SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ETHAN ALLEN INTERIORS INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
06-1275288
(I.R.S. Employer Identification No.)
Ethan Allen Drive
Post Office Box 1966
Danbury, Connecticut
(Address of principal executive offices)
06813-1966
(Zip Code)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A(c)(1) please
check the following box. []
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933 pursuant
to General Instruction A(c)(2) please check the following box. []
Securities to be registered pursuant to Section 12(b) of the Act:
Titles of each class
to be so registered
---------------------
Series C Preferred Stock
Purchase Rights
Name of Each Exchange on Which
each class is to be registered
-------------------------------
New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
<PAGE>
Item 1. Description of Registrant's Securities to be Registered.
-------------------------------------------------------
On May 20, 1996, the Board of Directors ("Board") of Ethan Allen
Interiors Inc. ("Company") declared a dividend of one preferred stock
purchase right ("Right") for each outstanding share of common stock of $.01
par value ("Common Stock") of the Company. The dividend is payable to
stockholders of record at the close of business on July 10, 1996 ("Record
Date"). Each Right entitles the registered holder to purchase from the
Company one one-hundredth (1/100) of a share of the Company's Series C
Junior Participating Preferred Stock ("Series C Preferred Stock") at a
purchase price of $125. The terms and conditions of the Rights are
contained in a Rights Agreement.
Initially the Rights will not be exercisable, certificates for the
Rights will not be issued and the Rights will automatically trade with the
Common Stock. Until the close of business on the Distribution Date, which
will occur on the earlier of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons,
other than the Company, any subsidiary of the Company or any employee
benefit plan or employee stock plan of the Company (each, an "Exempt
Person"), has acquired, or has obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Stock (each, an
"Acquiring Person") (the "Stock Acquisition Date") or (ii) the fifteenth
business day following the commencement of or public announcement of the
intent to commence a tender or exchange offer which, if consummated, would
result in the ownership of 15% or more of the outstanding Common Stock,
irrespective of whether any shares of Common Stock are acquired pursuant to
such offer (the earlier of such dates referenced in clauses (i) or (ii)
above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate, together with a copy of this
Summary of Rights. The Rights Agreement excludes from the calculation of
beneficial ownership of shares of Common Stock of a Person, any shares
which such Person has the right to vote pursuant to a voting proxy provided
by Management Letter Agreements and Dealer Letter Agreements (as such terms
are defined in the Rights Agreement). The Rights Agreement provides that
the Distribution Date may be extended by the Board prior to the expiration
of either of the time periods referenced in clauses (i) and (ii) above. It
further provides that until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be represented by and
transferred with, and only with, the Common Stock. Until the Distribution
Date (or the earlier redemption or expiration of the Rights), the new
Common Stock certificates issued after July 10, 1996 will contain a legend
incorporating the Rights Agreement by reference and the surrender for
transfer of any of the Company's Common Stock certificates, with or without
the aforesaid legend or a copy of the summary of rights attached thereto,
will also constitute the simultaneous transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate Right Certificates
("Rights Certificates") will be mailed to holders of record of Common Stock
at the close of business on the Distribution Date, and, thereafter, the
Right Certificates alone will evidence the Rights, and the Rights will be
transferable separate and apart from the Common Stock.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on May 31, 2006, unless
redeemed or exchanged earlier as described below.
The Series C Preferred Stock will be nonredeemable and, unless
otherwise provided in connection with the creation of a subsequent series
of preferred stock, will be subordinate to all other series of the
Company's preferred stock. The Series C Preferred Stock will not be issued
except upon exercise of Rights. Each share of Series C Preferred Stock
will be entitled to receive, when, as and if declared, a quarterly dividend
in an amount equal to the greater of $1.00 per share or 100 times the
quarterly cash dividend declared on the Company's Common Stock. In
addition, the Series C Preferred Stock is entitled to 100 times any noncash
dividends declared on the Common Stock, in like kind. In the event of
dissolution, liquidation or winding-up of the Company, the holders of
Series C Preferred Stock will be entitled to receive a liquidation payment
in an amount equal to the greater of $100 per share or 100 times the
liquidation payment made per share of Common Stock. Each share of Series C
Preferred Stock will have 100 votes, voting together with the Common Stock.
