<PAGE> 1
=======================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES
OF SECURITIES PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
ROCKY SHOES & BOOTS, INC.
(Exact name of registrant as specified in its charter)
Ohio 31-1364046
(State of incorporation or organization) (I.R.S. Employer Identification No.)
39 East Canal Street
Nelsonville, Ohio 45764
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each Class Name of each Exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Preferred Stock Purchase Rights Nasdaq National Market
=======================================================================
<PAGE> 2
Item 1. Description of Registrant's Securities to be Registered.
- --------------------------------------------------------------------------------
On November 5, 1997, the Board of Directors of Rocky Shoes & Boots,
Inc. (the "Company") authorized and declared a dividend of one preferred stock
purchase right (a "Right") for each share of common stock, no par value, of the
Company (the "Common Shares"). The dividend is payable on November 24, 1997 (the
"Record Date") to the holders of record of Common Shares as of the close of
business on such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of November
5, 1997, by and between the Company and The Fifth Third Bank, as Rights Agent
(the "Rights Agent").
1. Common Share Certificates Representing Rights
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates representing
Common Shares shall also represent the Rights attached to such Common Shares.
Common Share certificates issued after the Record Date and prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
2. Distribution Date
The "Distribution Date" is the earliest of (a) the tenth business day
following the date of the first public announcement that any person (other than
the Company or certain related entities, and with certain additional exceptions)
has become the beneficial owner of 20% or more of the then outstanding Common
Shares (such person is a "20% Shareholder" and the date of such public
announcement is the "20% Ownership Date"), (b) the tenth business day (or such
later day as shall be designated by the Board of Directors) following the date
of the commencement of, or the announcement of an intention to make, a tender
offer or exchange offer, the consummation of which would cause any person to
become a 20% Shareholder or (c) the first date, on or after the 20% Ownership
Date, upon which the Company is acquired in a merger or other business
combination in which the Company is not the surviving corporation or in which
the outstanding Common Shares are changed into or exchanged for stock or assets
of another person, or upon which 50% or more of the Company's consolidated
assets or earning power are sold (other than in transactions in the ordinary
course of business). In calculating the percentage of outstanding Common Shares
that are beneficially owned by any person, such person shall be deemed to
beneficially own any Common Shares issuable upon the exercise, exchange or
conversion of any options, warrants or other securities beneficially owned by
such person; provided, however, that such Common Shares issuable upon such
exercise shall not be deemed outstanding for the purpose of calculating the
percentage of Common Shares that are beneficially owned by any other person.
Notwithstanding the foregoing, no person shall be deemed a "20% Shareholder"
until such person becomes the beneficial owner of
2
<PAGE> 3
a percentage of the then outstanding Common Shares that is at least 1% more than
the percentage of the outstanding Common Shares beneficially owned by such
person on November 5, 1997. In addition, if, after November 5, 1997, any person
becomes the beneficial owner of at least 20% of the then outstanding Common
Shares as a result of any increase in the number of Common Shares issuable upon
the exercise, exchange or conversion of outstanding securities, or any decrease
in the number of outstanding Common Shares resulting from any stock repurchase
plan or self tender offer of the Company, then such person shall not be deemed a
"20% Shareholder" until such person thereafter acquires beneficial ownership of,
in the aggregate, a number of additional Common Shares equal to 1% or more of
the then outstanding Common Shares.
Upon the close of business on the Distribution Date, the Rights shall
separate from the Common Shares, Right certificates shall be issued and the
Rights shall become exercisable to purchase Preferred Shares as described in
Section 5 below.
3. Issuance of Right Certificates
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4. Expiration of Rights
The Rights shall expire on November 5, 2007 unless earlier
redeemed or exchanged, unless the Distribution Date has previously occurred and
the Rights have separated from the Common Shares, in which case the Rights will
remain outstanding for ten years.
5. Exercise of Rights
Unless the Rights have expired or been redeemed or exchanged, they may
be exercised, at the option of the holders, pursuant to paragraphs (a), (b) or
(c) below. No Right may be exercised more than once or pursuant to more than one
of such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by a 20%
Shareholder or that was attached to a Common Share that is subject to an option
beneficially owned by a 20% Shareholder shall be void.
(a) Right to Purchase Preferred Shares.
From and after the close of business on the
Distribution Date, each Right (other than a Right that has become void)
shall be exercisable to purchase one one-hundredth of a share of Series
B Junior Participating Cumulative Preferred Stock, no par value, of the
Company (the "Preferred Shares"), at an exercise price of $80.00
(Eighty dollars) (the "Exercise Price"). Prior to the Distribution
Date, the Company may substitute for all or any
3
<PAGE> 4
portion of the Preferred Shares that would otherwise be issuable upon
exercise of the Rights, cash, assets or other securities having the
same aggregate value as such Preferred Shares. The Preferred Shares are
nonredeemable and, unless otherwise provided in connection with the
creation of a subsequent series of preferred stock, are subordinate to
any other series of the Company's preferred stock, whether issued
before or after the issuance of the Preferred Shares. The Preferred
Shares may not be issued except upon the exercise of Rights. The holder
of a Preferred Share is entitled to receive when, as and if declared,
the greater of (i) a preferential annual dividend of $1.00 per
Preferred Share ($.01 per one one-hundredth of a Preferred Share); or
(ii) cash and non-cash dividends in an amount equal to 100 times the
dividends declared on each Common Share. In the event of liquidation,
the holders of Preferred Shares shall be entitled to receive a
liquidation payment in an amount equal to the greater of (1) $1.00 per
Preferred Share ($.01 per one one-hundredth of a Preferred Share), plus
all accrued and unpaid dividends and distributions on the Preferred
Shares, or (2) an amount equal to 100 times the aggregate amount to be
distributed per Common Share. Each Preferred Share has 100 votes,
voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are
exchanged, the holder of a Preferred Share shall be entitled to receive
100 times the amount received per Common Share. The rights of the
Preferred Shares as to dividends, voting and liquidation preferences
are protected by antidilution provisions. It is anticipated that the
value of one one-hundredth of a Preferred Share should approximate the
value of one Common Share; or (ii) cash and non-cash dividends in an
amount equal to 100 times the dividends declared on each Common Share.
(b) Right to Purchase Common Shares of the Company.
From and after the close of business on the tenth
business day following the 20% Ownership Date, each Right (other than a
Right that has become void) shall be exercisable to purchase, at the
Exercise Price (initially $80.00), Common Shares with a market value
equal to two times the Exercise Price. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the
Company shall substitute for all or any portion of the Common Shares
that would otherwise be issuable upon the exercise of the Rights, cash,
assets or other securities having the same aggregate value as such
Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation.
If, on or after the 20% Ownership Date, (i) the
Company is acquired in a merger or other business combination in which
the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a merger or other business combination in
which all or part of the outstanding Common Shares are changed into or
exchanged for stock or assets of another person or (iii) 50% or more of
the Company's consolidated assets or earning power are sold (other than
in transactions in the ordinary course of business), then each Right
(other than a Right that has become void) shall
4
<PAGE> 5
thereafter be exercisable to purchase, at the Exercise Price (initially
$80.00) shares of common stock of the surviving corporation or
purchaser, respectively, with an aggregate market value equal to two
times the Exercise Price.
6. Adjustments to Prevent Dilution
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution. With certain exceptions, no adjustment in the
Exercise Price shall be required until cumulative adjustments require an
adjustment of at least 1%.
7. Cash Paid Instead of Issuing Fractional Securities
No fractional securities shall be issued upon exercise of a Right
(other than fractions of Preferred Shares that are integral multiples of one
one-hundredth of a Preferred Share and that may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
shall be made based on the market price of such securities on the last trading
date prior to the date of exercise.
8. Redemption
At any time prior to the earlier of (a) the tenth business day (or such
later day as shall be designated by the Board of Directors) following the date
of the commencement of, or the announcement of an intention to make, a tender
offer or exchange offer, the consummation of which would cause any person to
become a 20% Shareholder, (b) the tenth business day after the 20% Ownership
Date or (c) the first event of the type giving rise to exercise rights under
Section 5(c) above, the Board of Directors may, at its option, direct the
Company to redeem the Rights in whole, but not in part, at a price of $0.001 per
Right (the "Redemption Price"), and the Company shall so redeem the Rights;
provided, however, that any redemption after there is a 20% Shareholder shall
also require the approval of a majority of those directors of the Company who
were directors prior to such date. Immediately upon such action by the Board of
Directors (the date of such action is the "Redemption Date"), the right to
exercise Rights shall terminate and the only right of the holders of Rights
thereafter shall be to receive the Redemption Price.
9. Exchange
At any time after the 20% Ownership Date and prior to the first date
thereafter upon which a 20% Shareholder shall be the beneficial owner of 50% or
more of the outstanding Common Shares, the Board of Directors may, at its
option, direct the Company to exchange all, but not less than all, of the then
outstanding Rights for Common Shares at an exchange ratio per Right equal to one
Common Share per Right on such Date (the "Exchange Ratio"), and the Company
shall so exchange the Rights. Immediately upon such action by the Board of
Directors, the right to exercise Rights
5
<PAGE> 6
shall terminate and the only right of the holders of Rights thereafter shall be
to receive a number of Common Shares equal to the Exchange Ratio.
10. No Shareholder Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a shareholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. Amendment of Rights Agreement
The Board of Directors may, from time to time, without the approval of
any holder of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of the Rights Agreement in any manner, whether or not such
supplement or amendment is adverse to any holder of Rights, and the Company and
the Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the earliest of (a) the tenth business day (or such later
day as shall be designated by the Board of Directors) following the date of the
commencement of, or the announcement of an intention to make, a tender offer or
exchange offer, the consummation of which would cause any person to become a 20%
Shareholder, (b) the 20% Ownership Date, (c) the first event of the type giving
rise to exercise rights under Section 5(c) above, or (d) the Redemption Date,
the Rights Agreement shall not be supplemented or amended in any manner that
would materially and adversely affect any holder of outstanding Rights other
than a 20% Shareholder; and provided further that from and after the first date
upon which there shall exist a 20% Shareholder, the Rights Agreement shall not
be supplemented or amended in any manner without the approval of a majority of
the Company's directors who were directors prior to such date.
6
<PAGE> 7
Item 2. Exhibits
- --------------------------------------------------------------------------------
Attached hereto as an exhibit and incorporated herein by reference is
the Rights Agreement dated as of November 5, 1997, by and between the Company
and The Fifth Third Bank, as Rights Agent, and which includes as Exhibit A
thereto the Form of Second Amended and Restated Articles of Incorporation, as
Exhibit B thereto the Form of Right Certificate and as Exhibit C thereto the
Summary of Rights.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed by on its behalf by the undersigned, thereto duly authorized.
ROCKY SHOES & BOOTS, INC.
/s/ Mike Brooks
-------------------------------------------
By: Mike Brooks
Chairman of the Board, President and Chief
Executive Officer
Dated: November 5, 1997
7
<PAGE> 8
EXHIBIT INDEX
EXHIBIT NO.
4.1 Rights Agreement dated as of November 5, 1997 by and between the
Company and The Fifth Third Bank, as Rights Agent, and which includes as Exhibit
A thereto the Form of Second Amended and Restated Articles of Incorporation, as
Exhibit B thereto the Form of Right Certificate and as Exhibit C thereto the
Summary of Rights.
<PAGE> 1
Exhibit 4.1
RIGHTS AGREEMENT
DATED AS OF NOVEMBER 5, 1997
BY AND BETWEEN
ROCKY SHOES & BOOTS, INC.
