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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
WHITEHALL JEWELLERS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-1433610
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(State of Incorporation (I.R.S. Employer
or Organization) Identification No.)
155 N. Wacker Dr., Suite 500, Chicago, Illinois 60606
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(Address of Principal Executives Offices) (Zip Code)
If this Form relates to the registration of a class of
securities pursuant to Section 12(b) of the Exchange Act and is effective upon
filing pursuant to General Instruction A.(c), check the following box. [ ]
If this Form relates to the registration of a class of
securities pursuant to Section 12(g) of the Exchange Act and is effective
pursuant to General Instruction A.(d), check the following box. [ ]
Securities Act registration statement file to which this form
relates N/A (if applicable).
Securities to be registered pursuant to Section 12(b) of the
Act:
<TABLE>
<CAPTION>
Title of Each Class Name Of Each Exchange On Which
To Be So Registered Each Class Is To Be Registered
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<S> <C> <C>
N/A N/A
</TABLE>
Securities to be registered pursuant to Section 12(g) of the
Act:
Common Stock, $.001 par value,
including associated Preferred Stock Purchase Rights
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(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered
This amendment to the Company's Registration Statement on Form
8-A is being filed for the purpose of deleting therefrom the incorporation by
reference to the Company's Registration Statement on Form S-1 (file no.
333-1794) with respect to the description of the rights to purchase shares of
Series A Junior Participating Preferred Stock of the Company. The following
amends and restates the summary of such rights to purchase shares of Series A
Junior Participating Preferred Stock of the Company. In all other respects, the
Description of the Registrant's Securities previously incorporated by reference
in the Company's Registration Statement on Form 8-A remains in effect.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On April 1, 1996, the Board of Directors (the "Board") of
Whitehall Jewellers, Inc., a Delaware corporation (the "Company"), declared a
dividend of one preferred stock purchase right (individually a "Right" and
collectively the "Rights") for each share of Common Stock, $.001 par value (the
"Common Stock"), of the Company and a dividend of 35.42083833 Rights for each
Share of Class B Common Stock, $1.00 par value (the "Class B Common Stock"), of
the Company. The dividend was paid to holders of record of the Common Stock and
Class B Common Stock on May 2, 1996, the effective date of the Company's initial
public offering registration statement, file no. 333-1794 (the "Record Date")
Each Right entitles the holder thereof (except as described below) to purchase
from the Company one one-hundredth of a share of the Series A Junior
Participating Preferred Stock, $.001 par value (the "Preferred Shares"), of the
Company at a price (the "Exercise Price") of $52.00 per one one-hundredth of a
Preferred Share, subject to adjustment. The terms of the Rights are set forth in
the Amended and Restated Stockholders Rights Agreement dated as of April 28,
1999, as it may be amended from time to time (the "Rights Agreement") between
the Company and BankBoston, N.A. as Rights Agent (the "Rights Agent").
Capitalized terms not defined herein have the respective meanings specified in
the Rights Agreement.
DISTRIBUTION DATE; TRANSFER OF RIGHTS
Initially, the Rights associated with the Common Stock and
Class B Common Stock outstanding as of the Record Date will be evidenced solely
by the stock certificates for such Common Stock and Class B Common Stock. The
Rights will separate from the Common Stock upon the earliest to occur of (i) 10
Business Days after the first public announcement that any Person (other than an
Exempt Person (as hereinafter defined)) has become an
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Acquiring Person (as hereinafter defined) and (ii) 10 Business Days (or such
other Business Day as may be determined by action of the Board prior to the time
that any Person shall become an Acquiring Person (as hereinafter defined) after
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of its intention to commence, a tender or exchange offer if,
upon the consummation thereof, such Person would be the Beneficial Owner of 15%
or more of the outstanding shares of Common Stock (the earliest of the dates
specified in clauses (i) and (ii) being hereinafter called the "Distribution
Date"). After the Distribution Date, the Rights will be evidenced solely by
separate certificates and will trade independently from the Common Stock.
An "Acquiring Person" is any Person who or which, together
with its Affiliates and Associates, has acquired 15% or more of the shares of
Common Stock then outstanding, but does not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan or other compensation
program or arrangement of the Company or of any such Subsidiary, (iv) any Person
holding shares of Common Stock for or pursuant to the terms of any such plan,
program or arrangement, (v) Hugh M. Patinkin, John R. Desjardins, Matthew M.
Patinkin, and each Affiliate and Associate thereof and (vi) Frontenac Venture V
Limited Partnership, and each Affiliate and Associate thereof (together
"Frontenac"), provided that, Frontenac shall be considered an Acquiring Person
if Frontenac shall be the Beneficial Owner of more than 30% of the shares of
Common Stock of the Company then outstanding prior to the consummation of the
Offering plus 2% (the Persons specified in clauses (i) through (vi) being herein
collectively called "Exempt Persons"). Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," has become so inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person," then
such Person shall not be deemed to be an "Acquiring Person."
A "Restricted Person" is an Acquiring Person or any Affiliate or
Associate thereof.
The Rights Agreement provides that, until the Distribution
Date (or the earlier redemption or expiration of the Rights), the Rights may be
transferred only with the associated shares of Common Stock and Class B Common
Stock. Until the Distribution Date (or the earlier redemption or expiration of
the Rights), stock certificates for Common Stock and Class B Common Stock issued
after the Record Date, either upon transfer of outstanding shares or original
issuance of additional shares of Common Stock or Class B Common Stock, will
contain a legend incorporating the Rights Agreement by reference. Until the
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Distribution Date (or the earlier redemption or expiration of the Rights), the
surrender for transfer of any stock certificate for shares of Common Stock or
Class B Common Stock, with or without such legend and whether or not a copy of
this Summary of Rights is attached thereto, will also constitute the transfer of
the Rights associated with the shares of Common Stock or Class B Common Stock
represented by such stock certificate.
As soon as practicable after the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to the
holders of record of the Common Stock and Class B Common Stock as of the Close
of Business on the Distribution Date, which thereafter will constitute the sole
evidence of the Rights. Each share of Common Stock issued by the Company after
the Distribution Date and prior to the earlier redemption or expiration of the
Rights, including any shares of Common Stock issued by reason of the exercise of
any option, warrant, right (other than the Rights) or conversion or exchange
privilege (however evidenced) issued by the Company prior to the Distribution
Date, will be accompanied by a Right (unless the Board expressly provides to the
contrary at the time of issuance of any such option, warrant, right or
privilege), and Rights Certificates evidencing such Rights will be issued at the
same time as the stock certificates for the associated shares of Common Stock.
The Rights are not exercisable until the Distribution Date.
Moreover, the time when the Rights may be exercised is restricted as described
in the next paragraph. The Rights will expire on the tenth anniversary of the
Record Date (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.
EXERCISE OF RIGHTS UNDER CERTAIN CIRCUMSTANCES
In the event that any Person becomes an Acquiring Person,
proper provision will be made so that the registered holder of each Right (other
than Rights Beneficially Owned as described in the next sentence) will
thereafter have the right to receive, upon exercise thereof, the number of
shares of Common Stock which, at the time of the occurrence of such event, will
have a market value equal to two times the then current Exercise Price. After
the first occurrence of either of the events described in the preceding
sentence, all Rights which are, or (under certain circumstances specified in the
Rights Agreement) were, Beneficially Owned by a Restricted Person or specified
transferees therefrom will be or become void. Under no circumstances may a Right
be exercised after the occurrence of either such event unless the Company's
right to redeem the Rights (as described below) has expired.
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If, on or after the date on which any Person has become an
Acquiring Person, any of the following transactions occur: (i) the Company
merges into or consolidates with an Interested Stockholder (as hereinafter
defined) or, unless all holders of the Company's outstanding shares of Common
Stock are treated the same, another Person (with limited designated exceptions);
(ii) an Interested Stockholder or, unless all holders of the Company's
outstanding shares of Common Stock are treated the same, another Person (with
limited designated exceptions) merges into the Company and either (A) all or
part of the outstanding shares of Common Stock of the Company are converted into
capital stock or other securities of any other Person (or the Company), cash
and/or other property or (B) such shares remain outstanding, unconverted and
unchanged; or (iii) the Company sells or transfers 50% or more of its
consolidated assets or earning power to an Interested Stockholder (as
hereinafter defined) or, unless all holders of the Company's outstanding shares
of Common Stock are treated the same, another Person (with limited designated
exceptions); proper provision will be made so that the registered holder of each
Right (other than Rights which have become void) will thereafter have the right
(the "Flip-Over Right") to receive, upon exercise thereof, the number of common
shares of the acquiror (or of another Person affiliated therewith) which, at the
time of consummation of such transaction, will have a market value equal to two
times the then current Exercise Price. An "Interested Stockholder" is any
Restricted Person or any Affiliate or Associate of any other Person in which
such Restricted Person has an interest, or any Person acting, directly or
indirectly, on behalf of or in concert with any such Restricted Person.
ADJUSTMENTS TO EXERCISE PRICE AND STOCK PURCHASABLE UPON EXERCISE
The Exercise Price payable, the number and kind of shares of
capital stock issuable upon exercise of the Rights and the number of Rights
outstanding are subject to adjustment from time to time to prevent dilution (i)
in the event of a dividend payable in Preferred Shares on, or a subdivision,
combination or reclassification of, the Preferred Shares, (ii) upon the grant to
the holders of the Preferred Shares of certain options, warrants or rights to
subscribe for or purchase Preferred Shares at a price, or securities convertible
into or exchangeable for Preferred Shares with a conversion or exchange price,
less than the then Fair Market Value of the Preferred Shares or (iii) upon the
distribution to the holders of the Preferred Shares of cash, securities,
evidences of indebtedness or other property (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or options, warrants or
rights (other than those referred to in clause (ii) above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of
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each Right are also subject to adjustment in the event of a dividend on the
Common Stock payable in shares of Common Stock or a subdivision, combination or
reclassification of the Common Stock occurring, in any such case, prior to the
Distribution Date.
With certain specified exceptions, no adjustment in the
Exercise Price will be made until the cumulative adjustments required equal at
least 1% of the Exercise Price. The Company is not required to issue fractional
Preferred Shares (other than fractions which are multiples of one one-hundredth
of a Preferred Share), but in lieu thereof the Company would be required to make
a cash payment based on the Fair Market Value of the Preferred Shares on the
trading day immediately preceding the date of exercise.
TERMS OF PREFERRED SHARES
The Preferred Shares receivable upon exercise of the Rights
will not be redeemable. Each Preferred Share will entitle the holder thereof to
receive a preferential quarterly dividend equal to 100 times the aggregate per
share amount of all cash dividends, plus 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends and other distributions
(other than in shares of Common Stock), declared on the Common Stock during such
quarter, adjusted to give effect to any dividend on the Common Stock payable in
shares of Common Stock or any subdivision, combination or reclassification of
the Common Stock (a "Dilution Event"). Each Preferred Share will entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Company, voting together as a single class with the holders
of the Common Stock and the holders of any other class of capital stock having
general voting rights, adjusted to give effect to any Dilution Event. In the
event of liquidation of the Company, the holder of each Preferred Share will be
entitled to receive a preferential liquidation payment equal to 100 times the
aggregate per share amount to be distributed to the holders of the Common Stock,
adjusted to give effect to any Dilution Event, plus an amount equal to accrued
and unpaid dividends and distributions on such Preferred Share, whether or not
declared, to the date of such payment. In the event of any merger, consolidation
or other transaction in which the outstanding shares of Common Stock of the
Company are exchanged for or converted into other capital stock, securities,
cash and/or other property, each Preferred Share will be similarly exchanged or
converted into 100 times the per share amount applicable to the Common Stock,
adjusted to give effect to any Dilution Event.
Because of the nature of the dividend, voting, liquidation and
other rights accorded to each Preferred Share, the value of the one
one-hundredth of a Preferred Share receivable upon the exercise of each Right
should approximate the value of one share of Common Stock.
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REDEMPTION OF RIGHTS
At any time prior to the earliest of (i) 10 Business Days
after the first public announcement that any Person (other than an Exempt
Person) has become an Acquiring Person, (ii) the occurrence of any transaction
which permits the exercise of the Flip-Over Right and (iii) the Final Expiration
Date, the Board may redeem the Rights in whole, but not in part, at the
redemption price of $.01 per Right, adjusted to give effect to any Dilution
Event (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, in
its sole discretion, may establish. After the redemption period has expired, the
Company's right of redemption may be reinstated, under the circumstances
specified in the Rights Agreement, if either (i) the Person who became an
Acquiring Person shall reduce, in one or a series of related transactions not
involving the Company or any Subsidiary or the occurrence of any transaction
which permits the exercise of the Flip-Over Right, its Beneficial Ownership of
the outstanding shares of Common Stock to less than 10% of such outstanding
shares or (ii) in connection with any transaction which permits the exercise of
the Flip-Over Right, which does not involve an Interested Stockholder and in
which all holders of the Common Stock are treated the same. Immediately after
action by the Board directing the redemption of the Rights, the option to
exercise the Rights will terminate, and thereafter each registered holder of the
Rights will only be entitled to receive the Redemption Price therefor.
EXCHANGE OF RIGHTS
At any time after any Person has become an Acquiring Person
and prior to the time that any Person (other than an Exempt Person), together
with its Affiliates and Associates, has become the Beneficial Owner of 50% or
more of the outstanding shares of Common Stock, the Board may direct that all or
any part of the outstanding Rights (other than Rights which have become void) be
exchanged for shares of Common Stock at the exchange rate of one share of Common
Stock (or one one-hundredth of a Preferred Share or of another share of capital
stock of the Company having equivalent rights, preferences and privileges) per
Right, adjusted to give effect to any Dilution Event.
AMENDMENT OF THE RIGHTS AND THE RIGHTS AGREEMENT
Prior to the Distribution Date, the terms of the Rights and
the Rights Agreement may be supplemented or amended by the
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Board in any manner. From and after the Distribution Date, the Rights may be
supplemented or amended by the Board, without the approval of the holders of the
Rights, in certain respects which do not adversely affect, as determined by the
Board, the interests of such holders; provided, however, that the Rights
Agreement cannot be amended to lengthen (i) any time period unless (A) such
lengthening is approved by at least a majority of the Disinterested Directors
and (B) such lengthening is for the benefit of the holders of the Rights or (ii)
any time period relating to when the Rights may be redeemed if at such time the
Rights are not then redeemable.
MISCELLANEOUS
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.
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.
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Item 2. Exhibits
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Exhibit No. Description
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1. The Registrant's Restated Certificate of Incorporation, as
amended, is hereby incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K filed February 3, 1999, file
no. 0-028176.
2. Amended and Restated Stockholders Rights Agreement dated as of
April 28, 1999 between the Registrant and BankBoston, N.A. (filed
herewith).
</TABLE>
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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 registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 28, 1999
WHITEHALL JEWELLERS, INC.
By: /s/ John R. Desjardins
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John R. Desjardins
Executive Vice President,
Finance & Administration
and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
1. The Registrant's Restated Certificate of Incorporation, as
amended, is hereby incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K filed February 3, 1999, file
no. 0-028176.
2. Amended and Restated Stockholders Rights Agreement dated as
of April 28, 1999 between the Registrant and BankBoston, N.A.
(filed herewith).
</TABLE>
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EXHIBIT 2
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AMENDED AND RESTATED
STOCKHOLDERS RIGHTS AGREEMENT
DATED AS OF APRIL 28, 1999
BETWEEN
WHITEHALL JEWELLERS, INC.
AND
BANKBOSTON, N.A.