In the event of any merger, consolidation or other transaction in which
common shares are exchanged, each share of Series C Preferred Stock will be
entitled to receive 100 times the amount received per share of Common
Stock. The rights of the Series C Preferred Stock as to dividends,
liquidation payments and voting rights are protected by antidilution
provisions.
The Purchase Price payable and the number of shares of Series C
Preferred Stock or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series C Preferred Stock, (ii) upon the grant to
holders of the Series C Preferred Stock of certain rights or warrants to
subscribe for the purchase of Series C Preferred Stock or convertible
securities at less than the current market price of the Series C Preferred
Stock or (iii) upon the distribution to holders of the Series C Preferred
Stock of evidences of indebtedness or assets (excluding regular cash
dividends and dividends payable in Series C Preferred Stock) or of
subscription rights or warrants.
If any Person (other than an Exempt Person) becomes the beneficial
owner of 15% or more of the then outstanding shares of Common Stock, each
holder of a Right, other than the Acquiring Person, will have the right to
receive, upon payment of the Purchase Price, in lieu of Series C Preferred
Stock, a number of shares of Common Stock having a market value equal to
twice the Purchase Price. In lieu of issuing shares of Common Stock upon
exercise of Rights, the Company may, and to the extent that insufficient
shares of Common Stock are available for the exercise in full of the
Rights, the Company shall, issue cash, property or other securities of the
Company, or any combination thereof (which may be accompanied by a
reduction in the Purchase Price) in proportion determined by the Company,
so that the aggregate value received is equal to twice the Purchase Price.
The Rights Agreement contains an exemption for any issuance of Common Stock
by the Company directly to any person (for example, in a private placement
or an acquisition by the Company in which Common Stock is used as
consideration), even if that person would become the beneficial owner of
15% or more of the Common Stock, provided that such person does not acquire
any additional shares of Common Stock. Notwithstanding the foregoing,
after the acquisition of shares of Common Stock as described in this
paragraph, Rights that are (or, under certain circumstances, Rights that
were) beneficially owned by an Acquiring Person will be null and void.
The Board may, at its option, at any time after a person becomes an
Acquiring Person exchange all or part of the then outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right; provided, however, the Board may not
effect such exchange after the time that any Person becomes the beneficial
owner of 50% or more of the Common Stock then outstanding.
Unless the Rights are redeemed earlier, if, after the Stock
Acquisition Date, the Company is acquired in a merger or other business
combination (in which any shares of the Common Stock are changed into or
exchanged for other securities or assets) or more than 50% of the assets or
earnings power of the Company and its subsidiaries (taken as a whole) are
sold or transferred in one or a series of related transactions, the Rights
Agreement provides that proper provision shall be made so that each holder
of record of a Right will from and after that time have the right to
receive, upon payment of the Purchase Price, that number of shares of
common stock of the acquiring company which has a market value at the time
of such transaction equal to twice the Purchase Price.
At any time after the date of the Rights Agreement until the time
that a person becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), which may (at the option of the Company) be paid
in cash, shares of Common Stock or other consideration deemed appropriate
by the Board of Directors. Upon the effectiveness of any action of the
Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The provisions of the Rights Agreement may be amended by the Company,
except that any amendment adopted after the time that a person becomes an
Acquiring Person may not adversely affect the interests of holders of
Rights.
As of May 20, 1996, there were 14,556,503 shares of Common Stock
outstanding and 944,432 shares of Common Stock reserved for issuance under
employee benefit plans. Each outstanding share of Common Stock on July 10,
1996 will receive one Right. One hundred fifty five thousand, ten
(155,010) shares of Series C Preferred Stock will be reserved for issuance
in the event of exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired, and under certain
circumstances the Rights beneficially owned by such a person or group may
become void. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors because, if the
Rights would become exercisable as a result of such merger or business
combination, the Board of Directors may, at its option, at any time prior
to the time that any Person becomes an Acquiring Person, redeem all (but
not less than all) of the then outstanding Rights at the Redemption Price.
The Rights Agreement, dated June 26, 1996, between the Company and
Harris Trust and Savings Bank, as Rights Agent, specifying the terms of the
Rights is attached as an Exhibit to this Registration Statement. The
foregoing description of the Rights is qualified in its entirety by
reference to the Rights Agreement.