AND
TEH FIFTH THIRD BANK
AS RIGHTS AGENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Certain Definitions............................................................................2
Section 2. Appointment of Rights Agent....................................................................7
Section 3. Issuance of Right Certificates.................................................................7
Section 4. Form of Right Certificates.....................................................................9
Section 5. Countersignature and Registration..............................................................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.........................10
Section 7. Exercise of Rights............................................................................10
Section 8. Cancellation and Destruction of Right Certificates............................................12
Section 9. Reservation and Availability of Capital Stock.................................................13
Section 10 Securities Record Date........................................................................13
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
Upon Exercise of Rights or Number of Rights...................................................14
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights..............................................................19
Section 13. Consolidation, Merger, or Sale or Transfer of
Assets or Earning Power.......................................................................19
Section 14. Fractional Rights and Fractional Shares.......................................................22
Section 15. Rights of Action..............................................................................22
Section 16. Agreement of Right Holders....................................................................23
Section 17. Right Holder and Right Certificate Holder
Not Deemed a Shareholder......................................................................23
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 18. Concerning the Rights Agent...................................................................23
Section 19. Merger or Consolidation or Change of Name of Rights Agent.....................................24
Section 20. Duties of Rights Agent........................................................................25
Section 21. Change of Rights Agent........................................................................26
Section 22. Issuance of New Right Certificates............................................................27
Section 23. Redemption of Rights..........................................................................27
Section 24. Exchange of Rights............................................................................28
Section 25. Notice of Certain Events......................................................................29
Section 26. Notices ...................................................................................30
Section 27. Supplements and Amendments....................................................................31
Section 28 Certain Covenants.............................................................................31
Section 29. Successors....................................................................................32
Section 30. Benefits of this Agreement....................................................................32
Section 31. Severability..................................................................................32
Section 32. Governing Law.................................................................................32
Section 33. Counterparts..................................................................................32
Section 34. Descriptive Headings..........................................................................32
</TABLE>
-ii-
<PAGE> 4
TABLE OF EXHIBITS
Exhibit A Second Amended and Restated Articles of Incorporation
Exhibit B Form of Right Certificate
Exhibit C Form of Summary of the Rights
-iii-
<PAGE> 5
RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered into as of
November 5, 1997, by and between ROCKY SHOES & BOOTS, INC., an Ohio corporation
(the "Company"), and THE FIFTH THIRD BANK, an Ohio banking corporation (the
"Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized
and declared a dividend of one preferred stock purchase right
(a "Right") for each Common Share (as hereinafter defined) of
the Company, which dividend is payable on November 24, 1997
(the "Record Date"), to the holders of record of Common Shares
as of the Close of Business (as hereinafter defined) on such
date;
WHEREAS, the Board of Directors of the Company has further
authorized and directed the issuance of one (subject to
adjustment of such number as provided in this Agreement) Right
for (A) each Common Share that shall be issued by the Company
at any time after the Record Date and prior to the earliest of
the date of the first Section 11(a)(ii) Event, the date of the
first Section 13(a) Event, the Redemption Date or the
Expiration Date (as such terms are hereinafter defined), and
(B) each Common Share that shall be issued by the Company at
any time on or after the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the
Expiration Date pursuant to the exercise of conversion rights,
exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the
earlier of the date of the first Section 11(a)(ii) Event or
the date of the first Section 13(a) Event, unless the Board of
Directors shall provide otherwise at the time of the issuance
or grant of such conversion rights, exchange rights, rights
(other than Rights), warrants or options; and
WHEREAS, in connection with the matters referred to herein,
the Company desires to appoint the Rights Agent to act on
behalf of the Company for the benefit of the holders of
Rights, and the Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual agreements set forth herein, and for the benefit of
the holders of Rights, the parties hereto hereby agree as
follows:
1
<PAGE> 6
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in
effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own":
(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3
promulgated under the Exchange Act, in each case as in effect on the
date hereof;
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right
is exercisable immediately, or only after the passage of time,
compliance with regulatory requirements, the fulfillment of a
condition, or otherwise) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or options, or
otherwise, provided that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a
tender offer 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;
(iii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to vote, alone or in concert
with others, pursuant to any agreement, arrangement or understanding,
provided that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable
proxy given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy solicitation made pursuant to
and in accordance with the applicable rules and regulations of the
Exchange Act, and (B) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report);
(iv) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (other than
voting pursuant to a revocable proxy as described in the proviso to
Section 1(b)(iii) hereof) or disposing of any securities of the
Company; and
<PAGE> 7
(v) on any day on or after the Distribution Date, all Rights
that prior to such date were represented by certificates for Common
Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section 1(b), a Person engaged
in business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of Ohio are authorized or
obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 o'clock p.m.,
Cincinnati, Ohio time, on such date; provided, however, that if such date is not
a Business Day, it shall mean 5:00 o'clock p.m., Cincinnati, Ohio time, on the
next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall be
the last sale price, regular way, per share of such stock or unit of such other
security on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if such stock or other 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 on the principal national
securities exchange on which such stock or other security is listed or admitted
to trading or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("Nasdaq") or such other system then
in use or, if on any such date such stock or other security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker that makes a market in such stock or other
security and that is selected by the Board of Directors of the Company.
(f) "Common Share" shall mean one share of the Common Stock, no par
value, of the Company, unless used with reference to a Person other than the
Company, in which case it shall mean one share of the class of capital stock (or
equity interest) of such other Person having the greatest voting power per share
or, if such Person is a Subsidiary of another Person, of the Person that
ultimately controls such Person.
(g) "Common Share Equivalent" shall have the meaning ascribed to it in
Section 11(a)(iii) hereof.
3
<PAGE> 8
(h) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; provided,
however, that if any event shall have caused the Closing Price on any Trading
Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such noncomparable Closing Price so used shall be appropriately adjusted by
the Board of Directors of the Company in order to make the Closing Price on each
Trading Day during the period used for the determination of the Current Market
Price fully comparable with the Closing Price on such date in question (or, if
applicable, the immediately preceding Trading Day). "Current Market Price" per
share of any stock or unit of such other security that is not publicly held or
so listed or traded, and "Current Market Price" of any other property, shall
mean the fair value per share of such stock or unit of such other security, or
the fair value of such other property, respectively, as determined in good faith
by the Board of Directors of the Company based upon such appraisals or valuation
reports of such independent experts as the Board of Directors shall in good
faith determine appropriate, which determination shall be described in a
statement filed by the Company with the Rights Agent.
(i) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exchange Ratio" shall have the meaning ascribed to it in Section
24(a) hereof.
(l) "Exempt Person" shall mean the Company, any wholly-owned Subsidiary
of the Company, any employee benefit plan of the Company or of a Subsidiary of
the Company, and any Person holding Voting Shares for or pursuant to the terms
of any such employee benefit plan.
(m) "Exercise Price" shall have the meaning ascribed to it in Section
7(c) hereof.
(n) "Expiration Date" shall mean November 5, 2007, unless the
Distribution Date shall occur on or prior to such date and the Rights shall have
separated from the Common Shares pursuant to the terms of this Agreement, in
which case "Expiration Date" shall mean the date which is the tenth anniversary
of the Distribution Date.
(o) "Person" shall mean any individual, firm, partnership, corporation,
association, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect on the date hereof) or other entity, and shall include
any successor (by merger or otherwise) of such entity.
(p) "Preferred Share" shall mean one share of the Series B Junior
Participating Cumulative Preferred Stock, no par value, of the Company, which
shall have the rights and preferences set forth in the Form of Second Amended
and Restated Articles of Incorporation attached hereto as Exhibit A.
4
<PAGE> 9
(q) "Preferred Share Equivalents" shall have the meaning ascribed to it
in Section 11(b) hereof.
(r) "Record Date" shall have the meaning ascribed to it in the recitals
hereto.
(s) "Redemption Date" shall mean the date of the action of the Board of
Directors of the Company authorizing and directing the redemption of the Rights
pursuant to Section 23(a) hereof or the exchange of the Rights pursuant to
Section 24(a) hereof.
(t) "Redemption Price" shall have the meaning ascribed to it in Section
23(a) hereof.
(u) "Right" shall have the meaning ascribed to it in the recitals
hereto.
(v) "Rights Agent" shall have the meaning ascribed to it in the
recitals hereto.
(w) "Section 11(a)(ii) Event" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
(x) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(y) "Securities Act" shall mean the Securities Act of 1933, as amended.
(z) "Subsidiary" of any Person shall mean any corporation or other
Person of which equity securities or equity interests representing a majority of
the voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(aa) "Surviving Person" shall have the meaning ascribed to it in
Section 13(a) hereof.
(bb) "Trading Day" shall mean, as to any stock or other security, a day
on which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(cc) "Unavailable Adjustment Shares" has the meaning ascribed to it in
Section 11(a)(iii) hereof.
(dd) "Voting Share" shall mean (i) a Common Share of the Company and
(ii) any other share of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Shares
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
5
<PAGE> 10
(ee) "20% Ownership Date" shall mean the first date after the
declaration by the Board of Directors referred to in the first recital hereto of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or a 20% Shareholder containing the facts by virtue of which
a Person has become a 20% Shareholder.
(ff) "20% Shareholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of such
number of Voting Shares of the Company as constitutes a percentage of the then
outstanding Voting Shares that is equal to or greater than 20%; provided,
however, that the term "20% Shareholder" shall not include: (i) an Exempt
Person; (ii) any Person that, together with all Affiliates and Associates of
such Person, became the Beneficial Owner of 20% or more of the Voting Shares of
the Company on or prior to November 5, 1997 ("Existing Owner"), unless and until
such Existing Owner, after November 5, 1997, becomes the Beneficial Owner of
additional Voting Shares representing 1% or more of the Voting Shares or, after
first becoming the Beneficial Owner of less than 20% of the Voting Shares, again
becomes the owner of 20% or more of the Voting Shares; or (iii) any Person if
such Person would not otherwise be a 20% Shareholder but for a reduction in the
number of outstanding Voting Shares resulting from a stock repurchase program or
other similar plan of the Company or from a self-tender offer of the Company,
which plan or tender offer commenced on or after the date hereof, provided,
however, that the term "20% Shareholder" shall include such Person from and
after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then outstanding and (B) such
Person, together with all Affiliates and Associates of such Person, shall
Beneficially Own 20% or more of the Voting Shares of the Company then
outstanding. In calculating the percentage of the outstanding Voting Shares that
are Beneficially Owned by a Person for purposes of this subsection (ff), Voting
Shares that are Beneficially Owned by such Person shall be deemed outstanding,
and Voting Shares that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, exchange rights, rights (other than Rights), warrants or options shall
not be deemed outstanding. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person that would
otherwise be a 20% Shareholder pursuant to the foregoing provisions of this
Section 1(ff) and Section 1(b) hereof has become such inadvertently, and such
Person (a) promptly notifies the Board of Directors of such status and (b) as
promptly as practicable thereafter, either divests of a sufficient number of
Voting Shares so that such Person would no longer be a 20% Shareholder, or
causes any other circumstance, such as the existence of an agreement respecting
Voting Shares, to be eliminated such that such Person would no longer be a 20%
Shareholder as defined pursuant to this Section 1(ff) and 1(b), then such Person
shall not be deemed to be a 20% Shareholder for any purposes of this Agreement.
Any determination made by the Board of Directors of the Company as to whether
any Person is or is not a 20% Shareholder shall be conclusive and binding upon
all holders of Rights.
6
<PAGE> 11
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of Rights in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten days' prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such co-Rights Agent.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earliest of (i) the tenth Business Day (or such later day as shall
be designated by the Board of Directors of the Company) following the date of
the commencement of, or the first public announcement of the intent of any
Person, other than an Exempt Person, to commence, a tender offer or exchange
offer, the consummation of which would cause any Person to become a 20%
Shareholder, (ii) the date of the first Section 11(a)(ii) Event or (iii) the
date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented by
certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common Shares shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send, at the Company's
expense, by first-class, postage-prepaid mail to each record holder of Common
Shares, as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate
substantially in the form of Exhibit B hereto representing one Right for each
Common Share so held. From and after the Distribution Date, the Rights shall be
represented solely by such Right Certificates and may only be transferred by the
transfer of such Right Certificates, and the holders of such Right Certificates,
as listed in the records of the Company or any transfer agent or registrar for
such Rights, shall be the record holders of such Rights.
(d) As soon as practicable after the Record Date, the Company shall
send a copy of a Summary of the Rights in substantially the form attached hereto
as Exhibit C by first-class, postage-prepaid mail to each record holder of
Common Shares as of the Close of Business on the Record Date at the address of
such holder shown on the records of the Company.
7
<PAGE> 12
(e) Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution Date, the Redemption Date or
the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also represents Rights that entitle
the holder hereof to certain rights as set forth in a Rights
Agreement dated as of November 5, 1997 by and between the
Corporation and The Fifth Third Bank, as Rights Agent (the
"Rights Agreement"), the terms and conditions of which are
hereby incorporated herein by reference and a copy of which is
on file at the principal executive offices of the Corporation.
Under certain circumstances specified in the Rights
Agreement, such Rights will be represented by separate
certificates and will no longer be represented by this
certificate. Under certain circumstances specified in the
Rights Agreement, Rights beneficially owned by certain persons
may become null and void. The Corporation will mail to the
record holder of this certificate a copy of the Rights
Agreement without charge promptly following receipt of a
written request therefor.
(f) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued
pursuant to the terms of a Rights Agreement dated as of
November 5, 1997 by and between the Corporation and The Fifth
Third Bank, as Rights Agent.
(g) In the event that at any time on or after the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall issue any Common Shares pursuant to the exercise of conversion
rights, exchange rights, rights (other than Rights), warrants or options that
shall have been issued or granted prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event, then,
unless the Board of Directors of the Company shall have provided otherwise at
the time of the issuance or grant of such conversion rights, exchange rights,
rights (other than Rights), warrants or options, the Rights Agent shall, as soon
as practicable after the date of such event, send by first-class,
postage-prepaid mail to the record holder of such Common Shares, at the address
of such holder as shown on the records of the Company, a Right Certificate
substantially in the form of Exhibit B hereto representing one Right for each
Common Share so issued.