AS RIGHTS AGENT
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TABLE OF CONTENTS
<TABLE>
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PAGE
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Section 1. Certain Definitions...............................................................4
Section 2. Appointment of Rights Agent.......................................................9
Section 3. Issuance of Rights Certificates...................................................9
Section 4. Form of Rights Certificates......................................................12
Section 5. Countersignature and Registration................................................13
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates...................14
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights....................15
Section 8. Cancellation and Destruction of Rights Certificates..............................17
Section 9. Reservation and Availability of Preferred Shares.................................17
Section 10. Record Date of Preferred Share Ownership........................................19
Section 11. Adjustment of Exercise Price, Number and Kind of Shares and Number of
Rights.....................................................................20
Section 12. Certificate of Adjusted Exercise Price or Number of Shares......................28
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............28
Section 14. Fractional Rights and Fractional Shares.........................................32
Section 15. Rights of Action................................................................33
Section 16. Agreements of Holders of Rights.................................................33
Section 17. Rights Certificate Holder Not Deemed a Stockholder..............................34
Section 18. Concerning the Rights Agent.....................................................34
Section 19. Merger or Consolidation of the Rights Agent.....................................35
Section 20. Duties of the Rights Agent......................................................36
Section 21. Resignation or Removal of the Rights Agent......................................38
Section 22. Issuance of New Rights Certificates.............................................39
Section 23. Redemption......................................................................39
Section 24. Exchange........................................................................41
Section 25. Notice to Holders of Rights Certificates of Certain Events......................43
Section 26. Other Notices...................................................................44
Section 27. Supplements and Amendments......................................................45
Section 28. Successors......................................................................45
Section 29. Certain Determinations and Actions by the Board.................................46
Section 30. Benefits of this Agreement......................................................46
Section 31. Severability....................................................................46
Section 32. Governing Law...................................................................47
Section 33. Counterparts....................................................................47
Section 34. Descriptive Headings............................................................47
Exhibit A - Form of Certificate of Designations of
Series A Junior Participating Preferred
Stock (previously filed).............................................. A-1
Exhibit B - Form of Rights Certificate............................................ B-1
Exhibit C - Summary of Rights to Purchase Shares of
Series A Junior Participating Preferred
Stock................................................................. C-1
</TABLE>
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AMENDED AND RESTATED
STOCKHOLDERS RIGHTS AGREEMENT
Amended and Restated Stockholders Rights Agreement dated as of
April 28, 1999 (this "Agreement") between Whitehall Jewellers, Inc., a Delaware
corporation (f/k/a Marks Bros. Jewelers, Inc.) (the "Company") and BankBoston,
N.A., a national banking association (f/k/a The First National Bank of Boston)
(the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company desires to
provide all stockholders of the Company with the opportunity to benefit from the
long-term prospects and value of the Company and to ensure that all such
stockholders receive fair and equal treatment in the event of any proposed
takeover of the Company;
WHEREAS, on April 1, 1996, the Board of Directors of the
Company authorized and declared a dividend of one preferred stock purchase right
(individually a "Right" and collectively the "Rights") for each share of Common
Stock (as hereinafter defined) of the Company and a dividend of 35.42083833
Rights for each share of Class B Common Stock, $1.00 par value per share (the
"Class B Common Stock"), of the Company, in each case outstanding at the Close
of Business on May 2, 1996, the effective date of the Company's initial public
offering registration statement, file no. 333-1794 (the "Record Date"), each
Right representing the right to purchase one one-hundredth of a Preferred Share
(as hereinafter defined) upon the terms and subject to the conditions herein
after set forth, and contemplates that one Right will be issued with respect to
each share of Common Stock and 35.42083833 Rights will be issued with respect to
each share of Class B Common Stock, in each case which shall become outstanding
after the Record Date and prior to the earlier of the Redemption Date and the
Final Expiration Date (as such terms are hereinafter defined), including any
shares of Common Stock issued by reason of the exercise of any option, warrant,
right (other than the Rights) or conversion or exchange privilege contained in
any option, warrant, right (other than the Rights) or convertible or
exchangeable security issued by the Company prior to the Distribution Date,
unless the Board (as hereinafter defined) shall expressly provide to the
contrary at the time of issuance of any such option, warrant, right or
convertible or exchangeable security;
WHEREAS, the Company and the Rights Agent entered into a
Stockholders Rights Agreement (the "Original Agreement"), dated as of May 1,
1996, which, among other things, governs the terms and conditions under which
the Rights are exercisable by the holders of Common Stock and Class B Common
Stock of the Company; and
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WHEREAS, pursuant to Section 27 of the Original Agreement, the
Board of Directors of the Company desires to amend and restate the Original
Agreement to, among other things, conform such Original Agreement to certain
changes in law.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For all purposes of this
Agreement, unless the context otherwise requires, the following terms shall have
the respective meanings set forth below:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan or other compensation program or
arrangement of the Company or of any such Subsidiary, (iv) any Person holding
such shares of Common Stock for or pursuant to the terms of any such plan,
program or arrangement, (v) Hugh M. Patinkin, John R. Desjardins, Matthew M.
Patinkin, and each Affiliate and Associate thereof and (vi) Frontenac Venture V
Limited Partnership, and each Affiliate and Associate thereof (together
"Frontenac"), provided that, Frontenac shall be considered an Acquiring Person
if Frontenac shall be the Beneficial Owner of more than 30% of the shares of
Common Stock of the Company then outstanding prior to the consummation of the
Offering plus 2% (the Persons specified in clauses (i) through (vi) being
hereinafter collectively called "Exempt Persons"). Notwithstanding the preceding
sentence, no Person shall become an "Acquiring Person" as the result of an
acquisition by the Company of shares of its Common Stock which, by reason of
reducing the number of its then outstanding shares of Common Stock, increases
the percentage of its then outstanding shares of Common Stock Beneficially Owned
by such Person to 15% or more, or, in the case of Frontenac, increases the
percentage of its then outstanding shares of Common Stock Beneficially Owned by
Frontenac to the applicable percentage (as provided in (vi) above); provided,
however, that if such Person shall, after such purchase 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." Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person," as defined pursuant to
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<PAGE> 5
the foregoing provisions of this paragraph (a), then such Person shall not be
deemed to be an "Acquiring Person" for any purpose of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2, as in effect on the date of this
Agreement, under the Exchange Act; provided, however, that no director or
officer of the Company shall be deemed an Affiliate or Associate of any other
director or officer of the Company solely as a result of his or her being a
director or officer of the Company.
(c) "Beneficial Owner" (including the terms "Beneficially Own"
and "Beneficial Ownership"), when used with respect to any Person, shall be
deemed to include any securities which:
(i) such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (determined as
provided in Rule 13d-3, as in effect on the date of this Agreement,
under the Exchange Act);
(ii) 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 only after the passage of time or
upon the satisfaction of any conditions, or both) pursuant to
any written or oral agreement, arrangement or understanding
(other than customary agreements with and among underwriters
and selling group members with respect to a bona fide public
offering of securities), upon the exercise of any options,
warrants, rights (other than the Rights) or conversion or
exchange privileges or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own: (I) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange or (II)
securities issuable upon exercise of the Rights at any time
prior to the Distribution Date; or
(B) the right to vote pursuant to any written or oral
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security otherwise subject to this
item (B) if such agreement, arrangement or understanding to
vote
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<PAGE> 6
(I) arises solely from a revocable proxy or consent 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 under the Exchange Act and (II) is not also then
reportable by such Person on Schedule 13D (or any comparable
or successor report then in effect) under the Exchange Act; or
(C) the right to dispose of pursuant to any written
or oral agreement, arrangement or understanding (other than
customary agreements with and among underwriters and selling
group members with respect to a bona fide public offering of
securities); or
(iii) are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any written or oral agreement, arrangement or
understanding (other than customary agreements with and among
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to item (B) of
subparagraph (ii) of the first paragraph of this definition) or
disposing of any securities of the Company.
Notwithstanding the first paragraph of this definition, no
director or officer of the Company shall be deemed to be the "Beneficial Owner"
of, or to "Beneficially Own," shares of Common Stock or other securities of the
Company beneficially owned by any other director or officer of the Company
solely as a result of his or her being a director or officer of the Company.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(f) "Certificate of Designations" shall mean the Certificate
of Designations for the Preferred Shares previously filed with the Secretary of
State of the State of Delaware on May 2, 1996, in substantially the form
attached hereto as Exhibit A.
(g) "Class B Common Stock" shall have the meaning set forth in
the second recital clause of this Agreement.
(h) "Close of Business" on any given date shall mean 5:00
P.M., Eastern time, on such date or, if such date is not a Business Day, then
5:00 P.M., Eastern time, on the next succeeding Business Day.
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(i) "Common Stock," when used with reference to the Company,
shall mean the Common Stock, $.001 par value, of the Company. "Common Stock,"
when used with reference to any Person other than the Company, shall mean the
capital stock with the greatest voting power (or the other equity securities or
equity interests having the power to control or direct management) of such
Person or, if such Person is a Subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(a).
(k) "Equivalent Preferred Shares" shall have the meaning set
forth in Section 11(b).
(l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as in effect on the date of this Agreement.
(m) "Exchange Rate" shall have the meaning set forth in
Section 24(a).
(n) "Exempt Persons" shall have the meaning set forth in the
definition of "Acquiring Person."
(o) "Exercise Price" shall have the meaning set forth in
Section 7(b).
(p) "Fair Market Value" shall have the meaning and be
determined as set forth in Section 11(d).
(q) "Final Expiration Date" shall have the meaning set forth
in Section 7(a).
(r) "Interested Stockholder" shall mean any Restricted Person
or any Affiliate or Associate of any other Person in which such Restricted
Person has an interest, or any Person acting, directly or indirectly, on behalf
of or in concert with any such Restricted Person.
(s) "NASDAQ" shall have the meaning set forth in Section 9(c).
(t) "Original Agreement" shall have the meaning set forth in
the third recital clause of this Agreement.
(u) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of any of the foregoing.
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(v) "Preferred Shares" shall mean the Series A Junior
Participating Preferred Stock of the Preferred Stock, which series shall have
the powers, preferences and other rights set forth in the Certificate of
Designations.
(w) "Preferred Stock," when used with reference to the
Company, shall mean the Preferred Stock, $.001 par value, of the Company.
(x) "Principal Party" shall have the meaning set forth in
Section 13(e).
(y) "Record Date" shall have the meaning set forth in the
second recital clause of this Agreement.
(z) "Redemption Date" shall have the meaning set forth in
Section 7(a).
(aa) "Redemption Price" shall have the meaning set forth in
Section 23(a).
(bb) "Restricted Person" shall mean an Acquiring Person or any
Affiliate or Associate of an Acquiring Person.
(cc) "Rights" shall have the meaning set forth in the second
recital clause of this Agreement.
(dd) "Rights Certificates" shall mean the certificates
evidencing the Rights after the Distribution Date.
(ee) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii).
(ff) "Section 13 Event" shall mean any transaction described
in Section 13(a).
(gg) "Securities Act" shall mean the Securities Act of 1933,
as amended from time to time.
(hh) "Security" shall have the meaning set forth in Section
11(d).
(ii) "Share Acquisition Date" shall mean the first date on
which there shall be a public announcement (which shall include, without
limitation, any press release or publicly available filing with the Securities
and Exchange Commission or any other federal or state governmental authority or
agency) by the Company or an Acquiring Person that an Acquiring Person has
become such.
(jj) "Stock" shall have the meaning set forth in Section
11(d).
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<PAGE> 9
(kk) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power or the other equity
securities or equity interests having the power to control or direct management)
is owned, directly or indirectly, by such Person.
(ll) "Summary of Rights" shall mean the Summary of Rights to
Purchase shares of Series A Junior Participating Preferred Stock in
substantially the form attached hereto as Exhibit C.
(mm) "Trading Day" shall have the meaning set forth in Section
11(d)(i).
(nn) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
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 (which holders, as provided in Section 3, shall, prior to the
Distribution Date, also be the holders of the Common Stock and the Class B
Common Stock of the Company) in accordance with the terms and conditions of this
Agreement. 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' written notice to the Rights Agent. In the event
the Company appoints one or more Co-Rights Agents, the respective obligations
and duties of the Rights Agent and of any Co-Rights Agent shall be as the
Company shall specify in writing. The Rights Agent shall have no duty to
supervise, and shall not be liable for the acts or omissions of, any Co-Rights
Agent.
SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earliest of (i) the Close of Business on the
10th Business Day after the Share Acquisition Date (or, if the Share Acquisition
Date shall have occurred prior to the Record Date, the Close of Business on the
10th Business Day after the Record Date) or (ii) the Close of Business on the
10th Business Day (or, anything in Section 27 to the contrary notwithstanding,
such other Business Day as may be determined by action of the Board prior to the
occurrence of any Section 11(a)(ii) Event) after the date of the commencement by
any Person (other than an Exempt Person) of, or the first public announcement of
the intention of any Person (other than an Exempt Person) to commence, a tender
or exchange offer if, upon the consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding (the earliest of the dates specified clauses (i) and (ii) being
hereinafter called the "Distribution Date"), the Rights shall be evidenced and
be transferable only as provided in
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Section 3(b). As soon as practicable after the Distribution Date or, in the case
of any shares of Common Stock of the Company which are issued or otherwise
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date, including any shares of Common
Stock issued by reason of the exercise of any option, warrant, right (other than
the Rights) or conversion or exchange privilege contained in any option,
warrant, right (other than the Rights) or convertible or exchangeable security
issued by the Company prior to the Distribution Date, unless the Board shall
have expressly provided to the contrary at the time of issuance of any such
option, warrant, right or convertible or exchangeable security, simultaneously
with the issuance of stock certificates for such shares of Common Stock, the
Company shall prepare and execute, the Rights Agent shall countersign and the
Company shall deliver or cause to be delivered (or the Rights Agent shall, if
requested, deliver), by first-class mail, postage prepaid, to each record holder
of shares of Common Stock of the Company and Class B Common Stock as of the
Close of Business on the Distribution Date or, in the case of shares of Common
Stock issued or otherwise becoming outstanding after the Distribution Date
(unless otherwise provided with respect thereto as aforesaid), to each record
holder of the shares of Common Stock so being issued or becoming outstanding at
the time of such occurrence, at its last address shown on the registry books of
the transfer agent for the Common Stock and the Class B Common Stock of the
Company, one or more Rights Certificates evidencing one Right for each share of
Common Stock of the Company so held, issued or becoming outstanding and
35.42083833 Rights for each Share of Class B Common Stock so held. As of and
after the Distribution Date, the Rights shall be evidenced solely by the Rights
Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company shall send a copy of the Summary of Rights, by first-class mail,
postage prepaid, to each record holder of shares of Common Stock and Class B
Common Stock of the Company as of the Close of Business on the Record Date, at
its last address shown on the registry books of the transfer agent for the
Common Stock and Class B Common Stock of the Company. Until the Distribution
Date: no Rights Certificates shall be issued; each stock certificate for shares
of Common Stock and Class B Common Stock of the Company outstanding as of the
Record Date, until the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date, shall be deemed also to constitute a certificate
for the Rights associated with the shares represented thereby, together with a
copy of the Summary of Rights attached thereto; and the registered holder of
such shares shall also be the registered holder of the associated Rights. Until
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, the surrender for transfer of any such stock certificate, with
or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the shares of Common Stock
and Class B Common Stock represented thereby.