Item 2. Exhibits.
--------
The following exhibits are filed herewith:
Exhibit
Number Description
- ------- -----------
1. Certificate of Designations of Series C Participating Preferred
Stock of Ethan Allen Interiors Inc., dated July 3, 1996
2. Rights Agreement, dated as of June 26, 1996, among Ethan Allen
Interiors Inc. and Harris Trust and Savings Bank
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereto duly authorized.
ETHAN ALLEN INTERIORS INC.
By: /s/ M. Farooq Kathwari
------------------------------
Name: M. Farooq Kathwari
Title: Chairman, President and
Chief Executive Officer
Date: July 3, 1996
CERTIFICATE OF DESIGNATIONS
OF
SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
(Without Par Value)
OF
ETHAN ALLEN INTERIORS INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Ethan Allen Interiors Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Company"), DOES HEREBY
CERTIFY:
1. That pursuant to authority conferred on the Board of Directors of
the Company by its Certificate of Incorporation and the provisions of the
Section 151(g) of the General Corporation Law of the State of Delaware, the
Board of Directors on May 20, 1996 adopted the following resolution
establishing in their entireties the voting powers, preferences, and
relative, participating, optional or other special rights of the shares of
the Series C Preferred Stock, and the qualifications, limitations or
restrictions thereof.
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Company by its Restated Certificate of Incorporation and
by the provisions of Section 151(g) of the General Corporation Law of the
State of Delaware, the voting powers, preferences and relative
participating, optional or other special rights of the Series C Junior
Preferred Stock of the Company, and the qualifications, limitations or
restrictions thereof, be, and the same hereby are to be as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated "Series C Junior Participating Preferred Stock" ("Series C
Preferred Stock") and the number of shares constituting such series shall
be 155,010.
Section 2. Dividends and Distributions.
(a) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series C Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, (i) cash dividends in an amount per
share (rounded to the nearest cent) equal to 100 times the aggregate per
share amount of all cash dividends declared or paid on the Common Stock,
$.01 par value per share, of the Company ("Common Stock") and (ii) a
preferential cash dividend (a "Preferential Dividend"), if any, on the
first day of February, May, August and November of each year (each 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 C Preferred Stock, in an amount equal to $1.00 per share of
Series C Preferred Stock less the per share amount of all cash dividends
declared on the Series C Preferred Stock pursuant to clause (i) of this
sentence 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 C Preferred
Stock. In the event the Company shall, at any time after the issuance of
any share or fraction of a share of Series C Preferred Stock, make any
distribution on the shares of Common Stock, whether by way of a dividend or
a reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Company or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other
property (other than cash dividends subject to clause (i) of the
immediately preceding sentence and other than a distribution of shares of
Common Stock or other capital stock of the Company and other than a
distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for any such share), at a
price less than the Current Market Price of such share, then and in each
such event the Company shall simultaneously pay on each then outstanding
share of Series C Preferred of the Company a distribution, in like kind, of
100 times (subject to the provisions for adjustment hereinafter set forth)
such distribution paid on a share of Common Stock. The dividends and
distributions on the Series C Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
the second sentence of this paragraph are hereinafter referred to as
"Participating Dividends," and the multiple of cash and noncash dividends
on the Common Stock applicable to the determination of the Participating
Dividends, which shall be 100 initially but shall be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "Dividend
Multiple." In the event the Company shall at any time after June 26, 1996
declare or pay any dividend or make any distribution on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock,
then in each such event the Dividend Multiple thereafter applicable to the
determination of the amount of Participating Dividends which holders of
shares of Series C Preferred Stock shall be entitled to receive shall be
the Dividend Multiple applicable immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Company shall declare each Participating Dividend at the
same time it declares any cash or noncash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or noncash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required shall be paid or set
aside for payment of the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid or set aside for payment on the Series C Preferred
Stock.
(c) Preferential Dividends shall begin to accumulate on outstanding
shares of Series C Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issuance of any shares of Series C Preferred
Stock. Accumulated but unpaid Preferential Dividends shall cumulate but
shall not bear interest. Preferential Dividends paid on the shares of
Series C Preferred Stock in an amount less than the total amount of such
dividends at the time accumulated and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time out-standing.