8
<PAGE> 13
(h) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 20% Shareholder or any
of its Affiliates or Associates or to any Person if the Rights held by such
Person are Beneficially Owned by a 20% Shareholder or any of its Affiliates or
Associates. Any determination made by the Board of Directors of the Company as
to whether any Common Shares are or were Beneficially Owned at any time by a 20%
Shareholder or an Affiliate or Associate of a 20% Shareholder shall be
conclusive and binding upon all holders of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES.
The Right Certificates and the form of assignment, including
certificate, and the form of election to purchase, including certificate,
printed on the reverse thereof, when, as and if issued, shall be substantially
the same as Exhibit B hereto, and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange upon which the Rights or the securities of the Company
issuable upon exercise of the Rights may from time to time be listed, or to
conform to usage. Subject to Section 22 hereof, Right Certificates, whenever
issued, that are issued in respect of Common Shares that were issued and
outstanding as of the Close of Business on the Distribution Date, shall be dated
as of the Distribution Date.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its President or any
Vice President, either manually or by facsimile signature, and may have affixed
thereto the Company's seal or a facsimile thereof attested by its Secretary or
any Assistant Secretary, either manually or by facsimile signature. The Right
Certificates shall be countersigned by an authorized signatory of the Rights
Agent (which need not be the same authorized signatory for all of the Right
Certificates) and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless be countersigned by an authorized
signatory of the Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company. Any Right Certificate may be
signed on behalf of the Company by any person who at the actual date of such
execution shall be a proper officer of the Company to sign such Right
Certificate, even though such person was not such an officer at the date of the
execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its offices in Cincinnati, Ohio books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of Right
9
<PAGE> 14
Certificates, the number of Rights represented on its face by each Right
Certificate and the date of each Right Certificate.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent with the form of assignment, including certificate, on the
reverse side thereof completed and duly executed, with signature guaranteed and
such other and further documentation as the Rights Agent may reasonably request.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right 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
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
such Right Certificate, if mutilated, along with signature guarantees and such
other and further documentation as the Rights Agent may reasonably request, the
Company shall issue and deliver to the Rights Agent for delivery to the record
holder of such Right Certificate a new Right Certificate of like tenor in lieu
of such lost, stolen, destroyed or mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such Rights Agent knows such Right Certificate represents, or would represent
when held by such Person, Rights that had become or would become null and void
pursuant to Section 7(d) hereof.
SECTION 7. EXERCISE OF RIGHTS.
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions of
this Agreement, 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 or the
Expiration Date, the registered holder of any Right Certificate may exercise the
Rights represented thereby in whole or in part upon surrender of such
10
<PAGE> 15
Right Certificate, with the form of election to purchase, including certificate,
on the reverse side thereof completed and duly executed, with signature
guaranteed, to the Rights Agent at the office or agency of the Rights Agent in
Cincinnati, Ohio, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request, together with payment
of the Exercise Price for each Right exercised. Upon the exercise of an
exercisable Right and payment of the Exercise Price in accordance with the
provisions of this Agreement, the holder of such Right shall be entitled to
receive, subject to adjustment as provided herein, one one-hundredth of a
Preferred Share (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event, Common Shares, other securities, cash and/or other property
in accordance with the provisions of this Agreement).
(c) The Exercise Price for the exercise of each Right shall initially
be $80.00 (Eighty dollars) and shall be payable in lawful money of the United
States of America in accordance with Section 7(f) hereof. The Exercise Price and
the number of Preferred Shares (or, following the occurrence of a Section
11(a)(ii) Event or a Section 13(a) Event, Common Shares, cash and/or other
property in accordance with the provisions of this Agreement) to be acquired
upon exercise of a Right shall be subject to adjustment from time to time as
provided in Sections 7(e), 11 and 13 hereof and the other provisions of this
Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event, any Rights that are or were Beneficially
Owned by a 20% Shareholder or any Affiliate or Associate of a 20% Shareholder at
any time on or after the Distribution Date shall be null and void, and for all
purposes of this Agreement such Rights shall thereafter be deemed not to be
outstanding, and any holder of such Rights (whether or not such holder is a 20%
Shareholder or an Affiliate or Associate of a 20% Shareholder) shall thereafter
have no right to exercise such Rights.
(e) Prior to the Distribution Date, if the Board of Directors of the
Company shall have determined that such action adequately protects the interests
of the holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the Preferred Shares that would otherwise be issuable (after
the Close of Business on the Distribution Date) upon the exercise of each Right
and payment of the Exercise Price, (i) cash, (ii) other equity securities of the
Company, (iii) debt securities of the Company, (iv) other property, or (v) any
combination of the foregoing, in each case having an aggregate Current Market
Price equal to the aggregate Current Market Price of the Preferred Shares for
which substitution is made. Subject to Section 7(d) hereof, in the event that
the Company takes any action pursuant to this Section 7(e), such action shall
apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate, completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or cashier's
check payable to the order of the
11
<PAGE> 16
Company, the Rights Agent shall thereupon promptly (i) requisition from the
transfer agent of the Preferred Shares (or, following the occurrence of a
Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares, other
securities, cash and/or other property in accordance with the provisions of this
Agreement), certificates for the number of Preferred Shares (or such other
securities) to be purchased, and the Company hereby irrevocably authorizes such
transfer agent to comply with all such requests, and/or, as provided in Section
14 hereof, requisition from the depositary agent described therein depositary
receipts representing such number of one-hundredths of a Preferred Share (or
such other securities) as are to be purchased (in which case certificates for
the Preferred Shares (or such other securities) represented by such receipts
shall be deposited by the transfer agent with such depositary agent) and the
Company hereby directs such depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional Preferred Shares (or such other securities) in
accordance with Section 14 hereof, (iii) after receipt of such certificates,
depositary receipts or cash, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt thereof, deliver such cash to or upon the order of the registered holder
of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act and
any applicable securities law of any jurisdiction the Preferred Shares to be
issued pursuant to the exercise of the Rights; provided, however, that nothing
contained in this Section 7 shall relieve the Company of its obligations under
Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
12
<PAGE> 17
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity securities
(or out of its authorized and issued equity securities held in its treasury),
the number of such equity securities that will from time to time be sufficient
to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of
the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and any
applicable securities laws and to keep such registration effective until the
earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Exercise Price), be duly and validly authorized and issued and fully paid
and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the exercise of any Right until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.
SECTION 10. SECURITIES RECORD DATE.
Each person in whose name any certificate for securities of the Company
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the securities represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
representing such Rights was duly surrendered and payment of the Exercise Price
(and
13
<PAGE> 18
any applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the securities transfer books of
the Company are closed, such person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the securities transfer books of the Company
are open.
SECTION 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES ISSUABLE UPON
EXERCISE OF RIGHTS OR NUMBER OF RIGHTS.
The Exercise Price, the number and kind of securities that may be
purchased upon exercise of a Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the Close
of Business on the Record Date and prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date (A) declare
or pay any dividend on the Preferred Shares payable in Preferred Shares
or Voting Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue Preferred Shares or Voting Shares in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), then, and upon
each such event, the number and kind of Preferred Shares or other
securities issuable upon the exercise of a Right on the date of such
event shall be proportionately adjusted so that the holder of any Right
exercised on or after such date shall be entitled to receive, upon the
exercise thereof and payment of the Exercise Price, the aggregate
number and kind of Preferred Shares or other securities or other
property, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when such Right was
exercisable and the transfer books of the Company were open, such
holder would have owned upon such exercise and would have been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 20%
Ownership Date shall have occurred and neither the Redemption Date nor
the Expiration Date shall have occurred prior to the tenth Business Day
following such 20% Ownership Date, then, and effective as of the end of
such tenth Business Day, proper provision shall be made so that except
as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement and payment of the then
current Exercise Price, in lieu of the securities or other property
otherwise purchasable upon such exercise, such number of Common Shares
of the Company as shall equal the result obtained by multiplying the
then current Exercise Price by the then
14
<PAGE> 19
number of one-hundredths of a Preferred Share for which a Right was
exercisable (or, if the Distribution Date shall not have occurred prior
to the date of such Section 11(a)(ii) Event, the number of
one-hundredths of a Preferred Share for which a Right would have been
exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event)
immediately prior to such Section 11(a)(ii) Event, and dividing that
product by 50% of the Current Market Price (determined pursuant to
Section 11(d) hereof) of a Common Share on the date of occurrence of
the relevant Section 11(a)(ii) Event (such number of shares being
hereinafter referred to as the "Adjustment Shares"). Successive
adjustments shall be made pursuant to this paragraph each time a
Section 11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii)
Event the aggregate number of Common Shares that are authorized by the
Company's Second Amended and Restated Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is less than the aggregate number of Adjustment
Shares thereafter issuable upon the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Common Shares being
hereinafter referred to as the "Unavailable Adjustment Shares"), then,
and upon each such event, the Company shall substitute for the pro rata
portion of the Unavailable Adjustment Shares that would otherwise be
issuable thereafter upon the exercise of each Right and payment of the
Exercise Price, (A) cash, (B) other equity securities of the Company
(including, without limitation, shares of preferred stock of the
Company or units of such shares having the same Current Market Price as
one Common Share (a "Common Share Equivalent")), (C) debt securities of
the Company, (D) other property or (E) any combination of the
foregoing, in each case having an aggregate Current Market Price equal
to the aggregate Current Market Price of the Unavailable Adjustment
Shares for which substitution is made. Subject to Section 7(d) hereof,
in the event that the Company takes any action pursuant to this Section
11(a)(iii), such action shall apply uniformly to all outstanding
Rights.
(b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date prior to the
earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, 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 equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares that the aggregate
15
<PAGE> 20
offering price of the total number of Preferred Shares and/or Preferred Share
Equivalents to be so offered (and/or the aggregate initial conversion price of
the convertible securities to be so offered) would purchase at such Current
Market Price, and the denominator of which shall be equal to the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or Preferred Share Equivalents to be offered for
subscription or purchase (or into which the convertible securities to be so
offered are initially convertible); provided, however, that if such rights,
options or warrants are not exercisable immediately upon issuance but become
exercisable only upon the occurrence of a specified event or the passage of a
specified period of time, then the adjustment to the Exercise Price shall be
made and become effective only upon the occurrence of such event or such passage
of time, and such adjustment shall be made as if the record date for the
issuance of such rights, options or warrants had been the business day
immediately preceding the date upon which such rights, options or warrants
became exercisable. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment to the Exercise Price shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price that would
then be in effect if such record date had not been fixed.
(c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution of securities for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash dividend), then 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 equal to the excess of the Current
Market Price per Preferred Share on such record date over and above the fair
market value of the portion of the securities or assets to be so distributed
with respect to one Preferred Share, and the denominator of which shall be equal
to such Current Market Price per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such a
distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively deemed to be the Current Market Price per
Common Share multiplied by 100.
(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; provided, however, that any adjustments that by reason of this Section
11(e) are not required to be made shall be cumulated and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be
16
<PAGE> 21
made to the nearest cent or to the nearest one-hundredth of a Common Share or
other share or one-ten thousandth of a Preferred Share, as the case may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any securities of the Company other than Preferred Shares, the number of
such other securities so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Preferred Shares contained in this
Section 11, and the other provisions of this Agreement with respect to Preferred
Shares shall apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of 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 its election as provided in
Section 11(i) below, upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter represent
the right to purchase, at the adjusted Exercise Price, that number of
one-hundredths of a Preferred Share (calculated to the nearest one-ten
thousandth of a Preferred Share) obtained by multiplying (i) the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one Right
immediately prior to such adjustment of the Exercise Price by (ii) the Exercise
Price in effect immediately prior to such adjustment, and 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 of any adjustment of
the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one one-hundredth of a
Right) obtained by dividing the Exercise Price in effect immediately prior to
the adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least ten days
after the date of such public announcement. If separate Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates representing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
17
<PAGE> 22
adjustment or, at the option of the Company, cause to be distributed to such
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of such adjustment, and upon surrender
thereof if required by the Company, new Right Certificates representing all the
Rights to which such holders shall be entitled after such adjustment. Right
Certificates to be so distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company, the
adjusted Exercise Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of one-hundredths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-hundredth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that 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 that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredths of a Preferred Share at such adjusted Exercise
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
of the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such further adjustments in the number of
one-hundredths of a Preferred Share that may be purchased upon exercise of one
Right, and such further adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it
in its sole discretion shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for
cash of any Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares, (iv) dividends
on Preferred Shares payable in Preferred Shares or (v) issuance of rights,
options or warrants referred to Section 11(b) hereof, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
18
<PAGE> 23
(n) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earliest
of the date of the first Section 11(a)(ii) Event, the date of the first Section
13(a) Event, the Redemption Date or the Expiration Date, (i) pay any dividend on
the Common Shares payable in Common Shares, (ii) subdivide the outstanding
Common Shares, (iii) combine the outstanding Common Shares into a smaller number
of Common Shares or (iv) issue Common Shares in a reclassification of the Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
then, and upon each such event, the Exercise Price to be in effect after such
event shall be determined by multiplying the Exercise Price in effect
immediately prior to such event by a fraction, the numerator of which shall be
equal to the number of Common Shares outstanding immediately prior to such event
and the denominator of which shall be equal to the number of Common Shares
outstanding immediately after such event. Successive adjustments shall be made
pursuant to this Section 11(n) each time such a dividend is paid or such a
subdivision, combination or reclassification is effected. If an event occurs
that would require an adjustment under both this Section 11(n) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(n) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
SECTION 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES ISSUABLE
UPON EXERCISE OF RIGHTS.