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(c) Any stock certificate for shares of Common Stock or Class
B Common Stock of the Company which shall be delivered by or on behalf of the
Company (including, without limitation, stock certificates for shares of Common
Stock which are reacquired by the Company and then transferred) after the Record
Date and prior to the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date shall have impressed, printed or written thereon, or
otherwise affixed thereto, the following legend:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Amended and Restated
Stockholders Rights Agreement dated as of April 28, 1999, as it may be
amended from time to time (the "Rights Agreement") between Whitehall
Jewellers, Inc. (the "Company") and BankBoston, N.A., as Rights Agent,
the terms, provisions and conditions of which are incorporated herein
by reference and made a part hereof. The Rights Agreement is on file at
the principal office of the Company and the principal office of such
Rights Agent, and the Company will mail to the holder of this
certificate a copy without charge after receipt of a written request
therefor. 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. The Rights (i) may be
redeemed at a redemption price (subject to adjustment) of $.01 per
Right or (ii) under certain circumstances, may be exchanged, in whole
or in part, for shares of Common Stock of the Company at an exchange
rate (subject to adjustment) of one share of Common Stock per Right,
all as set forth in the Rights Agreement. Under certain circumstances,
as set forth in the Rights Agreement, Rights Beneficially Owned by a
Restricted Person (as such terms are defined in the Rights Agreement),
or by specified transferees from a Restricted Person, shall be or
become void."
Each stock certificate containing the foregoing legend, until
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, shall be deemed also to constitute a certificate for the Rights
associated with the shares represented thereby, and the registered holder of
such shares shall also be the registered holder of the associated Rights. Until
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, the surrender for transfer of any such stock certificate shall
also constitute the transfer of the Rights associated with the shares of Common
Stock or Class B
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<PAGE> 12
Common Stock represented thereby. The omission of the foregoing legend shall not
in any manner whatsoever affect the application or interpretation of Section
7(d).
(d) In the event that the Company shall reacquire any shares
of its Common Stock or Class B Common Stock after the Record Date and prior to
the Distribution Date, the Rights associated with such shares shall be deemed
canceled and retired, the Company not being entitled to exercise any Rights
associated with shares of its Common Stock or Class B Common Stock which are no
longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (including the Form of Election to
Purchase and Certification of Status and the Form of Assignment and
Certification of Status to be set forth on the reverse side thereof) shall be in
substantially the form attached hereto as Exhibit B and may have such marks of
identification or designation and such legends, summaries or endorsements set
forth thereon as the Company may deem appropriate and are not inconsistent with
the provisions of this Agreement, or as may be required to conform to customary
practice or to comply with any applicable law or any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed. Subject to Sections 11 and 22, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
(or, in the case of Rights with respect to shares of Common Stock issued or
becoming outstanding after the Record Date, the same date as the stock
certificate evidencing such shares), shall (if the Company shall so require)
indicate the date of countersignature by the Rights Agent and shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share at the Exercise Price as shall be set forth therein, but the number of
such one one-hundredths of a Preferred Share and the Exercise Price shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights Beneficially Owned by: (i) a Restricted
Person, (ii) a transferee from a Restricted Person who becomes a transferee
after the Acquiring Person becomes such or (iii) a transferee from a Restricted
Person 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 such Acquiring Person (or any Affiliate
or Associate thereof) to holders of equity interests in such Acquiring Person
(or any such Affiliate or Associate) or to any Person with whom such Acquiring
Person (or any such Affiliate or Associate) has any continuing written or oral
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board has determined is part of a plan, arrangement or
understanding which
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has as a primary purpose or effect the avoidance of Section 7(d), and any Rights
Certificate issued pursuant to Section 6, 11 or 22 upon the transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall have deleted therefrom the second sentence of the legend on the
Form of Rights Certificate attached hereto as Exhibit B and, in lieu thereof,
shall contain the following two sentences:
"The Rights represented by this Rights Certificate are or were
Beneficially Owned by a Restricted Person (as such term is defined in
such Agreement). This Rights Certificate and the Rights represented
hereby shall be or become void under the circumstances specified in
Section 7(d) of such Agreement."
The Company shall give prompt written notice to the Rights
Agent after becoming aware of the existence and identity of any Restricted
Person. The failure to insert the foregoing sentences on any such Rights
Certificate or any defect therein shall not in any manner whatsoever affect the
application or interpretation of Section 7(d). The Company shall specify to the
Rights Agent in writing which Rights Certificates are to be so legended.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, any of its Vice Presidents
or its Treasurer, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof attested by its
Secretary or any of its Assistant Secretaries, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by an
authorized signatory of the Rights Agent and shall not be valid or obligatory
for any purpose unless so countersigned. In case any officer of the Company who
shall have executed any Rights Certificate or who shall have attested the
Company's seal thereon shall cease to be such officer of the Company before such
Rights Certificate shall have been countersigned by an authorized signatory of
the Rights Agent and issued and delivered by or on behalf of the Company, such
Rights Certificate, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by or on behalf of the Company with the same force and
effect as though the individual who executed such Rights Certificate or who
attested the Company's seal thereon had not ceased to be such officer; and any
Rights Certificate may be executed on behalf of the Company and the Company's
seal may be attested by any individual who, at the actual date of such execution
or attestation, shall be a proper officer of the Company, although at the date
of execution of this Rights Agreement such person was not such an officer.
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(b) After the Distribution Date, the Rights Agent shall keep
or cause to be kept, at its principal office, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each Rights Certificate, the date of
each Rights Certificate and (if required by the Company) the date of
countersignature by the Rights Agent.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to Sections 4(b), 7(d) and 14, at any time after
the Close of Business on the Distribution Date and prior to the Close of
Business on the earlier of the Redemption Date and the Final Expiration Date,
any Rights Certificate (other than any Rights Certificate which shall have been
exchanged pursuant to Section 24) may be transferred, split up, combined or
exchanged for one or more other Rights Certificates, entitling the registered
holder to purchase the same number of one one-hundredths of a Preferred Share
(or after a Triggering Event, the securities, cash and other property
purchasable in lieu thereof) as the Rights Certificate or Rights Certificates
surrendered entitled such registered holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange one or more Rights
Certificates shall make such request in a writing delivered to the Rights Agent,
and shall surrender the Rights Certificates to be transferred, split up,
combined or exchanged, with the Form of Assignment and Certification of Status
on the reverse side thereof duly executed, together with such signature
guarantees and other documentation as the Rights Agent may reasonably request,
at the principal office of the Rights Agent. Thereupon the Company shall prepare
and execute, the Rights Agent shall countersign and the Company shall deliver or
cause to be delivered (or the Rights Agent shall, if requested, deliver) to the
person entitled thereto one or more Rights Certificates 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 Rights Certificates and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto.
(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 Rights Certificate, and, in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them or, in the
case of mutilation, upon surrender to the Rights Agent of the mutilated Rights
Certificate, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, the Company shall
prepare and execute, the
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<PAGE> 15
Rights Agent shall countersign and the Company shall deliver or cause to be
delivered (or the Rights Agent shall, if requested, deliver) to the registered
holder thereof a new Rights Certificate of like tenor in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION
DATE OF RIGHTS.
(a) Subject to Section 7(d), the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein), in whole or in part, at any time after the
Distribution Date and prior to the earliest of (i) the Close of Business on the
tenth anniversary of the Record Date (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed as provided in Section 23 (the "Redemption
Date") and (iii) the time at which such Rights are exchanged as provided in
Section 24, upon surrender of such Rights Certificate, with the Form of Election
to Purchase and Certification of Status on the reverse side thereof duly
executed, together with such signature guarantees and other documentation as the
Rights Agent may reasonably request, to the Rights Agent at its principal
office, accompanied by payment (as provided in subsection (c) of this Section 7)
of the Exercise Price for each one one-hundredth of a Preferred Share (or after
a Triggering Event, the securities, cash and other property purchasable in lieu
thereof) as to which the surrendered Rights are then being exercised.
(b) The price (the "Exercise Price") for each one
one-hundredth of a Preferred Share purchased upon exercise of the Rights shall
initially be $52.00 shall be subject to adjustment from time to time as provided
in Sections 11 and 13 and shall be payable in lawful money of the United States
of America in accordance with subsection (c) of this Section 7.
(c) Upon receipt of a Rights Certificate representing then
exercisable Rights, with the Form of Election to Purchase and Certification of
Status on the reverse side thereof duly executed, together with such signature
guarantees and other documentation as the Rights Agent may reasonably request,
accompanied by payment of the Exercise Price for the number of one
one-hundredths of a Preferred Share (or after a Triggering Event, the
securities, cash and other property purchasable in lieu thereof) being
purchased, plus the amount of any applicable transfer tax (as determined by the
Rights Agent) required to be paid by the holder of such Rights Certificate in
accordance with Section 9, by certified or cashier's check or money order
payable to the order of the Company, the Rights Agent shall, subject to the
terms and conditions of this Agreement, thereupon promptly (i) requisition from
any transfer agent for the Preferred Shares (or, if the Rights Agent is such a
transfer agent, make available) stock certificates for the number of one
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<PAGE> 16
one-hundredths of a Preferred Share being purchased, the Company hereby
irrevocably authorizing any such transfer agent to comply with all such
requests, (ii) if the Company shall have elected to deposit the Preferred Shares
issuable upon exercise of the Rights with a depository agent, requisition from
the depository agent depository receipts for the number of one one-hundredths of
a Preferred Share being purchased (in which case stock certificates for the
Preferred Shares represented by such depository receipts shall be deposited by
the transfer agent for the Preferred Shares with the depository agent), the
Company hereby irrevocably authorizing any such depository agent to comply with
all such requests, (iii) after a Triggering Event, requisition or obtain from
the appropriate Person or Persons such securities, cash and other property as
may then be purchasable in lieu of Preferred Shares, the Company hereby
irrevocably authorizing all such requests, (iv) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of the issuance of any
fractional share in accordance with Section 14 and (v) promptly after receipt of
such stock certificates, depository receipts, securities, cash and/or other
property, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered (when appropriate) in such name or
names as may be designated by such registered holder.
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of any Section 11(a)(ii) Event,
any Rights Beneficially Owned by: (i) a Restricted Person, (ii) a transferee
from a Restricted Person who becomes a transferee after the Acquiring Person
becomes such or (iii) a transferee from a Restricted Person 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 such Acquiring Person (or any Affiliate or Associate
thereof) to holders of equity interests in such Acquiring Person (or any such
Associate or Affiliate) or to any Person with whom such Acquiring Person (or any
such Associate or Affiliate) has any continuing written or oral agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(d)
shall be or become void without any further action; and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise, from and after such first occurrence.
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(d) and Section 4(b) are complied with, but shall have no
liability to any holder of the Rights Certificates or to any other Person as a
result of the Company's failure to make any applicable finding or determination
with respect to any Restricted Person, or any transferee therefrom.
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(e) Notwithstanding subsection (a) of this Section 7, a Right
may be exercised by the holder thereof on or after the Distribution Date and
prior to the receipt of the associated Rights Certificate by notifying the
Rights Agent in writing and furnishing to the Rights Agent such information and
evidence as to such election as the Rights Agent may reasonably request;
provided, however, that the Rights Agent shall not be required to take any of
the actions specified in subsection (c) of this Section 7 until such holder
shall have fully satisfied the applicable requirements specified therein.
(f) Neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to any Rights or Rights
Certificate upon the purported exercise or transfer thereof unless the
registered holder thereof shall have (i) completed and signed the Certification
of Status following the Form of Election to Purchase or the Form of Assignment,
as the case may be, set forth on the reverse side of the Rights Certificate
surrendered for such exercise or transfer and (ii) provided such additional
evidence as to the identity of the Beneficial Owner (or former Beneficial Owner)
thereof or the Affiliates or Associates thereof as the Company shall reasonably
request.
(g) In case the registered holder of any Rights Certificate
shall exercise less than all of the Rights evidenced thereby, then, subject to
the provisions of Section 14, a new Rights Certificate evidencing the Rights
remaining unexercised shall be prepared and executed by the Company and
countersigned and delivered by the Rights Agent to the registered holder of such
surrendered Rights Certificate or to such registered holder's duly authorized
assigns.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form or, if surrendered to the Rights Agent, shall be canceled by it;
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation, and the Rights Agent shall cancel, any other Rights Certificate
purchased or reacquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company
or shall, at the written request of the Company, destroy such canceled Rights
Certificates and deliver a certificate of the destruction thereof to the
Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares,
or any authorized and issued Preferred Shares held in its treasury, the number
of Preferred Shares required to permit the exercise in full of all outstanding
Rights.
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(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares delivered
upon exercise of the Rights shall, at the time of delivery of the stock
certificates therefor in accordance with Section 7(c) (including the receipt of
payment of the Exercise Price), be duly and validly authorized and issued and
fully paid and nonassessable.
(c) The Company covenants and agrees that it will use its best
efforts to cause, from and after such time as the Rights shall become
exercisable, all Preferred Shares issued or reserved for issuance to be listed,
upon official notice of issuance, on the principal national securities exchange,
if any, on which its Common Stock is listed or, if the principal market for
Common Stock is not on any national securities exchange, to be eligible for
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any successor thereto or other comparable quotation system.
(d) The Company covenants and agrees that it will use its best
efforts to (i) file, as soon as practicable after the occurrence of any Section
11(a)(ii) Event for which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iv),
or as soon as required by law after the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (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 which at all times meets the requirements of the Securities
Act) until the earliest of (A) the date as of which the Rights are no longer
exercisable for such securities, (B) the Redemption Date and (C) the Final
Expiration Date. The Company further covenants and agrees that it will take such
action as may be appropriate under, and which will ensure compliance with, the
securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate in connection with the exercisability of the Rights. The Company may
temporarily suspend, for not more than 90 days after the applicable date
specified in the first sentence of this subsection (d), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective and to complete such securities or "blue sky" law action.
Upon such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, and the Company
shall also issue a public announcement at such time as the suspension shall no
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longer be in effect. Failure of the Company to notify the Rights Agent of any
such suspension shall not affect the effectiveness thereof. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification or exemption in such
jurisdiction shall have been effected. Until otherwise notified in writing by
the Company, the Rights Agent may assume that each purported exercise of the
Rights is permitted by this Agreement and by applicable law, and the Rights
Agent shall not be liable for acting in reliance upon such assumption.
(e) The Company covenants and agrees that, subject to Section
6, it will pay when due and payable any and all federal and state original issue
or transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights or the Rights Certificates or of any stock certificate
for Preferred Shares issued upon exercise of the 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 any Rights Certificate to a Person other than, or
the issuance of any stock certificate for Preferred Shares upon exercise of any
of the Rights represented by such Rights Certificate in a name other than, the
registered holder of such Rights Certificate or to issue or deliver any Rights
Certificate or stock certificate for Preferred Shares upon such transfer or
exercise until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender thereof) or until
it has been established to the Company's reasonable satisfaction that no such
tax is due.
(f) After a Triggering Event, the provisions of this Section 9
shall apply, to the extent applicable and appropriate, to all shares of capital
stock and other securities then purchasable upon exercise of the Rights.
SECTION 10. RECORD DATE OF PREFERRED SHARE OWNERSHIP. The
Person in whose name any stock certificate for Preferred Shares is issued upon
exercise of any of the Rights shall for all purposes be deemed to have become
the holder of record of the Preferred Shares represented thereby on, and such
stock certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered to the Rights Agent with proper
payment of the Exercise Price (and all applicable transfer taxes, if any);
provided, however, that if the date of such surrender and payment shall be a
date upon which the registry books of the transfer agent for the Preferred
Shares are closed, such Person shall be deemed to have become the record holder
of such Preferred Shares on, and such stock certificate shall be dated, the next
succeeding Business Day on which such registry books are open.