Section 3. Voting Rights. The holders of shares of Series C
Preferred Stock shall have the following voting rights:
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series C Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the
Company. The number of votes which a holder of Series C Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Vote Multiple."
In the event the Company shall at any time after June __, 1996 declare or
pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Vote Multiple
thereafter applicable to the determination of the number of votes per share
to which holders of shares of Series C Preferred Stock shall be entitled
after such event shall be the Vote Multiple immediately prior to such event
multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided herein, in the Certificate of
Incorporation, in any resolution or resolutions of the Board of Directors
of the Company providing for the issue of any other series of Preferred
Stock or by law, the holders of shares of Series C Preferred Stock, the
holders of shares of Common Stock and the holders of shares of any other
class or series of capital stock of the Company entitled to vote generally
for the election of directors shall vote together as one class on all
matters submitted to a vote of stockholders of the Company.
(c) In the event that the Preferential Dividends accrued on the
Series C Preferred Stock for four or more consecutive quarterly dividend
periods shall not have been declared and paid or set apart for payment, the
holders of record of the Series C Preferred Stock, voting together with the
holders of record of any other series of Preferred Stock of the Company
which shall then have the right, expressly granted by the Restated
Certificate of Incorporation of the Company or in any resolution or
resolutions of the Board of Directors of the Company providing for the
issue of such shares of Preferred Stock, to elect directors upon such a
default in the payment of dividends by the Company, shall have the right,
at the next meeting of stockholders called for the election of directors,
voting together as a class, to elect two members to the Board of Directors,
which directors shall be in addition to the number provided for pursuant to
the Company's By-laws prior to such event, to serve until the next Annual
Meeting and until their successors are elected and qualified or their
earlier resignation, removal or incapacity or until such earlier time as
all accrued and unpaid Preferential Dividends upon the outstanding shares
of Series C Preferred Stock shall have been paid (or set aside for payment)
in full. The holders of shares of Series C Preferred Stock shall continue
to have the right to elect directors as provided by the immediately
preceding sentence until all accrued and unpaid Preferential Dividends upon
the outstanding shares of Series C Preferred Stock shall have been paid (or
set aside for payment) in full. Such directors may be removed and replaced
by such stockholders, and vacancies in such directorships may be filled
only by such stockholders (or by the remaining director elected by such
stockholders, if there be one) in the manner permitted by law. Subject to
the foregoing, any directors elected pursuant to this paragraph 3(c) shall
be elected annually and shall not constitute members of any Class of
directors as contemplated by Article Sixth of the Company's Restated
Certificate of Incorporation.
(d) Except as otherwise required by law or set forth herein, holders
of Series C 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 herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(a) Whenever Preferential Dividends or Participating Dividends are
in arrears or the Company shall be in default in payment thereof,
thereafter and until all accumulated and unpaid Preferential Dividends and
Participating Dividends, whether or not declared, on shares of Series C
Preferred Stock outstanding shall have been paid or set aside for payment
in full, and in addition to any and all other rights which any holder of
shares of Series C Preferred Stock may have in such circumstances, the
Company shall not
(i) declare or pay dividends on, make any other distributions
on or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock;
(ii) declare or pay dividends or make any other distributions
on any shares of stock ranking on a parity as to dividends with the
Series C Preferred Stock, unless dividends are paid ratably on the
Series C Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) except as permitted by subparagraph (iv) of this
paragraph (A), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior
(both as to dividends and upon liquidation, dissolution or winding
up) to the Series C Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series C Preferred Stock, or any shares of stock ranking on a
parity with the Series C Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company ranking junior to the Series C Preferred Stock unless the Company
could, under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
(c) The Company shall not issue any shares of Series C Preferred
Stock except upon exercise of Rights issued pursuant to that certain Rights
Agreement dated as of June __, 1996 between the Company and Harris Trust
and Savings Bank (the "Rights Agreement"), a copy of which is on file with
the Secretary of the Company at the principal executive office of the
Company and shall be made available to holders of record of Common Stock or