Whenever an adjustment is made as provided in Section 11 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts giving rise to such adjustment, (b) file with
the Rights Agent and with each transfer agent for the securities issuable upon
exercise of the Rights a copy of such certificate and (c) mail a brief summary
thereof to each holder of Rights in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or to give such notice shall not affect the validity or the force
and effect of such adjustment. Any adjustment to be made pursuant to Sections 11
or 13 hereof shall be effective as of the date of the event giving rise to such
adjustment.
SECTION 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 20% Ownership Date and prior to the earlier of the Redemption Date or
the Expiration Date, (1) the Company shall, directly or indirectly, consolidate
with or merge with and into any other Person and the Company shall not be the
continuing or surviving corporation in such consolidation or merger, (2) any
Person shall, directly or indirectly, consolidate with or merge with and into
the Company and the Company shall be the continuing or surviving corporation in
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (3) the Company and/or any one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer,
in one or more transactions (other than transactions in the ordinary course of
business), assets or earning power aggregating more than
19
<PAGE> 24
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons other than the Company or one or more of its
wholly owned Subsidiaries (such Persons, together with the Persons described in
clauses (1) and (2) above shall be collectively referred to in this Section 13
as the "Surviving Person"), then, and in each such case, proper provision shall
be made so that:
(i) except as provided in Section 7(d) hereof, each holder of
a Right shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and payment of
the then current Exercise Price, in lieu of the securities or other
property otherwise purchasable upon such exercise, such number of
validly authorized and issued, fully paid and nonassessable Common
Shares of the Surviving Person as shall be equal to a fraction, the
numerator of which is the product of the then current Exercise Price
multiplied by the number of one-hundredths of a Preferred Share
purchasable upon the exercise of one Right immediately prior to the
first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of
one-hundredths of a Preferred Share that would have been so purchasable
if the Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 13(a) Event, or, if a Section
11(a)(ii) Event has occurred prior to such Section 13(a) Event, the
product of the number of one-hundredths of a Preferred Share
purchasable upon the exercise of a Right (or, if the Distribution Date
shall not have occurred prior to the date of such Section 11(a)(ii)
Event, the number of one-hundredths of a Preferred Share that would
have been so purchasable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii)
Event) immediately prior to such Section 11(a)(ii) Event, multiplied by
the Exercise Price in effect immediately prior to such Section
11(a)(ii) Event), and the denominator of which is 50% of the Current
Market Price per Common Share of the Surviving Person on the date of
consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and
shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement;
(iii) the term, "Company," shall thereafter be deemed to refer
to the Surviving Person; and
(iv) the Surviving Person shall take such steps (including,
but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with
such consummation as may be necessary to ensure that the provisions
hereof shall thereafter be applicable to its Common Shares thereafter
deliverable upon the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the
sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning
20
<PAGE> 25
power of the Company and its Subsidiaries (taken as a whole), but less than 100%
thereof, then each Person acquiring all or a portion thereof shall assume the
obligations of the Company as to a fraction of each of the Rights equal to the
fraction of the assets of the Company and its Subsidiaries (taken as a whole)
acquired by such Person, and the obligations of the Company as to the remaining
fraction of each of the Rights shall continue to be the obligations of the
Company.
(c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the Surviving Person shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that such Surviving
Person shall, upon consummation of such Section 13(a) Event, assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective
as soon as practicable after such filing, use its best efforts to cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the Common Shares of the Surviving Person purchasable
upon exercise of the Rights on a national securities exchange, or use
its best efforts to cause the Rights and such Common Shares to meet the
eligibility requirements for quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof prior to the date of a Section 13(a) Event, such Rights
shall thereafter be exercisable only in the manner described in Section 13(a)
hereof. In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable pursuant to, and only pursuant to, this
Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
21
<PAGE> 26
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company shall
pay to the registered holders of the Right Certificates with respect to which
such fractional Rights would otherwise be issuable, at the time such fractional
Rights would otherwise have been issued as provided herein, an amount in cash
equal to the same fraction of the Current Market Price of a whole Right on the
Business Day immediately prior to the date upon which such fractional Rights
would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share) upon exercise of Rights, or to
distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the Company shall pay to the registered holders of Right Certificates with
respect to which such fractional Common Shares or Preferred Shares would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same fraction of the Current Market Price of a
whole Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, except the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates and certificates for
Common Shares representing Rights, and any registered holder of any Right
Certificate or of such certificate for Common Shares, without the consent of the
Rights Agent or of the holder of any other Right Certificate or any other
certificate for Common Shares may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights represented by such Right Certificate
or by such certificate for Common Shares in the manner provided in such
Certificate and in this Agreement.
22
<PAGE> 27
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance, and injunctive relief against actual or
threatened violations, of the obligations of any Person under this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer along with a signature guarantee and such other and
further documentation as the Rights Agent may reasonably request; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
SECTION 17. RIGHT HOLDER AND RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Right or Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
securities of the Company that may at any time be issuable upon the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent the compensation
agreed to in writing by the Company and the Rights Agent for all services
rendered by it hereunder, as well as
23
<PAGE> 28
its reasonable out-of-pocket expenses. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including, without limitation, the costs and expenses of defending against any
claim of liability arising under this Agreement.
(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 Right Certificate
or certificate for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed and executed by the proper person or persons, or otherwise upon the
advice of its counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer 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 instrument or any further act on the part
of any of the parties hereto, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. If, at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificates, and
in this Agreement.
(b) If at any time the name of the Rights Agent shall be changed, and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in such Right Certificates and in this Agreement.
24
<PAGE> 29
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations expressly
imposed by this Agreement (and no implied duties or obligations shall be read
into this Agreement against the Rights Agent) upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent is serving as an administrative agent and
accordingly, shall not be under any responsibility in respect of the legality or
validity of any of the provisions of this Agreement or the execution and
delivery hereof (except the due authorization, execution and delivery hereof by
the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including any Rights becoming null
and void pursuant to Section 7(d) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Sections
7, 11, 13 and 23 hereof, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights represented by Right Certificates after actual notice that such change
or adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Preferred Shares or Common
25
<PAGE> 30
Shares or other securities to be issued pursuant to this Agreement or any Right
Certificate, or as to whether any Preferred Shares or Common Shares or other
securities will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) At any time the Rights Agent may apply to the Company for written
instructions with respect to any matter arising in connection with the Rights
Agent's duties and obligations arising under this Agreement. Such application by
the Rights Agent for written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent with respect to its duties or obligations under this
Agreement and the date on and/or after which such action shall be taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall be not less than one Business
Day after the Company receives such application, without the Company's consent)
unless, prior to taking or initiating any such action (or the effective date in
the case of an omission), the Rights Agent has received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company. The Company
26
<PAGE> 31
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting as such, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the Company shall become the Rights Agent and
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of Ohio (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State
of Ohio), in good standing, that is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option (subject to Section
4 hereof), issue new Right Certificates in such form as may be approved by the
Board of Directors in order to reflect any adjustment or change in the Exercise
Price and the number or kind or class of shares or other securities or property
purchasable upon exercise of the Rights in accordance with the provisions of
this Agreement.
SECTION 23. REDEMPTION OF RIGHTS.
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Expiration
Date, the Board of Directors of the Company may, at its option, authorize and
direct the redemption of all, but not less than all, of the then outstanding
1
<PAGE> 32
Rights at a redemption price of $0.001 per Right, as such redemption price shall
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), and the
Company shall so redeem the Rights; provided, however, that from and after the
first date upon which there shall exist a 20% Shareholder, any redemption of the
Rights shall require, in addition to the approval of the Board of Directors of
the Company, the approval of a majority of those directors of the Company who
were directors prior to such date.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the redemption of the Rights pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it may
specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. Within ten Business Days after
the date of such action, the Company shall give notice of such redemption to the
holders of Rights by mailing such notice to all holders of Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives such notice, but neither the
failure to give any such notice nor any defect therein shall affect the legality
or validity of such redemption. Each such notice of Redemption shall state the
method by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may, directly or indirectly,
redeem, acquire or purchase for value any Rights in any manner other than that
specifically set forth in Section 24 hereof or in this Section 23, and other
than in connection with the purchase of Common Shares prior to the earlier of
the date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
SECTION 24. EXCHANGE OF RIGHTS.
(a) At any time after the 20% Ownership Date and prior to the first
date thereafter upon which a 20% Shareholder, together with all Affiliates and
Associates of such 20% Shareholder, shall be the Beneficial Owner of 50% or more
of the Voting Shares then outstanding, the Board of Directors of the Company
may, at its option, except as provided in Section 7(d) hereof, authorize and
direct the exchange of all, but not less than all, of the then outstanding
Rights for Common Shares at an exchange ratio (the "Exchange Ratio") equal to
one Common Share per Right on such date.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the exchange of the Rights pursuant to
subsection (a) of this Section 24, or at such time and date thereafter as it may
specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the holders of
Rights shall be to
28
<PAGE> 33
receive a number of Common Shares equal to the Exchange Ratio. Within ten
Business Days after the date of such action, the Company shall give notice of
such exchange to the holders of Rights by mailing such notice to all holders of
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, if prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives such
notice, but neither the failure to give any such notice nor any defect therein
shall affect the legality or validity of such exchange. Each such notice of
exchange shall state the method by which the Rights will be exchanged for Common
Shares. Neither the Company nor any of its Affiliates or Associates may,
directly or indirectly, redeem, acquire or purchase for value any Rights in any
manner other than (i) as specifically set forth in Section 23 hereof, (ii) as
specifically set forth in this Section 24 or (iii) in connection with the
purchase of Common Shares prior to the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute (i) cash, (ii) other equity securities of the Company
(including, but not limited to, Common Share Equivalents), (iii) debt securities
of the Company, (iv) other property or (v) any combination of the foregoing for
the Common Shares exchangeable for Rights, as appropriately adjusted. Subject to
Section 7(d) hereof, in the event that the Company takes any action pursuant to
this Section 24, such action shall apply uniformly to all outstanding Rights.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In the event that the Company shall propose (i) to declare or pay
any dividend payable on or make any distribution with respect to its Common
Shares or Preferred Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of its Common Shares or Preferred Shares options, rights
or warrants to subscribe for or to purchase any additional shares thereof or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Common Shares or Preferred Shares (other
than a reclassification involving only the subdivision of outstanding shares),
(iv) to effect any consolidation or merger with or into, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person or Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then and in each such case, the Company shall give
to each holder of a Right Certificate and to the Rights Agent, in accordance
with Section 26 hereof, a notice of such proposed action, that shall specify the
record date for the purpose of such dividend or distribution, or the date upon
which such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Common Shares or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the
29
<PAGE> 34
Common Shares or Preferred Shares, whichever date shall be the earlier. The
failure to give the notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate and to the Rights Agent, in accordance with
Section 26 hereof, a notice of the occurrence of such event, specifying the
event and the consequences of the event to holders of Rights under Sections 11
and 13 hereof.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Rocky Shoes & Boots, Inc.
39 East Canal Street
Nelsonville, Ohio 45764
Attention: President
with a copy to:
Curtis A. Loveland, Esq.
Secretary of Rocky Shoes & Boots, Inc.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) to the principal office of the
Rights Agent as follows:
The Fifth Third Bank
Number 1090D2
38 Fountain Square Plaza
Cincinnati, Ohio 45202
Attention: Transfer Agent responsible for Rocky Shoes & Boots, Inc.