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<PAGE> 20
SECTION 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF
SHARES AND NUMBER OF RIGHTS. The Exercise Price, the number and kind of shares
of capital stock for which each Right is exercisable 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 that the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares into
a greater number of Preferred Shares, (C) combine or consolidate the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of capital stock of any class in a reclassification of the Preferred
Shares (including any such reclassification in connection with a combination or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and in Section 7(d), the Exercise
Price in effect at the Close of Business on the record date for such dividend or
at the effective time of such subdivision, combination, consolidation or
reclassification, and the number and kind of shares of capital stock issuable
upon exercise of the Rights at such date or time, shall be proportionately
adjusted so that the registered holder of each Right exercised after such date
or time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date or time and at a time when the registry books of the transfer agent for the
Preferred Shares were open, such registered holder would have been entitled to
receive by reason of such dividend, subdivision, combination, consolidation 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 capital stock of the Company issuable upon the exercise thereof.
If an event shall occur which would require an adjustment under both this
paragraph (i) and paragraph (ii) of this subsection (a), the adjustment provided
for in this paragraph (i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to such paragraph (ii).
(ii) Subject to Section 24, in the event that any Person, either
alone or together with its Affiliates and Associates, shall become an
Acquiring Person, then, in such case and promptly following such
occurrence, proper provision shall be made so that the registered
holder of each Right, except as otherwise provided in Section 7(d),
shall thereafter have the right to receive, upon exercise thereof and
payment of an amount equal to the product determined by multiplying the
then current Exercise Price by the number of one one-hundredths of a
Preferred Share for which such Right was exercisable immediately prior
to such occurrence, in accordance with this Agreement, in lieu of
Preferred Shares, the number of shares of Common Stock determined
dividing such product by 50% of the Fair Market Value (determined as
provided in subsection (d) of this Section 11) of one share of Common
Stock on the date of such occurrence.
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<PAGE> 21
(iii) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock to permit the exercise in
full of the Rights in accordance with paragraph (ii) of this subsection
(a), the Company shall take all necessary action to authorize and
reserve for issuance such number of additional shares of Common Stock
as may from time to time be required to be issued upon the exercise in
full of all outstanding Rights and, if necessary, shall use its best
efforts to obtain stockholder approval thereof. Notwithstanding the
preceding sentence, if the Board shall determine that such action is
necessary or appropriate and is not contrary to the best interests of
the holders of the Rights, the Board may cause the Company, in lieu of
issuing shares of Common Stock in accordance with such paragraph (ii),
to distribute, or if a sufficient number of shares of Common Stock
cannot be issued for such purpose in accordance with the provisions
hereof, the Company shall distribute, upon the exercise of each Right,
cash, debt securities, Preferred Shares, other shares of Preferred
Stock, other property or any combination thereof having an aggregate
Fair Market Value (determined as provided in subsection (d) of this
Section 11) equal to the Fair Market Value (as so determined) of the
number of shares of Common Stock which otherwise would have been
issuable pursuant to such paragraph (ii). Any such decision by the
Board must be made and publicly announced within 30 days after the
occurrence of any Section 11(a)(ii) Event.
(b) In the event that the Company shall fix a record date for
the making of any distribution to all registered holders of Preferred Shares of
options, warrants or rights entitling them (for a period expiring not later than
45 calendar days after such record date) to subscribe for or purchase Preferred
Shares (or shares of capital stock of any class of the Company having the same
(or more favorable) powers, preferences and rights as the Preferred Shares
("Equivalent Preferred Shares"), or securities convertible into or exchangeable
for Preferred Shares or Equivalent Preferred Shares, at a price per Preferred
Share or per Equivalent Preferred Share (or having a conversion or exchange
price per share, in the case of securities convertible into or exchangeable for
Preferred Shares or Equivalent Preferred Shares) less than the Fair Market Value
(determined as provided in subsection (d) of this Section 11) of one Preferred
Share 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 Preferred Shares outstanding on such record date, plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or Equivalent Preferred Shares so to be
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<PAGE> 22
offered (and/or the aggregate initial conversion or exchange price, in the case
of convertible or exchangeable securities so to be offered) would purchase at
such Fair Market Value, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date, plus the total number of
Preferred Shares and/or Equivalent Preferred Shares so to be offered (and/or
into or for which the convertible or exchangeable securities so to be offered
are initially convertible or exchangeable); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon the exercise thereof. In case all or part of such subscription price may be
paid in a form other than cash, the value of such non-cash consideration shall
be its Fair Market Value (determined as provided in such subsection (d)).
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any computation provided for in this
subsection (b). The adjustment required by this subsection (b) 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 be adjusted to the
Exercise Price which would have been in effect if such record date had not been
fixed.
(c) In the event that the Company shall fix a record date for
the making of any distribution to all registered holders of Preferred Shares
(including any such distribution made in connection with a combination or merger
in which the Company is the continuing or surviving corporation) of cash (other
than a regular quarterly cash dividend), options, warrants, rights (other than
those referred to in subsection (b) of this Section 11), securities, evidences
of indebtedness or other property (excluding any dividend payable in Preferred
Shares, but including any dividend payable in other shares of capital stock),
the Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Fair Market Value (determined
as provided in subsection (d) of this Section 11) of one one-hundredth of a
Preferred Share on such record date, less the Fair Market Value (as so
determined) of the cash, options, warrants, rights, securities, evidences of
indebtedness or other property so to be distributed and properly attributable to
one one-hundredth of a Preferred Share, and the denominator of which shall be
such Fair Market Value of one one-hundredth of a Preferred Share; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon the exercise thereof. The adjustment required by
this subsection (c) 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 be adjusted to the Exercise Price which would have been in effect if
such record date had not been fixed.
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<PAGE> 23
(d) For the purpose of any computation required under this
Agreement, "Fair Market Value," when used with respect to Preferred Shares or
shares of Common Stock or other capital stock of any class (collectively, a
"Stock"), to any option, warrant, right or other security or evidence of
indebtedness (collectively, a "Security") or to any other property, shall be
determined as provided in this subsection (d):
(i) In the case of any Stock or Security which is publicly
traded, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices per share of such Stock or per unit
of such Security for the 30 consecutive Trading Days immediately prior
to such date; provided, however, that in the event that the Fair Market
Value per share of any Stock is determined during a period commencing
after the public announcement by its issuer of (A) a dividend or
distribution on such Stock payable in shares of such Stock or
securities convertible into or exchangeable for shares of such Stock or
(B) a subdivision, combination, consolidation or reclassification of
such Stock, and ending prior to the expiration of the 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination, consolidation or
reclassification, then, in each such case, the Fair Market Value of
such Stock 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 shall take 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 such Stock or Security is
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the
principal national securities exchange on which such Stock or Security
is listed or admitted to trading; or if such Stock or Security is 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 any other similar system then in use; or if on
any such day no bid for such Stock or Security is 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 Stock
or Security selected by the Board. If during any relevant period no
market maker is making a market in such Stock or Security, its Fair
Market Value on a
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<PAGE> 24
specified date shall be determined reasonably and with utmost good
faith to the holders of the Rights by the Board; provided, however,
that if at the time of such determination there shall be an Acquiring
Person, the Fair Market Value of such Stock or Security on such date
shall be determined by a nationally recognized investment banking firm
selected by the Board, which determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Company, 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 Stock or Security is listed or
admitted to trading is open for the transaction of business or, if such
Stock or Security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) In the case of any Stock or Security which is not publicly
traded, the Fair Market Value on any date shall be the fair value per
share of such Stock or per unit of such Security as determined
reasonably and with utmost good faith to the holders of the Rights by
the Board; provided, however, that if at the time of such determination
there shall be an Acquiring Person, the Fair Market Value of such Stock
or Security on such date shall be determined by a nationally recognized
investment banking firm selected by the Board, which determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Company, the Rights Agent and the holders of the
Rights.
(iii) In the case of any property which is not a Stock or a
Security, the Fair Market Value on any date shall be determined
reasonably and with utmost good faith to the holders of Rights by the
Board; provided, however, that if at the time of such determination
there shall be an Acquiring Person, the Fair Market Value of such
property on such date shall be determined by a nationally recognized
investment banking firm selected by the Board, which determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Company, the Rights Agent and the holders of the
Rights.
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Exercise Price then in effect; provided, however, that any adjustments which
by reason of this subsection (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 whole cent, to the nearest
one ten-thousandth of a share of Common Stock or other capital stock of any
class (other than Preferred Shares) or to the nearest one one-millionth of a
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<PAGE> 25
Preferred Share, as the case may be. Notwithstanding the first sentence of this
subsection (e), any adjustment required by this Section 11 shall be made no
later than the earliest of (i) three years after the date of the occurrence
requiring such adjustment, (ii) the Redemption Date and (iii) the Final
Expiration Date.
(f) If as a result of an adjustment required by any Triggering
Event the holder of any Rights thereafter exercised shall become entitled to
receive any shares of capital stock of any class of the Company (other than
Preferred Shares), the number of such other shares so receivable upon exercise
of any Rights shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as reasonably possible to the provisions with
respect to the Preferred Shares contained in this Section 11, and the provisions
of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares 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 one one-hundredths of a
Preferred Share 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 the option
provided in subsection (i) of this Section 11, upon each adjustment of the
Exercise Price as a result of the calculations required by subsection (b) or (c)
of this Section 11, each Right outstanding immediately prior to the making of
such Exercise Price adjustment shall thereafter evidence the right to purchase,
at the adjusted Exercise Price, the number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth) determined by (i)
multiplying the number of one one-hundredths of a Preferred Share purchasable
upon exercise of such Right immediately prior to such adjustment by the Exercise
Price in effect immediately prior to such adjustment and (ii) dividing the
product so obtained by the Exercise Price in effect immediately after such
adjustment.
(i) The Company may elect, on or after the date on which any
adjustment of the Exercise Price is required to be made hereunder, to adjust the
number of Rights outstanding in substitution for making an adjustment in the
number of one one-hundredths of a Preferred Share purchasable upon exercise of
each Right. Each Right outstanding after such an adjustment in the number of
Rights shall be exercisable for the same number of one one-hundredths of a
Preferred Share as such Right was exercisable for immediately prior to such
adjustment; but each Right held of record prior to such adjustment shall become
the number of Rights (calculated to the nearest one ten-thousandth) determined
by dividing the Exercise Price in effect immediately prior to the occurrence
requiring the adjustment of the Exercise
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<PAGE> 26
Price by the Exercise Price in effect immediately after such adjustment of the
Exercise Price. The Company shall make a prompt public announcement of its
election to adjust the number of Rights outstanding, indicating the record date
for the adjustment and, if known at the time of such announcement, the amount of
the adjustment to be made. Such record date may be the date on which the
Exercise Price is required to be adjusted or any day thereafter, unless the
Rights Certificates shall have been issued, in which case such record date shall
be at least 10 days after the date of such public announcement. If the Rights
Certificates shall have been issued, upon each adjustment of the number of
Rights outstanding pursuant to this subsection (i), the Company shall, as
promptly as practicable, cause to be distributed to each registered holder of
the Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14, the additional Rights to which such registered holder
shall be entitled as a result of such adjustment; or, at its option, the Company
shall cause to be distributed to each such registered holder, in substitution
and replacement for the Rights Certificates held by such registered holder prior
to the date of such adjustment, but only upon surrender thereof (if so required
by the Company), new Rights Certificates evidencing all the Rights to which such
registered holder shall be entitled after such adjustment. Rights Certificates
so distributed shall be executed and countersigned in the manner provided in
Section 5 (and may designate, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the registered holders
of the Rights Certificates on the record date specified in the aforesaid public
announcement.
(j) Irrespective of any adjustment or change in the Exercise
Price or the number of one one-hundredths of a Preferred Share issuable upon
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to designate the Exercise Price and the number of one
one-hundredths of a Preferred Share which were designated in the Rights
Certificates originally issued hereunder.
(k) Before taking any action which would cause an adjustment
reducing the Exercise Price below one one-hundredth of the then par value, if
any, of the Preferred Shares 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 Preferred Shares at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an
adjustment of the Exercise Price effective as of the record date for a
particular event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Rights exercised after such record date
of the Preferred Shares (and/or the other shares of capital stock, securities or
other property of the Company, if any) issuable upon such exercise in
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<PAGE> 27
excess of the Preferred Shares (and/or the other shares of capital stock,
securities or other property of the Company, if any) issuable upon such exercise
on the basis of the Exercise Price in effect immediately 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 excess upon the occurrence of such event.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Board shall be entitled to make reductions in the Exercise
Price, in addition to the adjustments expressly required by this Section 11, as
and to the extent that the Board, in its sole discretion, shall determine to be
advisable in order that any dividend on the Preferred Shares payable in
Preferred Shares, any subdivision, combination or consolidation of the Preferred
Shares (by reclassification or otherwise than by payment of dividends in
Preferred Shares) into a greater or lesser number of Preferred Shares, any
issuance of Preferred Shares solely for cash at less than the Fair Market Value
thereof, any issuance solely for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares or any
issuance of options, warrants, rights, securities, evidences of indebtedness or
other property subject to subsection (b) or (c) of this Section 11, hereafter
made by the Company to the holders of the Preferred Shares, shall not be taxable
to such holders.
(n) In the event that the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare a dividend
on its outstanding shares of Common Stock payable in shares of Common Stock or
(ii) effect a subdivision, combination or consolidation of its outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
dividends in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then, in each such case: (i) the number of one one-hundredths
of a Preferred Share purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event; and (ii)
each share of Common Stock and Class B Common Stock outstanding immediately
after such event shall have issued with respect to it the same number of Rights
which each share of Common Stock and Class B Common Stock outstanding
immediately prior to such event had issued with respect to it. The adjustment
required by this subsection (n) shall be made successively whenever such a
dividend is declared or such a subdivision, combination or consolidation is
effected.
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<PAGE> 28
(o) Except as permitted by Sections 23 and 27, the Company
covenants and agrees that, after the Distribution Date, it will not take, or
permit any of its Subsidiaries to take, any action if at the time such action
would be taken it is reasonably foreseeable that such action would eliminate or
substantially diminish the benefits intended to be afforded by the Rights.
