by the
Company, in each case as described below.
The Purchase Price payable, and the number of Units of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Units of Preferred Stock
of certain rights or warrants to subscribe for or purchase Units of Preferred
Stock at a price, or securities convertible into Units of Preferred Stock with a
conversion price, less than the then current market price of the Units of
Preferred Stock or (iii) upon the distribution to holders of the Units of
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Units of Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of Units of
Preferred Stock issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Units of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each Unit of Preferred Stock will be entitled to a
dividend equal to any dividend declared per share of Common Stock. In the event
of liquidation, each Unit of Preferred Stock will be entitled to a payment equal
to any payment made per share of Common Stock. Each Unit of Preferred Stock will
have one vote, voting together with the Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which shares of Common Stock
are exchanged, each Unit of Preferred Stock will be entitled to receive an
amount equal to the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting
rights, the value of each Unit of Preferred Stock purchasable upon exercise of
the Rights should approximate the value of one share of Common Stock.
In the event that, after the Rights become exercisable, the
Company is acquired in a merger or other business combination transaction with
an Acquiring Person or an affiliate thereof, or 50% or more of its consolidated
assets or earning power are sold to an Acquiring Person or an affiliate thereof,
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 of the Rights, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the exercise price of the Rights.
In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common Stock, proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive
2
<PAGE> 5
upon exercise that number of shares of Common Stock or Units of Preferred Stock
(or cash, other securities or property) having a market value of two times the
exercise price of the Rights.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding shares of Common Stock and prior to the acquisition by such person
or group of 50% or more of the outstanding Common Stock, the Board of Directors
of the Company may exchange all or part of the Rights (other than Rights owned
by such person or group which have become void) for Units of Preferred Stock at
an exchange ratio (subject to adjustment) which shall equal, subject to
adjustment to reflect stock splits, stock dividends and similar transactions
occurring after the date hereof, that number obtained by dividing the Purchase
Price by the then current per share market price per Unit of Preferred Stock on
the earlier of (i) the date on which any Person becomes an Acquiring Person and
(ii) the date on which a tender or exchange offer is announced by any Person, if
upon consummation thereof such Person would be the Beneficial Owner of 15% or
more of the shares of Company Common Stock then outstanding.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Units of Preferred Stock on the
last trading day prior to the date of exercise.
At any time before the close of business on the date a person or
group of affiliated or associated persons acquire beneficial ownership of 15% or
more of the outstanding Common Stock or within ten (10) business days after the
announcement of a tender or exchange offer (unless the Board of Directors extend
such ten-day period), the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (the
"Redemption Price"). The redemption of the rights may be made effective at such
time on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price. The Rights are also
redeemable under other circumstances as specified in the Agreement.
The terms of the Rights may be amended by the Board of Directors
of the Company without the consent of the holders of the Rights except that from
and after a Distribution Date no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the
3
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Company's Board of Directors, except pursuant to an offer conditioned on a
substantial number of rights being acquired. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
because the Rights may be redeemed by the Company at the Redemption Price prior
to the occurrence of a Distribution Date.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
4