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by
30
<PAGE> 35
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
(a) The Board of Directors of the Company may, from time to time,
before and after the Distribution Date, without the approval of any holders of
Rights, supplement or amend any provision of this Agreement in any manner,
whether or not such supplement or amendment is adverse to any holder of Rights,
and direct the Rights Agent so to supplement or amend such provision, and the
Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event, (iii) the Redemption Date
or (iv) the Expiration Date, this Agreement shall not be supplemented or amended
in any manner that would materially and adversely affect any holder of
outstanding Rights other than a 20% Shareholder or a Surviving Person; and
provided further, however, that from and after the first date upon which there
shall exist a 20% Shareholder, this Agreement shall not be supplemented or
amended in any manner without the approval of a majority of those directors of
the Company who were directors prior to such date.
(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date, the Company shall not
effect any amendment to the Second Amended and Restated Articles of
Incorporation for the Preferred Shares that would materially and adversely
affect the rights, privileges or preferences of the Preferred Shares without the
prior approval of the holders of two-thirds or more of the then outstanding
Rights.
SECTION 28. CERTAIN COVENANTS.
Subject to Section 27 hereof and the other provisions of this
Agreement, from and after the earlier of the date of the first Section 11(a)(ii)
Event or the date of the first Section 13(a) Event and prior to the earlier of
the Redemption Date or the Expiration Date, the Company shall not (a) issue or
sell, or permit any Subsidiary to issue or sell, to a 20% Shareholder or a
Surviving Person, or any Affiliate or Associate of a 20% Shareholder or a
Surviving Person, or any Person holding Voting Shares of the Company that are
Beneficially Owned by a 20% Shareholder or a Surviving Person, (i) any rights,
options, warrants or convertible securities on terms similar to, or that
materially adversely affect the value of, the Rights or (ii) Preferred Shares,
Common Shares or shares of any other class of capital stock, if such sale is
intended to or would materially adversely affect the value of the Rights, or (b)
take any other action that is intended to or would materially adversely affect
the value of the Rights.
31
<PAGE> 36
SECTION 29. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent, the registered holders of the Right
Certificates (other than those representing Rights that have become null and
void) and the certificates for Common Shares representing Rights (other than
those Rights that have become null and void) any legal or equitable right,
remedy or claim under this Agreement, and this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent, such registered holders
of Right Certificates and such certificates for Common Shares representing
Rights.
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
SECTION 32. GOVERNING LAW.
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Ohio and for all
purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts made and performed entirely within such state.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
such counterpart shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
32
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ROCKY SHOES & BOOTS, INC.
By: /s/ Mike Brooks
-------------------------------------------
Mike Brooks
Chairman of the Board, President and
Chief Executive Officer
THE FIFTH THIRD BANK
as Rights Agent
By: /s/ Dana Hushak
-------------------------------------------
Name: Dana Hushak
-----------------------------------------
Title: Vice President
----------------------------------------
33
<PAGE> 38
EXHIBIT A
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ROCKY SHOES & BOOTS, INC.
<PAGE> 39
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ROCKY SHOES & BOOTS, INC.
(adopted November 5, 1997)
Mike Brooks, President, and Curtis A. Loveland, Secretary, of Rocky
Shoes & Boots, Inc. (the "Corporation"), with its principal offices located at
Nelsonville, Athens County, Ohio, do hereby certify that pursuant to the
authority conferred upon the Board of Directors by the Amended and Restated
Articles of Incorporation of the Corporation, the Board of Directors on November
5, 1997, adopted a resolution creating a series of 125,000 (one hundred-twenty
five thousand) shares of Voting Preferred Stock, no par value, designated as
Series B Junior Participating Cumulative Preferred Stock, and that the Amended
and Restated Articles of Incorporation have been amended and restated as
follows:
FIRST: The name of the Corporation shall be Rocky Shoes & Boots, Inc.
SECOND: The place in Ohio where its principal office is to be located
is Athens County, the City of Nelsonville, Ohio.
THIRD: The purposes for which it is formed are to engage in any
business or activity for which corporations may be formed under Sections 1701.01
to 1701.98, inclusive, of the Revised Code of Ohio.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is Ten Million Five Hundred
Thousand (10,500,000) consisting of:
1. Ten Million (10,000,000) shares of Common Stock, without
par value (the "Common Stock");
2. Two Hundred Fifty Thousand (250,000) shares of Voting
Preferred Stock, without par value (the "Voting Preferred Stock"); and
3. Two Hundred Fifty Thousand (250,000) shares of Non-Voting
Preferred Stock, without par value (the "Non-Voting Preferred Stock").
<PAGE> 40
A. Common Stock
------------
The holders of the Common Stock are entitled at all times to one vote
for each share and to such dividends as the Board of Directors may in
its discretion from time to time legally declare, subject, however, to
the voting and dividend rights, if any, of the holders of the Voting
Preferred Stock and the Non-Voting Preferred Stock. In the event of any
liquidation, dissolution or winding up of the Corporation, the
remaining assets of the Corporation after the payment of all debts and
necessary expenses shall be distributed among the holders of the Common
Stock pro rata in accordance with their respective holdings, subject,
however, to the rights of the holders of the Voting Preferred Stock and
the Non-Voting Preferred Stock then outstanding. The Common Stock is
subject to all of the terms and provisions of the Voting Preferred
Stock and the Non-Voting Preferred Stock as fixed by the Board of
Directors as hereinafter provided.
B. Voting Preferred Stock
----------------------
The Board of Directors is hereby expressly authorized to adopt
amendments to the Articles of Incorporation to provide for the issuance
of one or more series of Voting Preferred Stock, to establish from time
to time the number of shares to be included in each such series, to fix
the designation, powers, preferences and rights of the shares of each
such series and any qualifications, limitations or restrictions
thereof, including without limitation the following, and the shares of
each series may vary from the shares of any other series in the
following respects:
(a) the division of such shares into series and the
designation and authorized number of shares of each
series;
(b) the annual dividend rate on the shares;
(c) the dates of payment of dividends, whether the dividends
shall be cumulative and, if cumulative, the date from
which dividends shall accumulate;
(d) the redemption price or prices for the particular series,
if redeemable, and the terms and conditions of such
redemption;
(e) sinking fund requirements, if any;
(f) the preference, if any, of the shares of such series in
the event of any voluntary or involuntary liquidation,
dissolution, or winding up of affairs of the Corporation;
(g) the right, if any, of the shares of such series to be
converted into shares of any other series or class and the
terms and conditions of such conversion; and
- 2 -
<PAGE> 41
(h) any other relative rights, preferences, and limitations of
that series.
The holders of Voting Preferred Stock shall be entitled at all times to
one vote for each share, voting as a class.
C. Non-Voting Preferred Stock
--------------------------
The Board of Directors is hereby expressly authorized to adopt
amendments to the Articles of Incorporation to provide for the issuance
of one or more series of Non-Voting Preferred Stock, and to establish
from time to time the number of shares to be included in each such
series, to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or
restrictions thereof, including without limitation the following, and
the shares of each series may vary from the shares of any other series
in the following respects:
(a) the division of such shares into series and the
designation and authorized number of shares of each
series;
(b) the annual dividend rate on the shares;
(c) the dates of payment of dividends, whether the dividends
shall be cumulative and, if cumulative, the date from
which dividends shall accumulate;
(d) the redemption price or prices for the particular series,
if redeemable, and the terms and conditions of such
redemption;
(e) sinking fund requirements, if any;
(f) the preference, if any, of the shares of such series in
the event of any voluntary or involuntary liquidation,
dissolution, or winding up of affairs of the Corporation;
(g) the right, if any, of the shares of such series to be
converted into shares of any other series or class and the
terms and conditions of such conversion; and
(h) any other relative rights, preferences, and limitations of
that series.
Except as otherwise required by law, no holders of Non-Voting Preferred
Stock shall be entitled to vote on any matter submitted to the
shareholders of the Corporation.
- 3 -
<PAGE> 42
D. Series A Convertible Non-Voting Preferred Stock
-----------------------------------------------
There shall be created out of the authorized number of shares of
Non-Voting Preferred Stock of the Corporation a series of Non-Voting
Preferred Stock designated as Series A Non-Voting Convertible Preferred
Stock (the "Series A Stock"), to consist of 125,000 shares, with a
stated value of $.06 per share, of which the preferences and relative
and other rights, and the qualifications, limitations or restrictions
thereof, shall be (in addition to those set forth elsewhere in this
Article FOURTH) as follows:
1. CERTAIN DEFINITIONS. Unless the context otherwise requires,
the terms defined in this paragraph shall have, for the purposes of
this paragraph and paragraphs 2 through 10 below, the meanings herein
specified.
COMMON STOCK. The term "Common Stock" shall mean all shares now
or hereafter authorized of any class of Common Stock of the
Corporation and any other shares of the Corporation, howsoever
designated, authorized after the Issue Date, which have the
right (subject always to prior rights of any class or series of
Voting and Non-Voting Preferred Stock) to participate in the
distribution of the assets and earnings of the Corporation
without limit as to per share amount.
ISSUE DATE. The term "Issue Date" shall mean the date that
shares of Series A Stock are first issued by the Corporation.
JUNIOR STOCK. The term "Junior Stock" shall mean the Common
Stock and any class or series of shares of the Corporation
issued after the Issue Date not entitled to receive any assets
upon the liquidation, dissolution or winding up of the affairs
of the Corporation until the shares of Series A Stock shall have
received the Stated Value of all outstanding shares of Series A
Stock as of the date of such liquidation, dissolution or winding
up, plus any accrued and unpaid dividends to such date.
PARITY STOCK. The term "Parity Stock" shall mean, for purposes
of paragraph 3 below, any class or series of shares of the
Corporation issued after the Issue Date entitled to receive
assets upon the liquidation, dissolution or winding up of the
affairs of the Corporation on a parity with the Series A Stock.
SENIOR STOCK. The term "Senior Stock" shall mean any class or
series of shares of the Corporation issued after the Issue Date
ranking senior to the Series A Stock in respect of the right to
receive dividends, as discussed in paragraph 2 below, or assets
upon the liquidation, dissolution or winding up of the affairs
of the Corporation, as discussed in paragraph 3 below.
STATED VALUE. The term "Stated Value" when used in reference to
the Series A Stock shall mean $.06 per share of Series A Stock.
- 4 -
<PAGE> 43
2. DIVIDEND RATE; Payment. The dividend rate and dates of
payment for Series A Stock shall be identical to the Common Stock.
3. DISTRIBUTIONS UPON LIQUIDATION, DISSOLUTION OR WINDING UP. In
the event of any voluntary or involuntary liquidation, subject to the
prior preferences and other rights of any shares of Senior Stock, but
before any distribution or payment shall be made to the holders of
Junior Stock, the holders of the shares of Series A Stock shall be
entitled to be paid the Stated Value of all outstanding shares of
Series A Stock as of the date of such liquidation or dissolution or
such other winding up, plus any accrued and unpaid dividends thereon to
such date, in cash or in property taken at its fair value as determined
by the Board of Directors, or both, at the election of the Board of
Directors. If such payment shall have been made in full to the holders
of the Series A Stock, and if payment shall have been made in full to
the holders of any Senior Stock and Parity Stock of all amounts to
which such holders shall have a preference, then the remaining assets
and funds of the Corporation shall be distributed pro rata, on a
share-for-share basis, among the holders of shares of Series A Stock,
Parity Stock and Junior Stock. If, upon any such liquidation,
dissolution or other winding up of the affairs of the Corporation, the
net assets of the Corporation distributable among the holders of all
outstanding shares of Series A Stock and of any shares of Parity Stock
shall be insufficient to permit the payment in full to such holders of
the preferential amounts to which they are entitled, then the entire
net assets of the Corporation remaining after the distributions to
holders of any shares of Senior Stock of the full amounts to which they
may be entitled shall be distributed among the holders of the shares of
Series A Stock and of any Parity Stock ratably in proportion to the
full amounts to which they would otherwise be respectively entitled.
Neither the consolidation nor merger of the Corporation into or with
another corporation or corporations, nor the sale of all or
substantially all of the assets of the Corporation to another
corporation shall be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this paragraph 3.
4. VOTING RIGHTS. Except as otherwise required by law, no holder
of the Series A Stock shall be entitled to vote on any manner submitted
to the shareholders of the Corporation.
5. CONVERSION. Each share of Series A Stock may, at the option
of the holder, be converted into one share of Common Stock of the
Corporation at any time after the second anniversary of the Issue Date.
All remaining issued and outstanding shares of Series A Stock shall,
without further action by the holders thereof, convert into an equal
number of shares of Common Stock on the fifth anniversary of the Issue
Date.
6. ADJUSTMENTS FOR STOCK SPLITS OR COMBINATIONS. If the
Corporation shall at any time or from time to time after the Issue Date
of the shares of Series A Stock, effect a stock split or stock dividend
or other subdivision of the Common Stock, the Series A Stock shall be
proportionately subdivided. Conversely, if the Corporation shall at any
time or from time to time after the Issue Date of the Series A Stock,
effect a combination of the Common
- 5 -
<PAGE> 44
Stock, the Series A Stock shall be proportionately combined. In
addition to the foregoing adjustment to the number of Series A Stock,
the Stated Value shall be proportionately adjusted with any subdivision
or combination of the Series A Stock. Any adjustment under this
paragraph 6 shall become effective as of the close of business on the
date the subdivision or combination becomes effective.