SECTION 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER
OF SHARES. Whenever any adjustment shall be required by Section 11, 13 or 23(g),
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts requiring such adjustment, (b)
file with the Rights Agent and with each transfer agent for the Preferred Shares
or the Common Stock and Class B Common Stock of the Company a copy of such
certificate and (c) mail a brief summary thereof to each registered holder of
the Rights in accordance with Section 26. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment described
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 occurrence of any
Section 11(a)(ii) Event, directly or indirectly: (i) the Company shall
consolidate with, or merge with and into, any Interested Stockholder or, if in
such consolidation or merger all holders of the Common Stock of the Company are
not treated the same, any other Person (other than a wholly-owned Subsidiary of
the Company in a transaction not prohibited by Section 11(o)), so that the
Company shall not be the continuing or surviving corporation, (ii) any
Interested Stockholder or, if in such merger all holders of the Common Stock of
the Company are not treated the same, any other Person (other than a
wholly-owned Subsidiary of the Company in a transaction not prohibited by
Section 11(o)) shall merge with and into the Company, so that the Company shall
be the continuing or surviving corporation, and in connection with such merger
either (A) all or part of the outstanding shares of Common Stock of the Company
shall be converted or changed into or exchanged for capital stock or other
securities of any other Person (or the Company), cash and/or other property or
(B) such shares of Common Stock shall remain outstanding, unconverted and
unchanged, or (iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one 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 Interested Stockholder or, if in such transaction or transactions the
holders of the Common Stock of the Company are not treated the same, any other
Person or Persons (other than the Company or one or more of its wholly-owned
Subsidiaries in one or more
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<PAGE> 29
transactions, each of which is not prohibited by Section 11(o)), then, in each
such case, proper provision shall be made so that (w) the registered holder of
each Right, except as otherwise provided in Section 7(d), shall thereafter have
the right to receive, upon exercise thereof and payment of an amount equal to
the product determined by multiplying the then current Exercise Price by the
number of one one-hundredths of a Preferred Share for which such Right is then
exercisable, in accordance with this Agreement, in lieu of Preferred Shares, the
number of freely tradable shares (which shall be duly authorized, validly
issued, fully paid and non-assessable) of Common Stock of the Principal Party
or, in the case of a merger described in clause (ii) of this sentence in which
the Common Stock of the Company shall remain outstanding, unconverted and
unchanged, of the Company, free and clear of all rights of call or first
refusal, liens, encumbrances or other adverse claims, determined by dividing
such product by 50% of the Fair Market Value (determined as provided in Section
11(d)) of the shares of Common Stock of such Principal Party (or, if
appropriate, the Company) on the date of consummation of such Section 13 Event;
(x) such Principal Party shall thereafter be liable for, and shall assume, by
reason of the consummation of such Section 13 Event, all the obligations and
duties of the Company under this Agreement; (y) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 shall apply to such Principal Party;
and (z) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of Common Stock to
permit exercise of all outstanding Rights in accordance with this subsection (a)
and the distribution of cash, debt securities, shares and other property in
accordance with Section 11(a)(iv))in connection with the consummation of such
Section 13 Event as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably possible, in relation to the
shares of Common Stock thereafter deliverable upon exercise of the Rights.
(b) After the Distribution Date, the Company shall not
consolidate or merge with any other Person (other than a wholly-owned Subsidiary
of the Company in a transaction not prohibited by Section 11(o)), or sell or
otherwise transfer (or permit one or more of its Subsidiaries to sell or
otherwise transfer), in one 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 one or more of its wholly-owned Subsidiaries in one
or more transactions, each of which is not prohibited by Section 11(o)), if (i)
at the time of or immediately after the consummation of such transaction there
are any options, warrants, rights, conversion or exchange privileges or
securities outstanding or any written or oral agreements, arrangements or
understandings
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(including provisions contained in the Company's Certificate of Incorporation or
By-laws) 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, or (ii) prior to, at the time of or immediately after the
consummation of such transaction the stockholders of the Person who constitutes,
or would constitute, the Principal Party for the purpose of subsection (a) of
this Section 13 shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates.
(c) The Company shall not consummate any Section 13 Event
unless prior thereto (i) 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 (ii) the Company, the Principal Party and each other Person who
may become the Principal Party as a result of the consummation of such Section
13 Event shall have executed and delivered to the Rights Agent a supplemental
agreement providing (x) for the implementation of all the terms and conditions
set forth in this Section 13 and (y) that, as soon as practicable after the date
of such Section 13 Event, the Principal Party, at its own expense, shall:
(A) prepare and file a registration statement on an
appropriate form under the Securities Act with respect to the
Rights and the securities purchasable upon exercise thereof,
and use its best efforts to cause such registration statement
to become effective as soon as practicable after such filing
and to remain effective (with a prospectus which at all times
meets the requirements of the Securities Act) until the
earliest of the date as of which the Rights are no longer
exercisable for such securities, the Redemption Date and the
Final Expiration Date;
(B) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise thereof
under the securities or "blue sky" laws of such jurisdictions
as may be necessary or appropriate in connection with the
exercisability of the Rights;
(C) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon
exercise thereof on a national securities exchange or to meet
the eligibility requirements for quotation on NASDAQ; and
(D) deliver to the registered holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates complying in all material respects with
the requirements for registration of securities on Form 10
under the Exchange Act.
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(d) "Principal Party" shall mean: in the case of any
transaction described in clause (i) or (ii) of subsection (a) of this Section
13, the Person which is the issuer of the securities into which shares of Common
Stock of the Company are being converted or changed in such trans action or, if
there shall be more than one such issuer, the issuer having shares of Common
Stock with the greatest aggregate market value; or if no securities are being
issued in such transaction for shares of Common Stock of the Company, the Person
which is the other party to such transaction or, if there shall be more than one
such Person, the Person having shares of Common Stock with the greatest
aggregate market value; and in the case of any transaction described in clause
(iii) of such subsection (a), the Person which is the party receiving the
greatest portion of the assets or earning power sold or otherwise transferred
pursuant to such transaction or transactions; provided, however, that in any
such case (i) if the shares of Common Stock of such Person shall not at the time
of the consummation of such transaction have been continuously registered under
Section 12 of the Exchange Act during the immediately preceding 12-month period,
and such Person shall be a direct or indirect Subsidiary or Affiliate of another
Person the shares of Common Stock of which shall have been so registered,
"Principal Party" shall mean such other Person; and (ii) if such Person shall be
a direct or indirect Subsidiary or Affiliate of more than one other Person, the
shares of Common Stock of two or more of which shall have been so registered,
"Principal Party" shall mean whichever of such other Persons shall have Common
Stock with the greatest aggregate market value; and (iii) if such Person shall
be owned, directly or indirectly, by a joint venture formed by two or more
Persons which are not owned, directly or indirectly, by the same Person, the
rules set forth in clauses (i) and (ii) of this proviso shall apply to each
chain of ownership of any joint venturer as though such joint venture were a
"Subsidiary" of all of such joint venturers, and the Principal Party in each
such chain shall bear the obligations and duties set forth in this Section 13 in
the same proportion as their direct or indirect ownership interest in such
Person bears to the total of such ownership interests.
(e) If, in the case of any transaction described in clause
(iii) of subsection (a) of this Section 13, the Person or Persons to whom assets
or earning power are sold or otherwise transferred are individuals, then, in
lieu of any other payment or distribution required by this Section 13, and the
Company shall require as a condition to such transaction that, such Person or
Persons shall pay to each holder of a Rights Certificate, upon its surrender to
the Rights Agent and in exchange therefor (without requiring any payment by such
holder), cash in the amount determined by multiplying the then current Exercise
Price by the number of one one-hundredths of a Preferred Share for which a Right
is then exercisable.
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(f) In no event shall the Rights Agent have any obligations or
duties in respect of any Section 13 Event, except as expressly set forth in this
Agreement. The Rights Agent may rely, and shall be fully protected in relying
upon, a certificate of the Company stating that the provisions of this Section
13 have been fulfilled. The prior written consent of the Rights Agent shall be
required in connection with any supplemental agreement which alters or impairs
the rights, obligations, duties or immunities of the Rights Agent hereunder.
(g) The provisions of this Section 13 shall similarly apply to
successive consolidations, mergers, sales or other transfers. In the event that
any Section 13 Event shall occur at any time after the occurrence of any Section
11(a)(ii) Event, the Rights which have not been theretofore exercised shall
thereafter be exercisable in the manner described in this Section 13.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractional
Rights or to distribute Rights Certificates which evidence fractional Rights. If
the Company shall determine not to issued fractional Rights, the Company shall
pay, in lieu of issuing fractional Rights, to the registered holders of the
Rights with respect to which fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the Fair Market Value (determined
as provided in Section 11(d) for the Trading Day immediately prior to the date
on which such fractional Rights would otherwise have been issued) of one Right.
(b) The Company shall not be required to issue fractional
Preferred Shares (other than fractions which are multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute stock
certificates which evidence fractional Preferred Shares (other than fractions
which are multiples of one one-hundredth of a Preferred Share). If the Company
shall determine not to issue fractional Preferred Shares that are not multiples
of one one-hundredth of a Preferred Share, the Company shall pay to the
registered holders of the Rights Certificates at the time Rights represented
thereby are exercised, in lieu of such fractional Preferred Shares, an amount in
cash equal to the same fraction of the Fair Market Value (determined as provided
in Section 11(d) for the Trading Day immediately prior to the date of such
exercise) of one one-hundredth of a Preferred Share.
(c) Each holder of a Right, by accepting the same, expressly
waives such holder's right to receive or exercise any fractional Right or to
receive any fractional Preferred Share upon the exercise of such Right (except
as provided in this Section 14).
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SECTION 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, other than rights of action which the Rights Agent may have
under Sections 18 and 20, are vested in the registered holders of the Rights
Certificates (or, prior to the Distribution Date, the registered holders of the
Common Stock and the Class B Common Stock of the Company); and the registered
holder of any Rights Certificate (or, prior to the Distribution Date, of any
stock certificate for shares of such Common Stock and Class B Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of any other stock certificate
for shares of Common Stock or Class B Common Stock), may, on such registered
holder's own behalf and for such registered holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such registered holder's right to
exercise the Rights evidenced by such Rights Certificate (or, prior to the
Distribution Date, such stock certificate) in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the generality of the
foregoing or any remedies available to the holders of the Rights, it is
specifically acknowledged that the registered holders of the Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations and duties under, and
injunctive relief against any actual or threatened violations of the obligations
and duties of any Person subject to, this Agreement.
SECTION 16. AGREEMENTS OF HOLDERS OF RIGHTS. Each holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
transferable only simultaneously and together with the transfer of shares of
Common Stock or Class B Common Stock of the Company;
(b) after the Distribution Date, the Rights Certificates shall
be transferable on the registry books of the Rights Agent only if surrendered at
the principal office of the Rights Agent, with the Form of Assignment and
Certification of Status on the reverse side thereof duly executed, together with
such signature guarantees and other documentation as the Rights Agent may
reasonably request;
(c) subject to Sections 6 and 7(d), the Company and the Rights
Agent may deem and treat the Person in whose name any Rights Certificate (or,
prior to the Distribution Date, any stock certificate for Common Stock or Class
B Common Stock of the
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Company) is registered as the absolute owner thereof and of the Rights
represented thereby (notwithstanding any notations of ownership or other writing
on such Rights Certificate or 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) neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or to any other Person because of its
inability to perform any of its obligations or duties under this Agreement by
reason of any applicable law, 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 rule,
regulation or executive order promulgated or enacted by any such governmental
authority prohibiting or otherwise restraining performance of any such
obligation or duty; provided, however, that the Company shall use its best
efforts to have any such injunction, order, decree or ruling lifted or otherwise
overturned as soon as reasonably possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Rights Certificate shall be entitled to
vote, to receive dividends or other distributions on or to exercise any
preemptive rights with respect to, or shall be deemed for any other purpose to
be the holder of, the Preferred Shares or other shares of capital stock of any
class of the Company which may at the time be issuable upon exercise of the
Rights represented thereby; nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company, or any right to vote
for the election of directors or upon any other matter submitted to stockholders
at any meeting thereof, to give or withhold consent to any corporate action, to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25) or to receive dividends, subscription rights or other
distributions, until the Rights represented by such Rights Certificate shall
have been exercised, in whole or in part, in accordance with the provisions
hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company covenants and agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time on the written request of the Rights Agent, to reimburse it
for all reasonable expenses and counsel fees incurred in connection with the
acceptance and administration of this Agreement and the performance of its
obligations and duties hereunder. The Company also covenants and agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without
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negligence, bad faith or willful misconduct on its part, for any action taken,
suffered or omitted by it in connection with the acceptance and administration
of this Agreement and the performance of its obligations and 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 in reliance upon any Rights
Certificate, stock certificate for Preferred Shares, Common Stock or other
shares of capital stock of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be executed and, where necessary, verified or acknowledged by the proper
Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OF THE 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 stockholder services or corporate trust business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as successor Rights Agent under Section 21. In
case at the time any successor Rights Agent shall succeed to the agency created
by this Agreement any of the Rights Certificates countersigned by its
predecessor Rights Agent shall not have been delivered, such successor Rights
Agent may adopt the countersignature of its predecessor Rights Agent and deliver
the Rights Certificates so countersigned; or in case at such time any of the
Rights Certificates shall not have been countersigned, such successor Rights
Agent may countersign such Rights Certificates either in the name of its
predecessor Rights Agent or in the name of such successor Rights Agent; and in
all such cases, such Rights Certificates shall have the full force and effect
provided therein 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 Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver the Rights Certificates so countersigned; or in
case at such time any of the Rights Certificates shall not have been
countersigned,
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the Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases, such Rights Certificates
shall have the full force and effect provided therein and in this Agreement.
SECTION 20. DUTIES OF THE RIGHTS AGENT. The Rights Agent
undertakes the obligations and duties imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
the Rights Certificates (or, prior to the Distribution Date, the stock
certificates for Common Stock and Class B Common Stock of the Company), by
accepting the same, shall be bound, and no implied obligations or duties shall
be read into this Agreement against the Rights Agent:
(a) the Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the written opinion of such legal counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken, suffered or omitted by it in good faith and in accordance
with such opinion;
(b) whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking, suffering or
omitting 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 executed by any one of the
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full and complete authorization and protection to the Rights Agent as
to any action taken, suffered or omitted by it in good faith in reliance upon
such certificate;
(c) the Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct;
(d) the Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature thereon) 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 responsible for the validity
of this Agreement or the execution and delivery hereof (except for its due
execution hereof) or for the validity or execution of any Rights Certificate
(except for its countersignature thereon); nor shall the Rights Agent be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights
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Certificate; nor shall the Rights Agent be responsible for any change in the
exercisability of the Rights (including Rights becoming void pursuant to Section
7(d)), for any adjustment or change (or for the manner or method of determining
same) in the terms of the Rights (including any adjustment or change in the
Exercise Price or in the number or kind of shares, securities or other property
issuable upon the exercise thereof) required by Section 11, 13, 23 or 24 or for
ascertaining the existence of facts which would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice, in the manner provided in Section 12, that
such change or adjustment is required); nor shall the Rights Agent by any act
hereunder be deemed to have made any representation or warranty as to the
authorization or reservation of any Preferred Shares or shares of Common Stock
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any Preferred Shares or shares of Common Stock will, when issued, be
validly authorized and issued and fully paid and nonassessable;
(f) the Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further 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 obligations and
duties hereunder from any one of the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its obligations and
duties; and the Rights Agent shall not be liable for any action taken, suffered
or omitted by it in good faith and in accordance with the written instructions
of any such officer or for any delay in acting while waiting for such
instructions;
(h) the Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in the Rights or in any other
securities of the Company (including the Preferred Shares and its Common Stock)
or become pecuniarily interested in any transaction in which the Company (or any
of its Subsidiaries) may be interested, or contract with or lend money to the
Company (or any of its Subsidiaries), and may otherwise act as fully and freely
as though it were not the Rights Agent under this Agreement; and nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company, any of its Subsidiaries or any other entity;
(i) the Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any of its obligations or duties
hereunder either directly or by or through
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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 exercised reasonable care in
the selection and continued employment of such attorney or agent;
(j) if, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the Form of Certification of Status
attached to the Form of Election to Purchase or the Form of Assignment, as the
case may be, has either not been completed or indicates an affirmative response
to Question 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to the requested exercise or transfer without first
consulting with the Company; and
(k) no provision of 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 obligations or duties or in the exercise of its
rights or powers hereunder 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.