Series C Preferred Stock without charge upon written request therefor
addressed to the Secretary of the Company. Notwithstanding the foregoing
sentence, nothing contained in the provisions hereof shall prohibit or
restrict the Company from issuing for any purpose any series of Preferred
Stock with rights and privileges similar to, different from, or greater
than those of the Series C Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series C Preferred
Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, no distribution shall be made (i) to the holders of shares of
stock ranking junior to the Series C Preferred Stock (either as to
dividends or upon liquidation, dissolution or winding up) unless the
holders of shares of Series C Preferred Stock shall have received, subject
to adjustment as hereinafter provided, the greater of (A) $100.00 per share
plus an amount equal to all accumulated and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, and (B) the amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with
the Series C Preferred Stock, unless simultaneously therewith distributions
are made ratably on the Series C Preferred Stock and all other shares of
such parity stock in proportion to the total amounts to which the holders
of shares of Series C Preferred Stock are entitled under clause (i) (A) of
this sentence and to which the holders of such parity shares are entitled,
in each case upon such liquidation, dissolution or winding up. The amount
to which holders of Series C Preferred Stock shall be entitled upon
liquidation, dissolution or winding up of the Company pursuant to clause
(i)(B) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount," and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Company applicable pursuant to said clause
to the determination of the Participating Liquidation Amount, which shall
be 100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Liquidation Multiple." In the
event the Company shall at any time after June 26, 1996 declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of
the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, then in each such case the Liquidation Multiple
thereafter applicable to the determination of the Participating Liquidation
Amount to which holders of Series C Preferred Stock shall be entitled after
such event shall be the Liquidation Multiple applicable immediately prior
to such event multiplied by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Certain Reclassification and Other Events.
(a) In the event that holders of shares of Common Stock receive
after June 26, 1996 in respect of their shares of Common Stock any share of
capital stock of the Company (other than any share of Common Stock of the
Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise
("Transaction"), then in each such event the dividend rights and rights
upon the liquidation, dissolution or winding up of the Company of the
shares of Series C Preferred Stock shall be adjusted so that after such
event the holders of Series C Preferred Stock shall be entitled, in respect
of each share of Series C Preferred Stock held, in addition to such rights
in respect thereof to which such holder was entitled immediately prior to
such adjustment, to (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such Transaction multiplied by the
additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such
capital stock, (ii) such additional voting rights as equal the Vote
Multiple in effect immediately prior to such Transaction multiplied by the
additional voting rights which the holder of a share of Common Stock shall
be entitled to receive by virtue of the receipt in the Transaction of such
capital stock, and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple
in effect immediately prior to such Transaction multiplied by the
additional amount which the holder of a share of Common Stock shall be
entitled to receive upon liquidation, dissolution or winding up of the
Company by virtue of the receipt in the Transaction of such capital stock,
as the case may be, all as provided by the terms of such capital stock.
(b) In the event that holders of shares of Common Stock receive
after June 26, 1996 in respect of their shares of Common Stock any right or
warrant to purchase Common Stock (including as such a right, for all
purposes of this paragraph, any security convertible into or exchangeable
for Common Stock) at a purchase price per share less than the Current
Market Price (as hereinafter defined) of a share of Common Stock on the
date of issuance of such right or warrant, then in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution
or winding up of the Company of the shares of Series C Preferred Stock
shall each be adjusted so that after such event the Dividend Multiple, the
Vote Multiple and the Liquidation Multiple shall each be the product of the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple, as the
case may be, in effect immediately prior to such event multiplied by a
fraction the numerator of which shall be the number of shares of Common
Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock which could be acquired
upon exercise in full of all such rights or warrants and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
before such issuance of rights or warrants plus the number of shares of
Common Stock which could be purchased, at the Current Market Price of the
Common Stock at the time of such issuance, by the maximum aggregate
consideration payable upon exercise in full of all such rights or warrants.