7. OTHER TERMS. Except as may otherwise be provided in this
Article FOURTH or as required by law, the terms of the Series A Stock
shall be identical to those of the Common Stock.
8. HEADINGS OF SUBDIVISIONS. The headings of the paragraphs 1
through 10 hereof are for convenience of reference only and shall not
affect the interpretation of the provisions hereof.
9. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Series A Stock set forth in paragraphs 1 through 10
hereof (as may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule of law or public
policy, all other rights, preferences and limitations set forth in
paragraphs 1 through 10 hereof (as so amended) which can be given
effect without the invalid, unlawful and unenforceable right,
preference or limitation shall, nevertheless, remain in full force and
effect, and no right, preference or limitation herein set forth shall
be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.
10. STATUS OF REACQUIRED SHARES. Upon conversion or redemption
of all issued and outstanding shares of Series A Stock, shares reserved
for the Series A Stock shall (upon compliance with any applicable
provisions of the laws of the State of Ohio) have the status of
authorized and unissued Non-Voting Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.
E. Series B Junior Participating Cumulative Preferred Stock.
---------------------------------------------------------
There shall be created out of the authorized number of shares of Voting
Preferred Stock of the Corporation a series of Voting Preferred Stock
designated as Series B Junior Participating Cumulative Preferred Stock
(the "Series B Preferred Stock"), to consist of 125,000 shares, without
par value, of which the preferences and relative and other rights, and
the qualifications, limitations or restrictions thereof, shall be (in
addition to those set forth elsewhere in this Article FOURTH) as
follows:
1. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series B Preferred Stock, in
preference to the holders of shares of Common Stock,
without par value, of the Corporation (the "Common Stock")
and of any other junior stock of the Corporation that may
be
- 6 -
<PAGE> 45
outstanding, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in
cash on the tenth day of January, April, July and October
in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series B
Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $0.25 per share
($1.00 per annum), or (ii) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock, or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series B Preferred Stock.
In the event that the Corporation shall at any time
declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then
and in each such event, the amount to which the holder of
each share of Series B Preferred Stock was entitled
immediately prior to such event under clause (ii) of the
preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after
such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Corporation shall declare a dividend or
distribution on the Series B Preferred Stock as provided
in paragraph (a) of this Section 1 immediately after it
declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided, however, that in the event no dividend or
distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $0.25 per share ($1.00 per annum) on
the Series B Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series B Preferred Stock, unless
the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date
of issue is a
- 7 -
<PAGE> 46
Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date,
in either of which cases such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall cumulate
but shall not bear interest. Dividends paid on the shares
of Series B Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series B
Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall
be not more than 60 days prior to the date fixed for the
payment thereof.
2. VOTING RIGHTS. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(a) Each share of Series B Preferred Stock shall entitle
the holder thereof to 100 votes (and each one
one-hundredth of a share of Series B Preferred Stock shall
entitle the holder thereof to one vote) on all matters
submitted to a vote of the shareholders of the
Corporation. In the event that the Corporation shall at
any time declare or pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision
or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then
and in each such event, the number of votes per share to
which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which
is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided in the Second Amended and
Restated Articles of Incorporation of the Corporation or
by law, the holders of shares of Series B Preferred Stock
and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote
of shareholders of the Corporation.
(c) In addition, the holders of shares of Series B
Preferred Stock shall have the following special voting
rights:
(i) In the event that at any time dividends on
Series B Preferred Stock, whenever accrued and
whether or not consecutive, shall not have been
paid
- 8 -
<PAGE> 47
or declared and a sum sufficient for the payment
thereof set aside, in an amount equivalent to six
quarterly dividends on all shares of Series B
Preferred Stock at the time outstanding, then and
in each such event, the holders of shares of Series
B Preferred Stock and each other series of
preferred stock now or hereafter issued that shall
be accorded such class voting right by the Board of
Directors and that shall have the right to elect
one director (or, in the event any such other
series is entitled to a greater number of
directors, such number of directors, which shall be
cumulative with and not in addition to the director
provided for herein, such director or directors
being hereinafter referred to as "Special
Directors") as the result of a prior or subsequent
default in payment of dividends on such series
(each such other series being hereinafter called
"Other Series of Preferred Stock"), voting
separately as a class without regard to series,
shall be entitled to elect the Special Director at
the next annual meeting of shareholders of the
Corporation, in addition to the directors to be
elected by the holders of all shares of the
Corporation entitled to vote for the election of
directors, and the holders of all shares (including
the Series B Preferred Stock) otherwise entitled to
vote for directors, voting separately as a class,
shall be entitled to elect the remaining members of
the Board of Directors, provided that the Series B
Preferred Stock and each Other Series of Preferred
Stock, voting as a class, shall not have the right
to elect more than one Special Director (in
addition to any Special Director to which the
holders of any Other Series of Preferred Stock are
then entitled). Such special voting right of the
holders of shares of Series B Preferred Stock may
be exercised until all dividends in default on the
Series B Preferred Stock shall have been paid in
full or declared and funds sufficient therefor set
aside, and when so paid or provided for, such
special voting right of the holders of shares of
Series B Preferred Stock shall cease, but subject
always to the same provisions for the vesting of
such special voting rights in the event of any such
future dividend default or defaults.
(ii) At any time after such special voting rights
shall have so vested in the holders of shares of
Series B Preferred Stock, the Chairman of the
Board, President, or Chief Executive Officer of the
Corporation may, and upon the written request of
the holders of record of 10% or more in number of
the shares of Series B Preferred Stock and each
Other Series of Preferred Stock then outstanding
addressed to the President at the principal
executive office of the Corporation shall, call a
special meeting of the holders of shares of
Preferred Stock so entitled to vote, for the
election of the Special Directors to be elected by
them as herein provided, to be held within 60 days
after such call and at the place and upon the
notice provided by law and in the Code of
Regulations for the holding of meetings of
shareholders; provided, however, that the Chairman
of the Board, President, or Chief Executive
- 9 -
<PAGE> 48
Officer shall not be required to call such special
meeting in the case of any such request received
less than 90 days before the date fixed for any
annual meeting of shareholders, and if in such case
such special meeting is not called or held, the
holders of shares of Preferred Stock so entitled to
vote shall be entitled to exercise the special
voting rights provided in this paragraph at such
annual meeting. If any such special meeting
required to be called as above provided shall not
be called by the Chairman of the Board, President,
or Chief Executive Officer within 30 days after
receipt of any such request, then the holders of
record of 10% or more in number of the shares of
Series B Preferred Stock and each Other Series of
Preferred Stock then outstanding may designate in
writing one of their number to call such meeting,
and the person so designated may, at the expense of
the Corporation, call such meeting to be held at
the place and upon the notice given by such person,
and for that sole purpose shall have access to the
stock books of the Corporation. No such special
meeting and no adjournment thereof shall be held on
a date later than 60 days before the annual meeting
of shareholders. If, at any meeting so called or at
any annual meeting held while the holders of shares
of Series B Preferred Stock have the special voting
rights provided for in this paragraph, the holders
of not less than 10% of the aggregate voting power
of Series B Preferred Stock and each Other Series
of Preferred Stock then outstanding are present in
person or by proxy, which percentage shall be
sufficient to constitute a quorum for the election
of additional directors as herein provided, the
then authorized number of directors of the
Corporation shall be increased by the number of
Special Directors to be elected, as of the time of
such special meeting or the time of the first such
annual meeting held while such holders have special
voting rights and such quorum is present, and the
holders of shares of Series B Preferred Stock and
each Other Series of Preferred Stock, voting as a
class, shall be entitled to elect the Special
Director or Directors so provided for. If the
directors of the Corporation are then divided into
classes under provisions of the Second Amended and
Restated Articles of Incorporation of the
Corporation or the Code of Regulations, the Special
Director or Directors shall belong to each class of
directors in which a vacancy is created as a result
of such increase in the authorized number of
directors. If the foregoing expansion of the size
of the Board of Directors shall not be valid under
applicable law, then the holders of shares of
Series B Preferred Stock and of each Other Series
of Preferred Stock, voting as a class, shall be
entitled, at the meeting of shareholders at which
they would otherwise have voted, to elect a Special
Director or Directors to fill any then existing
vacancies on the Board of Directors, and shall
additionally be entitled, at such meeting and each
subsequent meeting of shareholders at which
directors are elected, to elect all of the
directors then
- 10 -
<PAGE> 49
being elected until by such class vote the
appropriate number of Special Directors has been so
elected.
(iii) Upon the election at such meeting by the
holders of shares of Series B Preferred Stock and
each Other Series of Preferred Stock, voting as a
class, of the Special Director or Directors they
are entitled so to elect, the persons so elected,
together with such persons as may be directors or
as may have been elected as directors by the
holders of all shares (including Series B Preferred
Stock) otherwise entitled to vote for directors,
shall constitute the duly elected directors of the
Corporation. Each Special Director so elected by
holders of shares of Series B Preferred Stock and
each Other Series of Preferred Stock, voting as a
class, shall serve until the next annual meeting or
until their respective successors shall be elected
and qualified, or if any such Special Director is a
member of a class of directors under provisions
dividing the directors into classes, each such
Special Director shall serve until the annual
meeting at which the term of office of such Special
Director's class shall expire or until such Special
Director's successor shall be elected and shall
qualify, and at each subsequent meeting of
shareholders at which the directorship of any
Special Director is up for election, said special
class voting rights shall apply in the reelection
of such Special Director or in the election of such
Special Director's successor; provided, however,
that whenever the holders of shares of Series B
Preferred Stock and each Other Series of Preferred
Stock shall be divested of the special rights to
elect one or more Special Directors as above
provided, the terms of office of all persons
elected as Special Directors, or elected to fill
any vacancies resulting from the death,
resignation, or removal of Special Directors shall
forthwith terminate (and the number of directors
shall be reduced accordingly).
(iv) If, at any time after a special meeting of
shareholders or an annual meeting of shareholders
at which the holders of shares of Series B
Preferred Stock and each Other Series of Preferred
Stock, voting as a class, have elected one or more
Special Directors as provided above, and while the
holders of shares of Series B Preferred Stock and
each Other Series of Preferred Stock shall be
entitled so to elect one or more Special Directors,
the number of Special Directors who have been so
elected (or who by reason of one or more
resignations, deaths or removals have succeeded any
Special Directors so elected) shall by reason of
resignation, death or removal be reduced the
vacancy in the Special Directors may be filled by
any one or more remaining Special Director or
Special Directors. In the event that such election
shall not occur within 30 days after such vacancy
arises, or in the event that there shall not be
incumbent at least one Special Director, the
Chairman of the Board, President, or Chief
Executive Officer
- 11 -
<PAGE> 50
of the Corporation may, and upon the written
request of the holders of record of 10% or more in
number of the shares of Series B Preferred Stock
and each Other Series of Preferred Stock then
outstanding addressed to the Secretary at the
principal office of the Corporation shall, call a
special meeting of the holders of shares of Series
B Preferred Stock and each Other Series of
Preferred Stock so entitled to vote, for an
election to fill such vacancy or vacancies, to be
held within 60 days after such call and at the
place and upon the notice provided by law and in
the Code of Regulations for the holding of meetings
of shareholders; provided, however, that the
Chairman of the Board, President, or Chief
Executive Officer shall not be required to call
such special meeting in the case of any such
request received less than 90 days before the date
fixed for any annual meeting of shareholders, and
if in such case such special meeting is not called,
the holders of shares of Preferred Stock so
entitled to vote shall be entitled to fill such
vacancy or vacancies at such annual meeting. If any
such special meeting required to be called as above
provided shall not be called by the Chairman of the
Board, President, or Chief Executive Officer within
30 days after receipt of any such request, then the
holders of record of 10% or more in number of the
shares of Series B Preferred Stock and each Other
Series of Preferred Stock then outstanding may
designate in writing one of their number to call
such meeting, and the person so designated may, at
the expense of the Corporation, call such meeting
to be held at the place and upon the notice above
provided, and for that purpose shall have access to
the stock books of the Corporation; no such special
meeting and no adjournment thereof shall be held on
a date later than 60 days before the annual meeting
of shareholders.
(d) Nothing herein shall prevent the directors or
shareholders from taking any action to increase the number
of authorized shares of Series B Preferred Stock, or
increasing the number of authorized shares of Preferred
Stock of the same class as the Series B Preferred Stock or
the number of authorized shares of Common Stock, or
changing the par value of the Common Stock or Preferred
Stock, or issuing options, warrants or rights to any class
of stock of the Corporation as authorized by the Second
Amended and Restated Articles of Incorporation of the
Corporation, as they may hereafter be amended.