SECTION 21. RESIGNATION OR REMOVAL OF THE RIGHTS AGENT. The
Rights Agent or any successor Rights Agent may resign and be discharged from its
obligations and duties under this Agreement upon 30 days' prior notice to the
Company and to each transfer agent for the Preferred Shares and for the Common
Stock and Class B Common Stock of the Company, sent by registered or certified
mail, postage prepaid, and to each registered holder of the Rights Certificates,
sent by first-class mail, postage prepaid. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' prior notice to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
for the Preferred Shares and for the Common Stock and Class B Common Stock of
the Company, sent by registered or certified mail, postage prepaid, and to each
registered holder of the Rights Certificates, sent by first-class mail, postage
prepaid. If the Rights Agent or any successor Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor Rights Agent. If the Company shall fail to make such appointment
within 30 days after giving notice of such removal or after receiving notice of
such resignation or incapacity, either from the resigning or incapacitated
Rights Agent or from the registered holder of any Rights Certificate (who shall,
with such notice, submit its Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a successor Rights Agent. Any successor
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Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
of America, the State of Delaware, the State of New York or the State of
Illinois (or of any other state so long as such corporation is authorized to do
business as a banking institution in the State of Delaware, the State of New
York or the State of Illinois), be in good standing under the laws of the
jurisdiction of its incorporation, have an office in the State of Delaware, the
State of New York or the State of Illinois, be authorized under such laws to
exercise corporate trust or stock transfer powers, be subject to supervision or
examination by federal or state authority and have at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an affiliate of a corporation described in clause (a) of this
sentence. After its appointment, the successor Rights Agent shall be vested with
the same rights, powers, obligations, duties and immunities 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 for
the Preferred Shares and for the Common Stock and Class B Common Stock of the
Company, and mail notice thereof to the registered holders of the Rights
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 any successor Rights Agent or the
appointment of any successor thereto.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any provision of this Agreement or of the Rights Certificates to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing the Rights in such form as may be approved by the Board to reflect
any adjustment or change in the Exercise Price or in the number or kind of
shares, securities or other property issuable upon exercise of the Rights in
accordance with the provisions of this Agreement; provided, however, that (a) no
such Rights Certificates shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance could create a significant risk
of material adverse tax consequences to the Company or to the Persons to whom
such Rights Certificates would be issued and (b) no such Rights Certificates
shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
SECTION 23. REDEMPTION.
(a) The Board may, at its option, at any time prior to
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the earliest of (i) the Close of Business on the 10th Business Day after the
Share Acquisition Date (or, if the Share Acquisition Date shall have occurred
prior to the Record Date, the Close of Business on the 10th Business Day after
the Record Date), (ii) the occurrence of any Section 13 Event and (iii) the
Final Expiration Date, redeem all, but not less than all, of the then
outstanding Rights at a redemption price of $.01 per Right, adjusted as provided
in subsection (g) of this Section 23 (such redemption price being hereinafter
called the "Redemption Price").
(b) In addition to the right of redemption reserved in the
first sentence of subsection (a) of this Section 23, the Board may redeem all,
but not less than all, of the then out standing Rights at the Redemption Price
after the Share Acquisition Date, but prior to the occurrence of any Section 13
Event, if either (i) the Person who is an Acquiring Person shall have
transferred or otherwise disposed of (either alone or together with its
Affiliates and Associates) such number of shares of Common Stock of the Company,
in one or a series of related transactions not directly or indirectly involving
the Company or any of its Subsidiaries or the occurrence of any Section 13
Event, as shall result in such Person thereafter being a Beneficial Owner of
less than 10% of the then outstanding shares of Common Stock of the Company, and
after such transfer or other disposition there is no other Acquiring Person, or
(ii) in connection with any Section 13 Event which shall not involve an
Interested Stockholder and in which all holders of the Common Stock of the
Company are treated the same.
(c) Notwithstanding any other provision of this Agreement, the
Rights shall not be exercisable after the first occurrence of any Section
11(a)(ii) Event until such time as the Company's right of redemption under this
Section 23 shall have expired.
(d) In considering whether to redeem the Rights, the Board may
consider the best long-term and short-term interests of the Company and its
stockholders, including, without limitation, the effects of the redemption of
the Rights upon employees, creditors, suppliers and customers of the Company or
of its Subsidiaries and upon the communities in which offices or other
establishments of the Company and such Subsidiaries are located and all other
pertinent factors. The redemption of the Rights by the Board may be made
effective at such time, on such basis and with such conditions as the Board, in
its sole discretion, may establish.
(e) Immediately after action by the Board directing the
redemption of the Rights pursuant to subsection (a) or (b) of this Section 23,
and without any further action and without any notice, the right to exercise the
Rights shall terminate, and thereafter each registered holder of the Rights
shall only be
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entitled to receive the Redemption Price therefor. The Company shall give prompt
written notice to the Rights Agent and prompt public notice to the holders of
the Rights of any such redemption; provided, however, that the failure to give,
or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after action by the Board directing the redemption of
the Rights, the Company shall mail (or cause the Rights Agent to mail) a notice
of redemption to each registered holder of the then outstanding Rights, at its
last address appearing on 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 and Class B Common Stock of the Company. Any notice which is mailed
in the manner provided in this subsection (e) shall be deemed given, whether or
not received by the registered holder to whom sent. Each notice of redemption
shall state the method by which payment of the Redemption Price is to be made.
Neither the Company nor any of its Affiliates or Associates may at any time
redeem, acquire or purchase for value any Rights other than in the manner set
forth in this Section 23 and Section 24 or in connection with any purchase of
outstanding shares of its Common Stock or Class B Common Stock prior to the
Distribution Date.
(f) The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on its Fair Market Value (determined as
provided in Section 11(d)) as of the date of redemption) or any other form of
consideration deemed appropriate by the Board.
(g) In the event that the Company shall at any time after the
date of this Agreement (i) declare a dividend on its outstanding shares of
Common Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of its outstanding shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then, in each
such case, the Redemption Price after such event shall equal the Redemption
Price in effect immediately prior to such event multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event; provided,
however, that such adjustment shall be made only if the amount of the Redemption
Price would be reduced or increased by at least $.001 per Right.
SECTION 24. EXCHANGE.
(a) The Board may, at its option, at any time on or after the
occurrence of any Section 11(a)(ii) Event, exchange all or any part of the then
outstanding and exercisable Rights (which shall not include any Rights which
have become void pursuant to
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Section 7(d)) for shares of Common Stock of the Company at an exchange rate of
one share of Common Stock per Right, appropriately adjusted to reflect any event
specified in clauses (A) through (D), inclusive, of the first sentence of
Section 11(a)(i) or in Section 11(n) occurring after the date hereof (such
exchange rate being hereinafter called the "Exchange Rate"); provided, however,
that the Board shall not be authorized to effect such an exchange at any time
after any Person (other than an Exempt Person), together with the Affiliates and
Associates of such Person, shall have become the Beneficial Owner of 50% or more
of the then outstanding shares of Common Stock of the Company.
(b) Immediately after action by the Board directing the
exchange of any Rights pursuant to subsection (a) of this Section 24, and
without any further action and without any notice, the right to exercise such
Rights shall terminate, and thereafter each registered holder of such Rights
shall only be entitled to receive the number of shares of Common Stock of the
Company which shall equal the number of such Rights held by such registered
holder multiplied by the Exchange Rate then in effect. The Company shall give
prompt written notice to the Rights Agent and prompt public notice to the
holders of the Rights of any such exchange; 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 the Board directing the exchange of any
Rights, the Company shall mail (or cause the Rights Agent to mail) a notice of
exchange to each registered holder of such Rights, at its last address appearing
on 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 and Class B Common
Stock of the Company. Any notice which is mailed in the manner provided in this
subsection (b) shall be deemed given, whether or not received by the registered
holder to whom sent. Each notice of exchange shall state the method by which the
exchange of shares of Common Stock for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata among the registered holders of the
Rights based upon the number of Rights held (excluding Rights which shall have
become void pursuant to Section 7(d)); 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.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or Equivalent Preferred Shares)
for shares of Common Stock in effecting an exchange for Rights, at the initial
rate of one one-hundredth of a Preferred Share (or Equivalent Preferred Share)
for each share of Common Stock, appropriately adjusted to reflect any
adjustments in the voting rights of the Preferred
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<PAGE> 43
Shares pursuant to the Certificate of Designations attached hereto as Exhibit A,
so that the fractional Preferred Share delivered in lieu of each share of Common
Stock shall have the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient authorized
and unissued or treasury shares of Common Stock or Preferred Shares (or
Equivalent Preferred Shares) to permit the exchange of Rights directed by the
Board, the Company shall take all necessary action to authorize and reserve for
issuance such number of additional shares of Common Stock or Preferred Shares
(or Equivalent Preferred Shares) as may be required for issuance upon such
exchange and, if necessary, shall use its best efforts to obtain stockholder
approval thereof.
(e) The Company shall not be required to issue fractional
shares of Common Stock in exchange for Rights or to distribute stock
certificates which evidence fractional shares of Common Stock. If the Company
shall determine not to issue fractional shares of Common Stock, the Company
shall pay to the registered holders of the Rights with respect to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the Fair Market Value (determined as provided in Section 11(d)
for the Trading Day immediately prior to the date of such exchange) of one share
of Common Stock.
SECTION 25. NOTICE TO HOLDERS OF RIGHTS CERTIFICATES OF
CERTAIN EVENTS.
(a) In the event that at any time after the Distribution Date,
the Company shall propose: (i) to pay any dividend payable in shares of capital
stock of any class of the Company to the holders of Preferred Shares or to make
any other cash distribution to the holders of Preferred Shares (other than a
regular quarterly cash dividend); (ii) to effect any reclassification of the
Preferred Shares (other than a reclassification involving only the subdivision
of the outstanding Preferred Shares); (iii) to make any distribution to the
holders of Preferred Shares described in subsection (b) or (c) of Section 11;
(iv) to effect any Section 13 Event; (v) to pay any dividend on its shares of
Common Stock payable in shares of Common Stock or to effect a subdivision,
combination or consolidation of its outstanding shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock); or (vi) to effect the liquidation, dissolution or winding up of the
Company; then, in each such case, the Company shall give to the Rights Agent and
each registered holder of the Rights, in the manner provided in Section 26,
written notice of such proposed action, which shall specify the record date for
such stock dividend or distribution or the date on which such reclassification,
Section 13 Event, liquidation, dissolution or winding up is expected to occur
(and the date for participation therein by the holders of the Common
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<PAGE> 44
Stock and/or Preferred Shares if any such date is to be fixed). Such notice
shall be given, in the case of any action described in clause (i) or (iii) of
the preceding sentence, at least 10 days prior to the record date and, in the
case of any other such action, at least 20 days prior to the date of taking of
such proposed action or the date for participation therein by the holders of
Preferred Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, the
Company shall, as soon as practicable thereafter, give to the Rights Agent and
each registered holder of the Rights, in the manner provided in Section 26,
written notice of the occurrence thereof, which notice shall describe such
occurrence and its consequences in reasonable detail.
SECTION 26. OTHER NOTICES. Except as otherwise provided
herein, notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the registered holder of any Rights, Rights Certificate
or stock certificate for shares of Common Stock or Class B Common Stock of the
Company to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address shall be
filed in writing with the Rights Agent) as follows:
Whitehall Jewellers, Inc.
155 N. Wacker Drive, Suite 500
Chicago, Illinois 60606
Attention: President
Except as otherwise provided herein, notices or demands
authorized by this Agreement to be given or made by the Company or by the
registered holder of any Rights, Rights Certificate or stock certificate for
shares of Common Stock or Class B Common Stock of the Company to or on the
Rights Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address shall be filed in writing with
the Company) as follows:
BankBoston, N.A.
c/o EquiServe Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Attention: Client Administration
Except as otherwise provided herein, notices or demands
authorized by this Agreement to be given or made by the Company or the Rights
Agent to the registered holder of any Rights, Rights Certificate or stock
certificate for shares of Common Stock or Class B Common Stock of the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at its last address appearing
-44-
<PAGE> 45
on 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 and the Class B
Common Stock of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date, but subject to the last sentence of this Section 27, the
Company and the Rights Agent, if so directed in writing by the Company, shall
supplement or amend any term, provision or condition of this Agreement, without
the approval of the registered holders of the stock certificates representing
the Common Stock, the Class B Common Stock and the Rights. From and after the
Distribution Date, but subject to the last sentence of this Section 27, the
Company and the Rights Agent, if so directed in writing by the Company, shall
supplement or amend this Agreement, without the approval of the registered
holders of the Rights (however represented), in order: (a) to cure any
ambiguity, (b) to correct or supplement any term, provision or condition of this
Agreement which may be defective or inconsistent with any other term, provision
or condition hereof, (c) to shorten or lengthen any time period specified herein
or (d) to change or supplement one or more of the terms, provisions or
conditions hereof in any manner which the Company may deem necessary or
desirable and which shall not adversely affect, as determined by the Board, the
interests of the holders (other than any Restricted Person or the transferees
therefrom specified in Section 7(d) of the Rights (however represented);
provided, however, that this Agreement may not be supplemented or amended
pursuant to clause (c) of this sentence (i) to lengthen any time period (except
as permitted by Section 3(a)(ii)) unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders (other than any Restricted Person or the transferees therefrom specified
in Section 7(d)) of the Rights or (ii) 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 a certificate from an appropriate officer of
the Company stating 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; provided, however, that the Rights Agent shall not be
required to execute any supplement or amendment which affects any of the Rights
Agent's rights, powers, obligations, duties or immunities under this Agreement
without its consent. On and after the Distribution Date, no supplement or
amendment shall be made which changes the Exercise Price, the number of one
one-hundredths of a Preferred Share for which a Right is exercisable, the
Redemption Price or the Final Expiration Date. Prior to the Distribution Date,
the interests of the holders of the Rights shall be deemed coincident with the
interests of the holders of the Common Stock and Class B Common Stock of the
Company.
SECTION 28. SUCCESSORS. All of the terms, provisions and
conditions 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.
-45-
<PAGE> 46
SECTION 29. CERTAIN DETERMINATIONS AND ACTIONS BY THE BOARD.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including the determination of
the percentage of such outstanding shares of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i), as in effect on the date hereof, under the Exchange Act. The
Board shall have the exclusive power and authority to interpret this Agreement
and to exercise all rights and powers specifically granted to the Board 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 make all
determinations deemed necessary or advisable for such administration, including,
without limitation, a determination to redeem or not to redeem the Rights, to
exchange or not to exchange the Rights or to supplement or amend this Agreement.
All such calculations, determinations, interpretations and exercises (including,
for purposes of clause (b) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith shall (a) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other Persons and (b) not subject any director 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 other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the registered holders of the stock certificates for
the Common Stock and Class B Common Stock of the Company) 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 Rights Certificates (and, prior to the Distribution Date, the
registered holders of the stock certificates for the Common Stock and Class B
Common Stock of the Company).
SECTION 31. SEVERABILITY. If any term, provision or condition
of this Agreement shall be held by a court of competent jurisdiction or other
lawful authority to be invalid, void or unenforceable, the remaining terms,
provisions, and conditions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that if any such term, provision or condition is held by such court or
authority to be invalid, void or unenforceable and the Board shall determine in
good faith that severing the same from this Agreement would adversely affect the
purposes or effect of this Agreement, the right of redemption set forth in
Section 23 shall be reinstated and shall not expire until the Close of Business
on the 10th day following the date of such determination by the Board.
-46-
<PAGE> 47
SECTION 32. GOVERNING LAW. This Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall for all purposes be deemed to be
an original, but all such counterparts shall together constitute 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.
-47-
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this
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.
WHITEHALL JEWELLERS, INC.
By: /s/ Hugh M. Patinkin
------------------------------
(Corporate Seal) Hugh M. Patinkin
Chairman, President and
Chief Executive Officer
Attest:
By: /s/ John R. Desjardins
-------------------------------------
John R. Desjardins
Secretary
BANKBOSTON, N.A.