(c) In the event that holders of shares of Common Stock receive
after June 26, 1996 in respect of their shares of Common Stock any right or
warrant to purchase capital stock of the Company (other than shares of
Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock
of the Company (other than Common Stock), at a purchase price per share
less than the Current Market Price of such shares of capital stock on the
date of issuance of such right or warrant, then in each such event the
dividend rights, voting rights and rights upon liquidation, dissolution or
winding up of the Company of the shares of Series C Preferred Stock shall
each be adjusted so that after such event each holder of a share of Series
C Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such event, to receive
(i) such additional dividends as equal the Dividend Multiple in effect
immediately prior to such event multiplied, first, by the additional
dividends to which the holder of a share of Common Stock shall be entitled
upon exercise of such right or warrant by virtue of the capital stock which
could be acquired upon such exercise and multiplied again by the Discount
Fraction (as hereinafter defined), (ii) such additional voting rights as
equal the Vote Multiple in effect, immediately prior to the event
multiplied, first, by the additional voting rights to which the holder of a
share of Common Stock shall be entitled upon exercise of such right of
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied, again, by the Discount Fraction, and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately prior to
such event multiplied, first, by the additional amount which the holder of
a share of Common Stock shall be entitled to receive upon liquidation,
dissolution or winding up of the Company upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction the numerator
of which shall be the difference between the Current Market Price (as
hereinafter defined) of a share of the capital stock subject to a right or
warrant distributed to holders of shares of Common Stock as contemplated by
this paragraph immediately after the distribution thereof and the purchase
price per share for such share of capital stock pursuant to such right or
warrant and the denominator of which shall be the Current Market Price of a
share of such capital stock immediately after the distribution of such
right or warrant.
(d) For purposes of this Section 7, the "Current Market Price" of a
share of capital stock of the Company (including a share of Common Stock)
on any date shall be deemed to be the average of the daily closing prices
per share thereof over the 30 consecutive Trading Days (as such-term is
hereinafter defined) immediately prior to such date, provided that in the
event that such Current Market Price of any such share of capital stock is
determined during a period which includes any date that is within 30
Trading Days after the ex-dividend date for (i) a dividend or distribution
on stock payable in shares of such stock or securities convertible into
shares of such stock or (ii) any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then
in each such event, the Current Market Price shall be appropriately
adjusted by the Board of Directors to reflect the Current Market Price of
such stock to take into account ex-dividend trading. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if the shares are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the shares are listed or admitted to trading or, if the shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or if on any such date the
shares are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the shares selected by the Board of Directors. The term "Trading
Day" shall mean a day on which the principal national securities exchange
on which the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or admitted to
trading on any national securities exchange, on which the New York Stock
Exchange or such other national securities exchange as may be selected by
the Board of Directors is open. If the shares are not publicly held or not
so listed or traded on any day within the period of 30 Trading Days
applicable to the determination of current Market Price thereof as
aforesaid, "Current Market Price" shall mean the fair market value thereof
per share as determined in good faith by the Board of Directors. In either
case referred to in the foregoing sentence, the determination of Current
Market Price shall be described in a statement filed with the Secretary of
the Company.
Section 8. Consolidation, Merger, etc. In the event that the
Company shall enter into any consolidation, merger, combination or other
transaction in which shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such event each outstanding share of Series C Preferred Stock shall at the
same time be similarly exchanged for or changed into the aggregate amount
of stock, securities, cash and other property (payable in like kind), as
the case may be, for which or into which each share of Common Stock is
changed or exchanged multiplied by the highest of the Dividend Multiple,
the Vote Multiple or the Liquidation Multiple in effect immediately prior
to such event.
Section 9. Effective Time of Adjustments.
(a) Adjustments to the Series C Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(b) The Company shall give prompt written notice to each holder of a
share of Series C Preferred Stock of the effect on any such shares of any
adjustment to the dividend rights, voting rights or rights upon
liquidation, dissolution or winding up of the Company required by the
provisions hereof. Notwithstanding the foregoing sentence, the failure of
the Company to give such notice shall not affect the validity of or the
force or effect of or the requirement for such adjustment.
Section 10. No Redemption. The shares of Series C Preferred Stock
shall not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Series C Preferred Stock in any other manner permitted by
law, the provisions of the Certificate of Designations setting forth the
rights, powers and preferences of the Series C Preferred Stock and the
Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the Certificate
of Incorporation or a certificate of designations relating to a subsequent
series of Preferred Stock of the Company, the Series C Preferred Stock
shall rank junior to all other series of the Company'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.
Section 12. Amendment. After the Distribution Date (as defined in
the Rights Agreement), the provisions of the Amended Certificate of
Designations setting forth the rights, powers and preferences of the Series
C Preferred Stock and the Restated Certificate of Incorporation shall not
be amended in any manner which would materially affect the rights,
privileges or powers of the Series C Preferred Stock without, in addition
to any other vote of stockholders required by law, the affirmative vote of
the holders of 66-2/3% or more of the outstanding shares of Series C
Preferred Stock, voting together as a single class.