(e) Except as set forth herein, holders of shares of
Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to
the extent they are entitled to vote as set forth in the
Second Amended and Restated Articles of Incorporation of
the Corporation or by law) for taking any corporate
action.
- 12 -
<PAGE> 51
3. CERTAIN RESTRICTIONS.
(a) Whenever any dividends or other distributions payable
on the Series B Preferred Stock as provided in paragraph 1
hereof are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not
declared, on shares of Series B Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not, directly or indirectly:
(i) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series B Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock
ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the
Series B Preferred Stock, except dividends paid
ratably on shares of the Series B Preferred Stock
and all such parity stock on which dividends are
payable or in arrears in proportion to the total
amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) with the Series B
Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series B
Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series B Preferred
Stock, or any shares of stock ranking on a parity
with the Series B Preferred Stock, except in
accordance with a purchase offer made in writing or
by publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after
consideration of the respective annual dividend
rates and other relative rights and preferences of
the respective series and classes, shall determine
in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for
consideration, directly or indirectly, any shares of stock
of the Corporation unless the Corporation could, under
paragraph (a) of this paragraph 3, purchase or otherwise
acquire such shares at such time and in such manner.
- 13 -
<PAGE> 52
4. REACQUIRED SHARES. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of preferred stock, without
designation as to series, and may be reissued as part of any series of
preferred stock created by resolution or resolutions of the Board of
Directors (including Series B Preferred Stock), subject to the
conditions and restrictions on issuance set forth herein.
5. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be
made to:
(a) the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or
winding up) to the Series B Preferred Stock unless, prior
thereto, the holders of shares of Series B Preferred Stock
shall have received the greater of (i) $1.00 per share
($0.001 per one one-hundredth of a share), plus an amount
equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such
payment, or (ii) an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per
share to holders of shares of Common Stock; or
(b) the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution
or winding up) with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock
and all other 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
declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then
and in each such event, the aggregate amount to which the
holder of each share of Series B Preferred Stock was
entitled immediately prior to such event under the proviso
in clause (a) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which
is the number of shares of Common Stock that were
outstanding immediately prior to such event.
6. CONSOLIDATION, MERGER, ETC. In the event that the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
or otherwise changed, then and in each such event, the shares of Series
B Preferred
- 14 -
<PAGE> 53
Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter
set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event that the Corporation shall at any
time declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock,
then and in each such event, the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series B
Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
7. NO REDEMPTION. The shares of Series B Preferred Stock shall
not be redeemable. Notwithstanding the foregoing, the Corporation may
acquire shares of Series B Preferred Stock in any other manner
permitted by law or the Second Amended and Restated Articles of
Incorporation of the Corporation.
8. RANK. Unless otherwise provided in the Second Amended and
Restated Articles of Incorporation of the Corporation or an amendment
of the Articles of Incorporation relating to a subsequent series of
preferred stock of the Corporation, the Series B Preferred Stock shall
rank junior to all other series of the Corporation's preferred stock as
to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up, and senior to the Common Stock
of the Corporation.
9. AMENDMENT. The Second Amended and Restated Articles of
Incorporation of the Corporation shall not be amended in any manner
that would materially and adversely alter or change the powers,
preferences or special rights of the Series B Preferred Stock without
the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series B Preferred Stock, voting together as a
single series.
10. FRACTIONAL SHARES. Series B Preferred Stock may be issued in
fractions of a share (in one one-hundredths (1/100) of a share and
integral multiples thereof) that shall entitle the holder thereof, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and have the
benefit of all other rights of holders of shares of Series B Preferred
Stock.
FIFTH: The Corporation, through its Board of Directors, shall have the
right and power to repurchase any of its outstanding shares at such times, for
such consideration and upon such terms and conditions as may be agreed upon
between the Corporation and the selling shareholder or shareholders.
- 15 -
<PAGE> 54
SIXTH: No holders of shares of the Corporation shall have any preemptive
right to subscribe for or to purchase any shares of the Corporation of any
class, whether now or hereafter authorized.
SEVENTH: The provisions of Section 1701.831 of the Revised Code of Ohio,
as may be amended from time to time, relating to control share acquisitions
shall not be applicable to this Corporation.
EIGHTH: The affirmative vote of the holders of the shares entitling them
to exercise two-thirds of the voting power of the corporation shall be required
for the approval or authorization of any (i) merger or consolidation of the
Corporation with or into any other corporation or (ii) sale, lease, exchange or
other disposition of all or substantially all of the assets of the Corporation
to or with any other corporation, person or other entity; provided, however,
that such two-thirds voting requirement shall not be applicable if the Board of
Directors of the Corporation shall have approved such a transaction described in
clause (i) or (ii) by resolution adopted by two-thirds of the members of the
Board of Directors.
NINTH: It is hereby declared to be a proper corporate purpose,
reasonably calculated to benefit shareholders, for the Board of Directors to
base the response of the Corporation to any "Acquisition Proposal" on the Board
of Directors' evaluation of what is in the best interest of the Corporation and
for the Board of Directors, in evaluating what is in the best interest of the
Corporation, to consider:
(i) The best interest of the shareholders; for this purpose the
Board shall consider, among other factors, not only the
consideration being offered in the Acquisition Proposal, in
relation to the then current market price, but also in relation
to the then current value of the Corporation in a freely
negotiated transaction and in relation to the Board of
Directors' then estimate of the future value of the Corporation
as an independent entity, the business and financial conditions
and earnings prospects of the acquiring person or persons, and
the competence, experience and integrity of the acquiring person
or persons and its or their management; and
(ii) such other factors as the Board of Directors determines to be
relevant, including, among other factors, the social, legal and
economic effects of the Acquisition Proposal upon employees,
suppliers, customers and business.
"Acquisition Proposal" means any proposal of any person (a) for
a tender offer or exchange offer for any equity security of the
Corporation, (b) to merge or consolidate the Corporation with
another corporation, or (c) to purchase or otherwise acquire all
or substantially all of the properties and assets of the
Corporation.
- 16 -
<PAGE> 55
TENTH: Indemnification and Insurance.
The Corporation may indemnify any director, officer, incorporator or
any former director or officer of the Corporation and any person who is or has
served at the request of the Corporation as a director, officer or trustee of
another corporation, partnership, joint venture, trust or other enterprise (and
his heirs, executors and administrators) against expenses, including attorneys
fees, judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him by reason of the fact that he is or was such director, officer,
incorporator or trustee in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, to the full extent and according to the procedures and
requirements set forth in the Ohio General Corporation Law as the same may be in
effect from time to time. The indemnification provided for herein shall not be
deemed to restrict the right of the Corporation to (i) indemnify employees,
agents and others as permitted by such Law, (ii) purchase and maintain insurance
or provide similar protection on behalf of the directors, officers or such other
persons against liabilities asserted against them or expenses incurred by them
arising out of their service to the Corporation as contemplated herein, and
(iii) enter into agreements with such directors, officers, incorporators,
employees, agents or others indemnifying them against any and all liabilities
(or such lesser indemnification as may be provided in such agreements) asserted
against them or incurred by them arising out of their service to the Corporation
as contemplated herein.
ELEVENTH: Notwithstanding any provision of Chapter 1701 of the Ohio
Revised Code, now or hereafter in effect, no shareholder shall have the right to
vote cumulatively in the election of directors.
TWELFTH: The provisions of Chapter 1704 of the Ohio Revised Code, now or
hereafter in effect, shall be applicable to this corporation.
THIRTEENTH: These Amended and Restated Articles may be amended by the
affirmative vote of the holders of shares entitling them to exercise a majority
of the voting power of the Corporation on the proposal; provided, however, that
the provisions set forth in Articles Seventh, Eighth, Ninth, Eleventh, Twelfth
and Thirteenth, herein, may not be repealed or amended in any respect unless
such action is approved by the affirmative vote of the holders of shares
entitling them to exercise two-thirds of the voting power of the Corporation on
the proposal.
FOURTEENTH: These Second Amended and Restated Articles of Incorporation
take the place of and supersede the existing Amended and Restated Articles of
Incorporation as heretofore amended.
- 17 -
<PAGE> 56
IN WITNESS WHEREOF, Mike Brooks, President, and Curtis A. Loveland,
Secretary, of Rocky Shoes & Boots, Inc., acting for and on behalf of the
Corporation, have hereunto subscribed their names this 5th day of November,
1997.
ROCKY SHOES & BOOTS, INC.
By: /s/ Mike Brooks
-------------------------------------
Mike Brooks, President
By: /s/ Curtis A. Loveland
-------------------------------------
Curtis A. Loveland, Secretary
- 18 -
<PAGE> 57
EXHIBIT B
FORM OF
RIGHT CERTIFICATE
Certificate No. R-___________ Rights
NOT EXERCISABLE AFTER NOVEMBER 5, 2007, OR EARLIER IF REDEEMED OR EXCHANGED. THE
RIGHTS ARE SUBJECT TO EXPIRATION, REDEMPTION AND EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY CERTAIN PERSONS OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
ROCKY SHOES & BOOTS, INC.
This certifies that ______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms and conditions of a Rights
Agreement (the "Rights Agreement") dated as of November 5, 1997, by and between
Rocky Shoes & Boots, Inc., an Ohio corporation (the "Company"), and The Fifth
Third Bank (the "Rights Agent"), to purchase from the Company at any time prior
to the earlier of the Redemption Date (as such term is defined in the Rights
Agreement) or 5:00 o'clock p.m., Cincinnati, Ohio time, on the Expiration Date
(November 5, 2007), unless the Distribution Date (as defined in the Rights
Agreement) shall have occurred on or prior to such date and the Rights shall
have separated from the Common Shares, in which case the Expiration Date is the
date that is the tenth anniversary of the Distribution Date), at the office or
agency of the Rights Agent at 38 Fountain Square Plaza, Cincinnati, Ohio 45263,
or at the office of its successor as Rights Agent, one one-hundredth of a fully
paid and nonassessable share of Series B Junior Participating Cumulative
Preferred Stock, no par value, of the Company (a "Preferred Share") or, in
certain circumstances, other securities or other property, at a purchase price
of $80.00 (Eighty dollars) per one one-hundredth of a Preferred Share (the
"Exercise Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase, including Certificate, on the reverse
side hereof completed and duly executed, with signature guaranteed.
The number of Rights represented by this Right Certificate and the
Exercise Price set forth above are the number of Rights and the Exercise Price
as of November 5, 1997, based upon the
1
<PAGE> 58
Preferred Shares as constituted on such date. As provided in the Rights
Agreement, the Exercise Price and the number of Preferred Shares or other
securities or other property that may be purchased upon the exercise of the
Rights represented by this Right Certificate are subject to modification and
adjustment upon the occurrence of certain events.
The Rights Agreement contains a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of Right Certificates. This Right Certificate is
subject to all the terms and conditions of the Rights Agreement, which terms and
conditions are hereby incorporated herein by reference and made a part hereof.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
presentation and surrender at the above-mentioned offices of the Rights Agent,
with the Form of Assignment, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
representing Rights entitling the holder thereof to purchase a like aggregate
number of Preferred Shares or, in certain circumstances, other securities or
other property, as the Rights represented by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon the surrender hereof with the Form of Election to Purchase,
including Certificate, on the reverse side hereof completed and duly executed,
with signature guaranteed, another Right Certificate or Right Certificates for
the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights represented by this Right Certificate may be
redeemed by the Company, at its option, at a redemption price of $0.001 per
Right or, upon the occurrence of certain events, the Company, at its option, may
exchange such Rights for fully paid and nonassessable shares of Common Stock, no
par value, of the Company at an exchange ratio, per Right, of that number of
Common Shares (as defined in the Rights Agreement) which, as of the date of the
Board of Directors' action, has a Current Market Price (as defined in the Rights
Agreement) equal to the difference between the Exercise Price and the Current
Market Price of the Common Shares which each holder of a Right would have a
right to receive upon the exercise of a Right on such date.
No fractional securities shall be issued upon the exercise of any Right
or Rights represented hereby (other than fractions of Preferred Shares that are
integral multiples of one one-hundredth of a Preferred Share, that may, at the
option of the Company, be represented by depository receipts), but in lieu
thereof, a cash payment shall be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or other securities of the Company that may at any time be issuable on
the exercise hereof, nor shall anything contained herein be construed to confer
upon the holder hereof, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or
2
<PAGE> 59
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, until the Right or
Rights represented by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________________, ____.
Attest: ROCKY SHOES & BOOTS, INC.