By: /s/ Tyler Haynes
--------------------------------
(Corporate Seal) Tyler Haynes
Administration Manager
Attest:
By: /s/ Karen Perkins
---------------------------------------
Karen Perkins
Senior Account Administrator
-48-
<PAGE> 49
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
MARKS BROS. JEWELERS, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
----------------------------
Marks Bros. Jewelers, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that, pursuant to authority conferred upon
its Board of Directors by its Restated Certificate of Incorporation, and by the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the following resolution was adopted by its Board of Directors at a
meeting duly called and held on April 1, 1996:
RESOLVED, that, pursuant to the authority conferred upon the
Board of Directors of the Corporation (the "Board") by the provisions of the
Restated Certificate of Incorporation of the Corporation and by the provisions
of Section 151 of the General Corporation Law of the State of Delaware, there is
hereby created a series of Preferred Stock of the Corporation, which series
shall have the following powers, designations, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations or restrictions thereof, in addition to those set forth in the
Restated Certificate of Incorporation of the Corporation:
Section 1. Designation of Series; Number of Shares. The series
of Preferred Stock established hereby shall be designated the "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock") and the
authorized number of shares constituting the Series A Preferred Stock shall be
309,183. Such number of authorized shares may be increased or decreased, from
time to time, by resolution of the Board; provided, however, that no such
decrease shall reduce the number of authorized shares of the Series A Preferred
Stock to a number less than the number of shares of the Series A Preferred Stock
then outstanding, plus the number of shares of the Series A Preferred Stock then
reserved for issuance upon the exercise of any outstanding options, warrants or
rights or the exercise of any conversion or exchange privilege contained in any
outstanding security issued by the Corporation.
<PAGE> 50
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of shares of any
other series of the Preferred Stock (or shares of any other class of capital
stock of the Corporation) ranking senior to the Series A Preferred Stock with
respect to dividends, the holders of shares of the Series A Preferred Stock, in
preference to the holders of shares of Common Stock and of any other class of
capital stock of the Corporation ranking junior to the Series A Preferred Stock
with respect to dividends, shall be entitled to receive, when, as and if
declared by the Board out of funds legally available therefor, quarterly
dividends payable in cash on the first day of March, June, September, and
December in each year (each such date being a "Dividend Payment Date"),
commencing on the first Dividend Payment Date after the initial issuance of a
share or fractional share of the Series A Preferred Stock, in an amount per
share (rounded to the nearest whole cent) equal to 100 times the aggregate per
share amount of all cash dividends, plus 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions (other
than a dividend payable in shares of Common Stock or a distribution in
connection with the subdivision of the outstanding shares of Common Stock, by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Dividend Payment Date or, with respect to the first
Dividend Payment Date, since the initial issuance of a share or fractional share
of the Series A Preferred Stock. The multiple of 100 (the "Dividend Multiple")
set forth in the preceding sentence shall be adjusted from time to time as
hereinafter provided in this paragraph (a). In the event that the Corporation
shall at any time after the effective date of this Certificate of Designations
(i) declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the Dividend Multiple
thereafter applicable to the determination of the amount of dividends per share
which the holders of shares of the Series A Preferred Stock shall be entitled to
receive shall be the Dividend Multiple in effect immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) The Board shall declare, out of funds legally available
therefor, a dividend or distribution on the Series A Preferred Stock, as
provided in paragraph (a) of this Section 2, immediately after it has declared a
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on the
outstanding shares of the Series A Preferred Stock from the Dividend Payment
Date next preceding the date of issuance of
<PAGE> 51
such shares, unless such date of issuance shall be prior to the record date for
the first Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issuance of such shares, or
unless such date of issuance shall be after the close of business on the record
date with respect to any Dividend Payment Date and on or prior to such Dividend
Payment Date, in which case dividends on such shares shall begin to accrue and
be cumulative from such Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on shares of the Series A Preferred
Stock in an amount less than the total amount of dividends then accrued shall be
allocated pro rata among such shares. The Board may fix a record date for the
determination of the holders of shares of the Series A Preferred Stock entitled
to receive payment of any dividend or distribution declared thereon, which
record date shall be not more than the number of days prior to the date fixed
for such payment permitted by applicable law.
Section 3. Voting Rights. In addition to any other voting
rights required by applicable law, the holders of shares of the Series A
Preferred Stock shall have the following voting rights:
(a) Each share of the Series A Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. The multiple of 100 (the "Voting Multiple") set
forth in the preceding sentence shall be adjusted from time to time as
hereinafter provided in this paragraph (a). In the event that the Corporation
shall at any time after the effective date of this Certificate of Designations
(i) declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the Voting Multiple
thereafter applicable to the determination of the number of votes per share to
which the holders of shares of the Series A Preferred Stock shall be entitled
shall be the Voting Multiple in effect immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided in this Certificate of
Designations, in any other Certificate of Designations establishing another
series of the Preferred Stock (or any series of any other class of capital stock
of the Corporation) or by applicable law, the holders of the Series A Preferred
Stock, the holders of the Common Stock and the holders of any other class of
capital stock of the Corporation having general voting rights shall vote
together as a single class on all matters submitted to a vote of the
stockholders of the Corporation.
<PAGE> 52
(c) Except as otherwise provided in this Certificate of
Designations or by applicable law, the holders of the Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent provided in paragraph (b) of this Section 3)
for the taking of any corporate action.
Section 4. Certain Restrictions.
(a) Whenever dividends or other distributions payable on the
Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on outstanding shares of the Series A Preferred Stock shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of any class of capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or
winding up of the Corporation) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of any class of capital stock of the Corporation ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up of the Corporation) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are accrued and unpaid in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem, purchase or otherwise acquire for consideration any
shares of any class of capital stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution or winding up
of the Corporation) to the Series A Preferred Stock, except that the
Corporation may at any time redeem, purchase or otherwise acquire any
shares of such junior stock in exchange for other shares of any class
of capital stock of the Corporation ranking junior (both as to
dividends and upon dissolution, liquidation or winding up of the
Corporation) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
the Series A Preferred Stock or any shares of any class of capital
stock of the Corporation ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up of the Corporation) with
the Series A Preferred Stock, or redeem any shares of such parity
stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board) to the holders of all such
shares upon such terms and conditions as the Board, after taking into
consideration the respective annual dividend rates and the other
relative
<PAGE> 53
powers, preferences and rights of the respective series and classes of
such shares, shall determine in good faith will result in fair and
equitable treatment among the respective holders of shares of all such
series and classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of any
class of capital stock of the Corporation unless the Corporation could, under
paragraph (a) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
Section 5. Reacquired Shares. Any shares of the Series A
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after such purchase or
acquisition. All such canceled shares shall thereupon become authorized and
unissued shares of Preferred Stock and may be reissued as part of any new series
of the Preferred Stock, subject to the conditions and restrictions on issuance
set forth in the Certificate of Incorporation of the Corporation, as amended
from time to time, in any other Certificate of Designations establishing another
series of the Preferred Stock (or any series of any other class of capital stock
of the Corporation) or in any applicable law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation (whether voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made (a) to the holders of shares of any
class of capital stock of the Corporation ranking junior (either as to dividends
or upon liquidation, dissolution or winding up of the Corporation) to the Series
A Preferred Stock unless, prior thereto, the holder of each outstanding share of
the Series A Preferred Stock shall have received an amount equal to the accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to an aggregate amount, subject to
adjustment as hereinafter provided in this Section 6, equal to 100 times the
aggregate per share amount to be distributed to the holders of the Common Stock
or (b) to the holders of shares of any class of capital stock of the Corporation
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up of the Corporation) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event that
the Corporation shall at any time after the effective date of this Certificate
of Designations (a) declare or pay any dividend on the Common Stock payable in
shares of Common Stock or (b) effect a subdivision, combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then, in each such case, the aggregate amount
per share which the holders of shares
<PAGE> 54
of the Series A Preferred Stock shall thereafter be entitled to receive pursuant
to clause (a)(ii) of the preceding sentence shall be the aggregate amount per
share in effect pursuant to such clause immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the
Corporation shall be a party to any consolidation, merger, combination or other
transaction in which the outstanding shares of Common Stock are converted or
changed into or exchanged for other capital stock, securities, cash or other
property, or any combination thereof, then, in each such case, each share of the
Series A Preferred Stock shall at the same time be similarly converted or
changed into or exchanged for an aggregate amount, subject to adjustment as
hereinafter provided in this Section 7, equal to 100 times the aggregate amount
of capital stock, securities, cash and/or other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is being
converted or changed or exchanged. In the event that the Corporation shall at
any time after the effective date of this Certificate of Designations (a)
declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the aggregate amount per
share which the holders of shares of the Series A Preferred Stock shall
thereafter be entitled to receive pursuant to the preceding sentence shall be
the aggregate amount per share in effect pursuant to such sentence immediately
prior to such event multiplied by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of the Series A Preferred
Stock shall not be redeemable at any time.
Section 9. Rank. Unless otherwise provided in the Certificate
of Designations establishing another series of the Preferred Stock after the
effective date of this Certificate of Designations, the Series A Preferred Stock
shall rank, as to the payment of dividends and the making of any other
distribution of assets of the Corporation, senior to the Common Stock, but
junior to all other series of the Preferred Stock.
Section 10. Amendments. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences and rights of the Series A Preferred Stock so
as to adversely affect any thereof without the affirmative vote of the holders
of at least two-thirds of the outstanding shares of the Series A Preferred
Stock, voting separately as a single class.
<PAGE> 55
Section 11. Fractional Shares. Fractional shares of the Series
A Preferred Stock may be issued, but, unless the Board shall otherwise
determine, only in multiples of one one-hundredth of a share. The holder of any
fractional share of the Series A Preferred Stock shall be entitled to receive
dividends, participate in distributions, exercise voting rights and have the
benefit of all other powers, preferences and rights relating to the Series A
Preferred Stock in the same proportion as such fractional share bears to a whole
share.
IN WITNESS WHEREOF, Corporation has caused this Certificate of
Designations to be executed and attested by its duly authorized officers this
__day of____________, 1996.
MARKS BROS. JEWELERS, INC.
By:
-------------------------------------
(Corporate Seal) Name:
Title:
Attest:
By:
----------------------------------------
Name:
Title:
<PAGE> 56
EXHIBIT B
FORM
OF
RIGHTS CERTIFICATE
CERTIFICATE NO. R-_________ RIGHTS
_______ Aggregate Number of
Shares of Series A Junior
Participated Preferred Stock
Initially Purchasable
NOT EXERCISABLE AFTER MAY 2, 2006 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF WHITEHALL JEWELLERS, INC., AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE AMENDED AND RESTATED
STOCKHOLDERS RIGHTS AGREEMENT HEREINAFTER MENTIONED. UNDER
CERTAIN CIRCUMSTANCES DESCRIBED IN SUCH AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY A RESTRICTED PERSON (AS SUCH TERM IS
DEFINED IN SUCH AGREEMENT), OR BY SPECIFIED TRANSFEREES FROM A
RESTRICTED PERSON, SHALL BE OR BECOME VOID.
<PAGE> 57
RIGHTS CERTIFICATE
WHITEHALL JEWELLERS, 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, subject to the terms, provisions and conditions of
the Amended and Restated Stockholders Rights Agreement dated as of April 28,
1999, as it may be amended from time to time (the "Rights Agreement") between
Whitehall Jewellers, Inc., a Delaware corporation (the "Company") and
BankBoston, N.A. (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date and prior to the Close of Business on May 2, 2006,
at the principal office of the Rights Agent or its successor as Rights Agent,
one one-hundredth of a fully paid and nonassessable share of Series A Junior
Participating Preferred Stock, $.001 par value (the "Preferred Shares"), of the
Company at a price (the "Exercise Price") of $52 per one one-hundredth of a
Preferred Share, upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and the related Form of Certification of Status
duly executed, together with such signature guarantees and other documentation
as the Rights Agent may reasonably request. The number of Rights evidenced by
this Rights Certificate (as well as the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of each Right) set
forth above, and the Exercise Price set forth above, are the numbers and the
Exercise Price as of ________________, based on the Preferred Shares as
constituted on such date. As provided in the Rights Agreement, such number of
Rights (and/or such number of one one-hundredths of a Preferred Share) and such
Exercise Price are subject to change and adjustment upon the happening of
certain events specified in the Rights Agreement. Capitalized terms not defined
herein have the respective meanings specified in the Rights Agreement.
From and after the first occurrence of any Section 11(a)(ii)
Event, if the Rights evidenced by this Rights Certificate are Beneficially Owned
by (i) a Restricted Person, (ii) a transferee from a Restricted Person who
becomes a transferee after the Acquiring Person becomes such or (iii) under
certain circumstances specified in the Rights Agreement, a transferee from a
Restricted Person who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such, such Rights shall be or become void, and no
holder hereof shall have any rights whatsoever with respect to such Rights.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by reference and made a part hereof, to which
Rights Agreement reference is hereby made for a full description of the rights,
powers, obligations, duties and immunities hereunder of the Company, the
<PAGE> 58
Rights Agent and the holders of the Rights Certificates. Under the circumstances
set forth in the Rights Agreement, the exercisability of the Rights represented
hereby may be temporarily suspended. The Rights Agreement is on file at the
principal office of the Company and at the principal office of the Rights Agent,
and a copy will be provided upon written request to the Secretary of the
Company.
Upon surrender at the principal office of the Rights Agent,
this Rights Certificate, with or without other Rights Certificates, may be
exchanged for one or more Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase the same aggregate number of one
one-hundredths of a Preferred Share as the Rights evidenced by the Rights
Certificates so surrendered. If this Rights Certificate shall be exercised in
part, the holder hereof shall be entitled to receive, upon surrender hereof, one
or more Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate (i) may be redeemed, at the direction of
the Board, at a redemption price (subject to adjustment) of $.01 per Right
(payable in cash, shares of Common Stock of the Company or any other form of
consideration deemed appropriate by the Board) or (ii) under certain
circumstances, may be exchanged, in whole or in part, at the direction of the
Board, for shares of Common Stock of the Company or Preferred Shares at an
exchange rate (subject to adjustment) of one share of Common Stock or one
one-hundredth of a Preferred Share per Right.
No fractional Preferred Share will be issued upon the exercise
of any Rights represented hereby (other than fractions which are a multiple of
one one-hundredth of a Preferred Share), but in lieu thereof a cash payment will
be made as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall be
entitled to vote, to receive dividends or other distributions on or to exercise
any preemptive rights with respect to, or shall be deemed for any other purpose
to be the holder of, the Preferred Shares or other shares of capital stock of
any class of the Company which may at any time be issuable upon exercise hereof;
nor shall anything contained herein or in the Rights Agreement 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
other matter submitted to stockholders at any meeting thereof, to give or
withhold consent to any corporate action, to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement) or
to receive dividends, subscription rights or other distributions, until the
Rights evidenced by this Rights Certificate shall have been exercised, in whole
or in part, in accordance with the provisions of the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
<PAGE> 59
IN WITNESS WHEREOF, this Rights Certificate has been executed
by the Company by the duly authorized facsimile signature of a proper officer of
the Company and a facsimile of its corporate seal has been imprinted hereon and
duly attested by the duly authorized facsimile signature of a proper officer of
the Company.
Dated as of _______________, ____.
WHITEHALL JEWELLERS, INC.
(Corporate Seal) By:
-------------------------------------
Name:
Title:
ATTEST:
- ------------------------------
Name:
Title:
Countersigned:
- ---------------------------------------,
as Rights Agent
By
----------------------------------
Authorized Signature
<PAGE> 60
[REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by this Rights Certificate)
To Whitehall Jewellers, Inc.:
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to purchase the
Preferred Shares (or other securities, cash or property) issuable upon the
exercise of such Rights and requests that certificates for such Preferred Shares
be issued in the name of:
Please insert social security
or other identifying number:
--------------------
- ----------------------------------------------------------------
(Please print name and address)
- ----------------------------------------------------------------
If such number of Rights shall not be all the Rights represented by this Rights
Certificate, a new Rights Certificate for the remaining unexercised Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number:
--------------------
- ----------------------------------------------------------------
(Please print name and address)
- ----------------------------------------------------------------
Dated: , 19
--------------- --
---------------------------------------
Signature
<PAGE> 61
Signature Guaranteed:
--------------------------------
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate
*----*
*----* is
*----*
*----* is not
being exercised by or on behalf of a Person who is or was a Restricted Person
(as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it
*----*
*----* did
*----*
*----* did not
acquire, directly or indirectly, the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
---------------------------------------
Signature
Date: , 19
--------------- --
<PAGE> 62
NOTICE
The signature(s) on the foregoing Form of Election to Purchase
and Certification of Status must correspond to the name written upon the face of
this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the Certification of Status set forth above is
not completed, the Company will deem the Beneficial Owner of the Rights
represented by this Rights Certificate to be a Restricted Person (as such term
is defined in the Rights Agreement), will not honor the Election to Purchase and
will affix a legend to such effect on this Rights Certificate and on any Rights
Certificates issued in exchange for this Rights Certificate.
<PAGE> 63
[Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate)
FOR VALUE RECEIVED _________________________ hereby sells,
assigns and transfers unto ______________________________
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: , 19
--------------- --
---------------------------------------
Signature
Signature Guaranteed:
--------------------------------
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
<PAGE> 64
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate
[ ] is
[ ] is not
being sold, assigned or transferred by or on behalf of a Person who is or was a
Restricted Person (as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge
of the undersigned, it
[ ] did
[ ] did not
acquire, directly or indirectly the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
---------------------------------------
Signature
Dated: , 19
--------------- --
<PAGE> 65
NOTICE
The signature(s) on the foregoing Form of Assignment and
Certification of Status must correspond to the name written upon the face of
this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the Certification of Status set forth above is
not completed, the Company will deem the Beneficial Owner of the Rights
represented by this Rights Certificate to be a Restricted Person (as such term
is defined in the Rights Agreement), will not honor the Assignment and will
affix a legend to such effect on this Rights Certificate and any Rights
Certificates issued in exchange for this Rights Certificate.
<PAGE> 66
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On April 1, 1996, the Board of Directors (the "Board") of
Whitehall Jewellers, Inc., a Delaware corporation (the "Company"), declared a
dividend of one preferred stock purchase right (individually a "Right" and
collectively the "Rights") for each share of Common Stock, $.001 par value (the
"Common Stock"), of the Company and a dividend of 35.42083833 Rights for each
Share of Class B Common Stock, $1.00 par value (the "Class B Common Stock"), of
the Company. The dividend was paid to holders of record of the Common Stock and
Class B Common Stock on May 2, 1996, the effective date of the Company's initial
public offering registration statement, file no. 333- 1794 (the "Record Date")
Each Right entitles the holder thereof (except as described below) to purchase
from the Company one one-hundredth of a share of the Series A Junior
Participating Preferred Stock, $.001 par value (the "Preferred Shares"), of the
Company at a price (the "Exercise Price") of $52.00 per one one-hundredth of a
Preferred Share, subject to adjustment. The terms of the Rights are set forth in
the Amended and Restated Stockholders Rights Agreement dated as of April 28,
1999, as it may be amended from time to time (the "Rights Agreement") between
the Company and BankBoston, N.A. as Rights Agent (the "Rights Agent").
Capitalized terms not defined herein have the respective meanings specified in
the Rights Agreement.
DISTRIBUTION DATE; TRANSFER OF RIGHTS
Initially, the Rights associated with the Common Stock and
Class B Common Stock outstanding as of the Record Date will be evidenced solely
by the stock certificates for such Common Stock and Class B Common Stock. The
Rights will separate from the Common Stock upon the earliest to occur of (i) 10
Business Days after the first public announcement that any Person (other than an
Exempt Person (as hereinafter defined)) has become an Acquiring Person (as
hereinafter defined) and (ii) 10 Business Days (or such other Business Day as
may be determined by action of the Board prior to the time that any Person shall
become an Acquiring Person (as hereinafter defined) after the commencement by
any Person (other than an Exempt Person) of, or the first public announcement of
its intention to commence, a tender or exchange offer if, upon the consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the
outstanding shares of Common Stock (the earliest of the dates specified in
clauses (i) and (ii) being hereinafter called the "Distribution Date"). After
the Distribution Date, the Rights will be evidenced solely by separate
certificates and will trade independently from the Common Stock.
<PAGE> 67
An "Acquiring Person" is any Person who or which, together
with its Affiliates and Associates, has acquired 15% or more of the shares of
Common Stock then outstanding, but does not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan or other compensation
program or arrangement of the Company or of any such Subsidiary, (iv) any Person
holding shares of Common Stock for or pursuant to the terms of any such plan,
program or arrangement, (v) Hugh M. Patinkin, John R. Desjardins, Matthew M.
Patinkin, and each Affiliate and Associate thereof and (vi) Frontenac Venture V
Limited Partnership, and each Affiliate and Associate thereof (together
"Frontenac"), provided that, Frontenac shall be considered an Acquiring Person
if Frontenac shall be the Beneficial Owner of more than 30% of the shares of
Common Stock of the Company then outstanding prior to the consummation of the
Offering plus 2% (the Persons specified in clauses (i) through (vi) being herein
collectively called "Exempt Persons"). Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," has become so inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person," then
such Person shall not be deemed to be an "Acquiring Person."
A "Restricted Person" is an Acquiring Person or any Affiliate or
Associate thereof.
The Rights Agreement provides that, until the Distribution
Date (or the earlier redemption or expiration of the Rights), the Rights may be
transferred only with the associated shares of Common Stock and Class B Common
Stock. Until the Distribution Date (or the earlier redemption or expiration of
the Rights), stock certificates for Common Stock and Class B Common Stock issued
after the Record Date, either upon transfer of outstanding shares or original
issuance of additional shares of Common Stock or Class B Common Stock, will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or the earlier redemption or expiration of the Rights), the
surrender for transfer of any stock certificate for shares of Common Stock or
Class B Common Stock, with or without such legend and whether or not a copy of
this Summary of Rights is attached thereto, will also constitute the transfer of
the Rights associated with the shares of Common Stock or Class B Common Stock
represented by such stock certificate.
As soon as practicable after the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to the
holders of record of the Common Stock and Class B Common Stock as of the Close
of Business on the Distribution Date, which thereafter will constitute the sole
evidence of the Rights. Each share of Common Stock issued by the Company after
the Distribution Date and prior to the
<PAGE> 68
earlier redemption or expiration of the Rights, including any shares of Common
Stock issued by reason of the exercise of any option, warrant, right (other than
the Rights) or conversion or exchange privilege (however evidenced) issued by
the Company prior to the Distribution Date, will be accompanied by a Right
(unless the Board expressly provides to the contrary at the time of issuance of
any such option, warrant, right or privilege), and Rights Certificates
evidencing such Rights will be issued at the same time as the stock certificates
for the associated shares of Common Stock.
The Rights are not exercisable until the Distribution Date.
Moreover, the time when the Rights may be exercised is restricted as described
in the next paragraph. The Rights will expire on the tenth anniversary of the
Record Date (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.
EXERCISE OF RIGHTS UNDER CERTAIN CIRCUMSTANCES
In the event that any Person becomes an Acquiring Person,
proper provision will be made so that the registered holder of each Right (other
than Rights Beneficially Owned as described in the next sentence) will
thereafter have the right to receive, upon exercise thereof, the number of
shares of Common Stock which, at the time of the occurrence of such event, will
have a market value equal to two times the then current Exercise Price. After
the first occurrence of either of the events described in the preceding
sentence, all Rights which are, or (under certain circumstances specified in the
Rights Agreement) were, Beneficially Owned by a Restricted Person or specified
transferees therefrom will be or become void. Under no circumstances may a Right
be exercised after the occurrence of either such event unless the Company's
right to redeem the Rights (as described below) has expired.
If, on or after the date on which any Person has become an
Acquiring Person, any of the following transactions occur: (i) the Company
merges into or consolidates with an Interested Stockholder (as hereinafter
defined) or, unless all holders of the Company's outstanding shares of Common
Stock are treated the same, another Person (with limited designated exceptions);
(ii) an Interested Stockholder or, unless all holders of the Company's
outstanding shares of Common Stock are treated the same, another Person (with
limited designated exceptions) merges into the Company and either (A) all or
part of the outstanding shares of Common Stock of the Company are converted into
capital stock or other securities of any other Person (or the Company), cash
and/or other property or (B) such shares remain outstanding, unconverted and
unchanged; or (iii) the Company sells or transfers 50% or more of its
consolidated assets or earning power to an Interested Stockholder (as
hereinafter defined) or, unless all holders of the Company's outstanding shares
of Common Stock
<PAGE> 69
are treated the same, another Person (with limited designated exceptions);
proper provision will be made so that the registered holder of each Right (other
than Rights which have become void) will thereafter have the right (the
"Flip-Over Right") to receive, upon exercise thereof, the number of common
shares of the acquiror (or of another Person affiliated therewith) which, at the
time of consummation of such transaction, will have a market value equal to two
times the then current Exercise Price. An "Interested Stockholder" is any
Restricted Person or any Affiliate or Associate of any other Person in which
such Restricted Person has an interest, or any Person acting, directly or
indirectly, on behalf of or in concert with any such Restricted Person.
ADJUSTMENTS TO EXERCISE PRICE AND STOCK PURCHASABLE UPON EXERCISE
The Exercise Price payable, the number and kind of shares of
capital stock issuable upon exercise of the Rights and the number of Rights
outstanding are subject to adjustment from time to time to prevent dilution (i)
in the event of a dividend payable in Preferred Shares on, or a subdivision,
combination or reclassification of, the Preferred Shares, (ii) upon the grant to
the holders of the Preferred Shares of certain options, warrants or rights to
subscribe for or purchase Preferred Shares at a price, or securities convertible
into or exchangeable for Preferred Shares with a conversion or exchange price,
less than the then Fair Market Value of the Preferred Shares or (iii) upon the
distribution to the holders of the Preferred Shares of cash, securities,
evidences of indebtedness or other property (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or options, warrants or
rights (other than those referred to in clause (ii) above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a dividend on the Common Stock
payable in shares of Common Stock or a subdivision, combination or
reclassification of the Common Stock occurring, in any such case, prior to the
Distribution Date.
With certain specified exceptions, no adjustment in the
Exercise Price will be made until the cumulative adjustments required equal at
least 1% of the Exercise Price. The Company is not required to issue fractional
Preferred Shares (other than fractions which are multiples of one one-hundredth
of a Preferred Share), but in lieu thereof the Company would be required to make
a cash payment based on the Fair Market Value of the Preferred Shares on the
trading day immediately preceding the date of exercise.
TERMS OF PREFERRED SHARES
The Preferred Shares receivable upon exercise of the
<PAGE> 70
Rights will not be redeemable. Each Preferred Share will entitle the holder
thereof to receive a preferential quarterly dividend equal to 100 times the
aggregate per share amount of all cash dividends, plus 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends and other
distributions (other than in shares of Common Stock), declared on the Common
Stock during such quarter, adjusted to give effect to any dividend on the Common
Stock payable in shares of Common Stock or any subdivision, combination or
reclassification of the Common Stock (a "Dilution Event"). Each Preferred Share
will entitle the holder thereof to 100 votes on all matters submitted to a vote
of the stockholders of the Company, voting together as a single class with the
holders of the Common Stock and the holders of any other class of capital stock
having general voting rights, adjusted to give effect to any Dilution Event. In
the event of liquidation of the Company, the holder of each Preferred Share will
be entitled to receive a preferential liquidation payment equal to 100 times the
aggregate per share amount to be distributed to the holders of the Common Stock,
adjusted to give effect to any Dilution Event, plus an amount equal to accrued
and unpaid dividends and distributions on such Preferred Share, whether or not
declared, to the date of such payment. In the event of any merger, consolidation
or other transaction in which the outstanding shares of Common Stock of the
Company are exchanged for or converted into other capital stock, securities,
cash and/or other property, each Preferred Share will be similarly exchanged or
converted into 100 times the per share amount applicable to the Common Stock,
adjusted to give effect to any Dilution Event.
Because of the nature of the dividend, voting, liquidation and
other rights accorded to each Preferred Share, the value of the one
one-hundredth of a Preferred Share receivable upon the exercise of each Right
should approximate the value of one share of Common Stock.
<PAGE> 71
REDEMPTION OF RIGHTS
At any time prior to the earliest of (i) 10 Business Days
after the first public announcement that any Person (other than an Exempt
Person) has become an Acquiring Person, (ii) the occurrence of any transaction
which permits the exercise of the Flip-Over Right and (iii) the Final Expiration
Date, the Board may redeem the Rights in whole, but not in part, at the
redemption price of $.01 per Right, adjusted to give effect to any Dilution
Event (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, in
its sole discretion, may establish. After the redemption period has expired, the
Company's right of redemption may be reinstated, under the circumstances
specified in the Rights Agreement, if either (i) the Person who became an
Acquiring Person shall reduce, in one or a series of related transactions not
involving the Company or any Subsidiary or the occurrence of any transaction
which permits the exercise of the Flip-Over Right, its Beneficial Ownership of
the outstanding shares of Common Stock to less than 10% of such outstanding
shares or (ii) in connection with any transaction which permits the exercise of
the Flip-Over Right, which does not involve an Interested Stockholder and in
which all holders of the Common Stock are treated the same. Immediately after
action by the Board directing the redemption of the Rights, the option to
exercise the Rights will terminate, and thereafter each registered holder of the
Rights will only be entitled to receive the Redemption Price therefor.
EXCHANGE OF RIGHTS
At any time after any Person has become an Acquiring Person
and prior to the time that any Person (other than an Exempt Person), together
with its Affiliates and Associates, has become the Beneficial Owner of 50% or
more of the outstanding shares of Common Stock, the Board may direct that all or
any part of the outstanding Rights (other than Rights which have become void) be
exchanged for shares of Common Stock at the exchange rate of one share of Common
Stock (or one one-hundredth of a Preferred Share or of another share of capital
stock of the Company having equivalent rights, preferences and privileges) per
Right, adjusted to give effect to any Dilution Event.
AMENDMENT OF THE RIGHTS AND THE RIGHTS AGREEMENT
Prior to the Distribution Date, the terms of the Rights and
the Rights Agreement may be supplemented or amended by the Board in any manner.
From and after the Distribution Date, the Rights may be supplemented or amended
by the Board, without the approval of the holders of the Rights, in certain
respects which do not adversely affect, as determined by the Board, the
interests of such holders; provided, however, that the Rights Agreement cannot
be amended to lengthen (i) any time period unless (A) such lengthening is
approved by at least a majority of
<PAGE> 72
the Disinterested Directors and (B) such lengthening is for the benefit of the
holders of the Rights or (ii) any time period relating to when the Rights may be
redeemed if at such time the Rights are not then redeemable.
MISCELLANEOUS
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.
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.