By: By:
--------------------------- -------------------------------------
Name: Curtis A. Loveland Name: Mike Brooks
Title: Secretary Title: Chairman of the Board, President
and Chief Executive Officer
Countersigned:
THE FIFTH THIRD BANK
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
3
<PAGE> 60
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer any
or all of the Rights represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_________________________________________________________________ (Name, address
and social security or other identifying number of transferee)________________
( ) of the Rights represented by this Right
Certificate, together with all right, title and interest in
and to said Rights, and hereby irrevocably constitutes and appoints
_________________________ attorney to transfer said Rights on the books of Rocky
Shoes & Boots, Inc. with full power of substitution.
Dated:
--------------------------- ---------------------------------
(Signature)
Signature Guaranteed:
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to exercise any
or all of the Rights represented by this Right Certificate)
To ROCKY SHOES & BOOTS, INC.:
The undersigned hereby irrevocably elects to exercise
___________________________ (_____________) of the Rights represented by this
Right Certificate to purchase the following:
(Check one of the following boxes)
|_| The Preferred Shares or other securities or property issuable
upon the exercise of said number of Rights pursuant to Section
7(c) of the Rights Agreement.
|_| The shares of the Common Stock, no par value, of the Company,
or other securities or property issuable upon the exercise of
said number of Rights pursuant to Section 11(a)(ii) of the
Rights Agreement.
|_| The securities issuable upon the exercise of said number of
Rights pursuant to Section 13(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a certificate for any
such securities be issued in the name of and delivered to:
---------------------
(Name, address and social security or other identifying number of issuee)
4
<PAGE> 61
The undersigned hereby further requests that if said number of Rights shall not
be all the Rights represented by this Right Certificate, a new Right Certificate
for the remaining balance of such Rights be issued in the name of and delivered
to:_____________________________________________________________________________
(Name, address and social security or other identifying number of issuee)
Dated:
-------------------------- -----------------------------
(Signature)
Signature Guaranteed:
CERTIFICATE
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this Right
Certificate are not Beneficially Owned by a 20% Shareholder or an Affiliate or
Associate of a 20% Shareholder (as such capitalized terms are defined in the
Rights Agreement).
Dated:
--------------------------- -----------------------------
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing Certificate, if
applicable, must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
In the event that the foregoing Certificate is not duly executed, with signature
guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 20% Shareholder or an Affiliate or
Associate of a 20% Shareholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any property or certificate for securities upon
the exercise of this Right Certificate or issue any new Right Certificate for
any remaining balance of unexercised Rights represented by this Right
Certificate.
5
<PAGE> 62
EXHIBIT C
ROCKY SHOES & BOOTS, INC.
FORM OF
SUMMARY OF THE RIGHTS
On November 5, 1997, the Board of Directors of Rocky Shoes & Boots, Inc. (the
"Company") authorized and declared a dividend of one preferred stock purchase
right (a "Right") for each share of common stock, no par value, of the Company
(the "Common Shares"). The dividend is payable on November 24, 1997 (the "Record
Date") to the holders of record of Common Shares as of the close of business on
such date.
The following is a brief description of the Rights. It is intended to provide a
general description only and is subject to the detailed terms and conditions of
a Rights Agreement (the "Rights Agreement") dated as of November 5, 1997 by and
between the Company and The Fifth Third Bank, as Rights Agent (the "Rights
Agent").
1. COMMON SHARE CERTIFICATES REPRESENTING RIGHTS
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates representing
Common Shares shall also represent the Rights attached to such Common Shares.
Common Share certificates issued after the Record Date and prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
2. DISTRIBUTION DATE
The "Distribution Date" is the earliest of:
(a) the tenth business day following the date of the first
public announcement that any person (other than the Company or certain
related entities, and with certain additional exceptions) has become
the beneficial owner of 20% or more of the then outstanding Common
Shares (such person is a "20% Shareholder" and the date of such public
announcement is the "20% Ownership Date");
(b) the tenth business day (or such later day as shall be
designated by the Board of Directors) following the date of the
commencement of, or the announcement of an intention to make, a tender
offer or exchange offer, the consummation of which would cause any
person to become a 20% Shareholder; or
(c) the first date, on or after the 20% Ownership Date, upon
which the Company is acquired in a merger or other business combination
in which the Company is not the
<PAGE> 63
surviving corporation or in which the outstanding Common Shares are
changed into or exchanged for stock or assets of another person, or
upon which 50% or more of the Company's consolidated assets or earning
power are sold (other than in transactions in the ordinary course of
business).
In calculating the percentage of outstanding Common Shares that are
beneficially owned by any person, such person shall be deemed to beneficially
own any Common Shares issuable upon the exercise, exchange or conversion of any
options, warrants or other securities beneficially owned by such person;
provided, however, that such Common Shares issuable upon such exercise shall not
be deemed outstanding for the purpose of calculating the percentage of Common
Shares that are beneficially owned by any other person. Notwithstanding the
foregoing, if any person is the beneficial owner of at least 20% of the
outstanding Common Shares as a result of any increase in the number of Common
Shares issuable upon the exercise, exchange or conversion of outstanding
securities, or any decrease in the number of outstanding Common Shares resulting
from any stock repurchase plan or self tender offer of the Company, then such
person shall not be deemed a "20% Shareholder" until such person thereafter
acquires beneficial ownership of, in the aggregate, a number of additional
Common Shares equal to 1% or more of the then outstanding Common Shares.
No person who was the beneficial owner of 20% or more of the
outstanding Common Shares on November 5, 1997, shall be deemed a 20% Shareholder
for purposes of the Rights unless and until such person shall have acquired
beneficial ownership of additional Common Shares amounting to 1% or more of the
total Common Shares outstanding, or such person, after having reduced its
beneficial ownership to less than 20% after November 5, 1997, shall thereafter
increase its beneficial ownership to 20% or more of the outstanding Common
Shares.
Upon the close of business of the Distribution Date, the Rights shall
separate from the Common Shares, Right certificates shall be issued, and the
Rights shall become exercisable to purchase Preferred Shares as described in
Section 5 below.
3. ISSUANCE OF RIGHT CERTIFICATES
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4. EXPIRATION OF RIGHTS
The Rights shall expire on November 5, 2007, unless earlier redeemed or
exchanged, unless the Distribution Date has previously occurred and the Rights
have separated from the Common Shares, in which case the Rights will remain
outstanding for ten years.
2
<PAGE> 64
5. EXERCISE OF RIGHTS
Unless the Rights have expired or been redeemed or exchanged, they may
be exercised, at the option of the holders, pursuant to paragraphs (a), (b) or
(c) below. No Right may be exercised more than once or pursuant to more than one
of such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by a 20%
Shareholder or that was attached to a Common Share that is subject to an option
beneficially owned by a 20% Shareholder shall be void.
(a) RIGHT TO PURCHASE PREFERRED SHARES.
From and after the close of business on the Distribution Date,
each Right (other than a Right that has become void) shall be
exercisable to purchase one one-hundredth of a share of Series B Junior
Participating Cumulative Preferred Stock, no par value, of the Company
(the "Preferred Shares"), at an exercise price of $80.00 (Eighty
dollars) (the "Exercise Price"). Prior to the Distribution Date, the
Company may substitute for all or any portion of the Preferred Shares
that would otherwise be issuable upon exercise of the Rights, cash,
assets or other securities having the same aggregate value as such
Preferred Shares. The Preferred Shares are nonredeemable and, unless
otherwise provided in connection with the creation of a subsequent
series of preferred stock, are subordinate to any other series of the
Company's preferred stock whether issue before or after the issuance of
the Preferred Shares. The Preferred Shares may not be issued except
upon exercise of Rights. The holder of a Preferred Share is entitled to
receive when, as and if declared, the greater of (i) a preferential
annual dividend of $1.00 per Preferred Share ($.01 per one
one-hundredth of a Preferred Share); or (ii) cash and non-cash
dividends in an amount equal to 100 times the dividends declared on
each Common Share. In the event of liquidation, the holders of
Preferred Shares shall be entitled to receive a liquidation payment in
an amount equal to the greater of (1) $1.00 per Preferred Share ($.01
per one one-hundredth of a Preferred Share), plus all accrued and
unpaid dividends and distributions on the Preferred Shares, or (2) an
amount equal to 100 times the aggregate amount to be distributed per
Common Share. Each Preferred Share has 100 votes, voting together with
the Common Shares. In the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, the holder of a
Preferred Share shall be entitled to receive 100 times the amount
received per Common Share. The rights of the Preferred Shares as to
dividends, voting and liquidation preferences are protected by
antidilution provisions. It is anticipated that the value of one
one-hundredth of a Preferred Share should approximate the value of one
Common Share.
(b) RIGHT TO PURCHASE COMMON SHARES OF THE COMPANY
("FLIP-IN RIGHT").
From and after the close of business on the tenth business day
following the 20% Ownership Date, each Right (other than a Right that
has become void) shall be exercisable to purchase, at the Exercise
Price (initially $80.00), Common Shares with a market value
3
<PAGE> 65
equal to two times the Exercise Price. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the
Company shall substitute for all or any portion of the Common Shares
that would otherwise be issuable upon the exercise of the Rights, cash,
assets or other securities having the same aggregate value as such
Common Shares.
(c) RIGHT TO PURCHASE COMMON STOCK OF A SUCCESSOR
CORPORATION ("FLIP-OVER RIGHT").
If, on or after the 20% Ownership Date, (i) the Company is
acquired in a merger or other business combination in which the Company
is not the surviving corporation, (ii) the Company is the surviving
corporation in a merger or other business combination in which all or
part of the outstanding Common Shares are changed into or exchanged for
stock or assets of another person or (iii) 50% or more of the Company's
consolidated assets or earning power are sold (other than in
transactions in the ordinary course of business), then each Right
(other than a Right that has become void) shall thereafter be
exercisable to purchase, at the Exercise Price (initially $80.00),
shares of common stock of the surviving corporation or purchaser,
respectively, with an aggregate market value equal to two times the
Exercise Price.
6. ADJUSTMENTS TO PREVENT DILUTION
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution. With certain exceptions, no adjustment in the
Exercise Price shall be required until cumulative adjustments require an
adjustment of at least 1%.
7. CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES
No fractional securities shall be issued upon exercise of a Right
(other than fractions of Preferred Shares that are integral multiples of one
one-hundredth of a Preferred Share and that may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
shall be made based on the market price of such securities on the last trading
date prior to the date of exercise.
8. REDEMPTION
At any time prior to the earlier of (a) the tenth business day (or such
later day as shall be designated by the Board of Directors) following the date
of the commencement of, or the announcement of an intention to make, a tender
offer or exchange offer, the consummation of which would cause any person to
become a 20% Shareholder, (b) the tenth business day after the 20% Ownership
Date or (c) the first event of the type giving rise to exercise rights under
Section 5(c)
4
<PAGE> 66
above, the Board of Directors may, at its option, direct the Company to redeem
the Rights in whole, but not in part, at a price of $0.001 per Right (the
"Redemption Price"), and the Company shall so redeem the Rights; provided,
however, that any redemption after there is a 20% Shareholder shall also require
the approval of a majority of those directors of the Company who were directors
prior to such date. Immediately upon such action by the Board of Directors (the
date of such action is the "Redemption Date"), the right of the holders of
Rights thereafter shall be to receive the Redemption Price.
9. EXCHANGE
At any time after the 20% Ownership Date and prior to the first date
thereafter upon which a 20% Shareholder shall be the beneficial owner of 50% or
more of the outstanding Common Shares, the Board of Directors may, at its
option, direct the Company to exchange all, but not less than all, of the then
outstanding Rights (other than a Right that has become void) for Common Shares
at an exchange ratio equal to one Common Share per Right on such date (the
"Exchange Ratio"), and the Company shall so exchange the Rights. Immediately
upon such action by the Board of Directors, the right to exercise Rights shall
terminate and the only right of the holders of Rights thereafter shall be to
receive a number of Common Shares equal to the Exchange Ratio.
10. NO SHAREHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a shareholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. AMENDMENT OF RIGHTS AGREEMENT
The Board of Directors may, from time to time, without the approval of
any holder of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of the Rights Agreement in any manner, whether or not such
supplement or amendment is adverse to any holder of Rights, and the Company and
the Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the earliest of (a) the tenth business day (or such later
day as shall be designated by the Board of Directors) following the date of the
commencement of, or the announcement of an intention to make, a tender offer or
exchange offer, the consummation of which would cause any person to become a 20%
Shareholder, (b) the 20% Ownership Date, (c) the first event of the type giving
rise to exercise rights under Section 5(c) above, or (d) the Redemption Date,
the Rights Agreement shall not be supplemented or amended in any manner that
would materially and adversely affect any holder of outstanding Rights other
than a 20% Shareholder; provided, further that from and after the first date
upon which there shall exist a 20% Shareholder, the Rights Agreement shall not
be supplemented or amended in any manner without the approval of a majority of
the Company's directors who were directors prior to such date.
5