2. This Certificate of Designations shall become effective at 5:01
pm. on July 3, 1996.
IN WITNESS WHEREOF, Ethan Allen Interiors Inc. has caused this
Certificate of Designations to be signed and attested this 3rd day of
July, 1996.
Ethan Allen Interiors Inc.
By /s/M. Farooq Kathwari
--------------------------
Name: M. Farooq Kathwari
Title: President and Chief
Executive Officer
ATTEST:
/s/Edward P. Schade
- -----------------------
Name: Edward P. Schade
Title: Vice President & Treasurer
- -------------------------------------------------------------------------------
Ethan Allen Interiors Inc.
and
Harris Trust and Savings Bank,
Rights Agent
------------------------
Rights Agreement
Dated as of June 26, 1996
- -------------------------------------------------------------------------------
RIGHTS AGREEMENT
----------------
Agreement ("Rights Agreement"), dated as of June 26, 1996, between
Ethan Allen Interiors Inc., a Delaware corporation (the "Company"), and
Harris Trust and Savings Bank (the "Rights Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, on May 31, 1996 the Board of Directors of the Company (i)
authorized the issuance and declared a dividend of one right (a "Right")
for each share of the Common Stock, $.01 par value per share ("Common
Stock"), of the Company outstanding as of the close of business on July 10,
1996 (the "Record Date"), each Right representing the right to purchase, on
the terms and conditions contained herein, one one-hundredth of a share
(subject to adjustment) of Series C Junior Participating Preferred Stock,
no par value ("Series C Preferred Stock"), of the Company having the rights
and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit A, and (ii) further authorized the issuance of
one Right (subject to adjustment) with respect to each share of Common
Stock that shall become outstanding (whether originally issued or delivered
from the Company's treasury) between the Record Date and the Distribution
Date (as defined herein);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates (as hereinafter
defined) and Associates (as hereinafter defined) of such Person,
shall be the Beneficial Owner (as hereinafter defined) of 15% or more
of the outstanding Common Stock, provided that an Acquiring Person
shall not include an Exempt Person (as hereinafter defined).
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of (a) an acquisition of shares of Common Stock
by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the shares of Common Stock of the
Company then outstanding or (b) the acquisition by such Person of
newly issued shares of Common Stock directly from the Company (it
being understood that a purchase from an underwriter or other
intermediary is not directly from the Company); provided, however,
that if a Person shall become the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then outstanding by reason
of share purchases by the Company or the receipt of newly issued
shares of Common Stock directly from the Company and shall, after
such share purchases or direct issuance by the Company, become the
Beneficial Owner of any additional shares of Common Stock of the
Company, then such Person shall be deemed to be an "Acquiring
Person"; provided further, however, that any transferee from such
Person who becomes the Beneficial Owner of 15% or more of the shares
of Common Stock of the Company then outstanding shall nevertheless be
deemed to be an "Acquiring Person." Notwithstanding the foregoing,
if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph, has
become such inadvertently, and such Person divests as promptly as
practicable (and in any event within ten business days after
notification by the Company) a sufficient number of shares of Common
Stock so that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this paragraph, then
such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement. The word "outstanding," when used with
reference to a Person's Beneficial Ownership of shares of Common
Stock of the Company, shall mean the number of such shares then
issued and outstanding together with the number of such shares not
then issued and outstanding which such Person would be deemed to own
beneficially hereunder.
"Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Rights
Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any shares of Common Stock:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, whether
or not in writing, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise,
provided that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (x) securities tendered
pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or (y)
securities which such Person has a right to acquire on the
exercise of Rights at any time prior to the occurrence of a
Section 11(a)(ii) Event or a Section 13 Event (each as
hereinafter defined) or (z) securities issuable upon exercise of
Rights from and after the occurrence of a Section 11(a)(i) Event
or a Section 13 Event if such Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 22 hereof
("original Rights") or pursuant to Section 11(i) or Section
11(p) with respect to an adjustment to original Rights; or (B)
the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing), provided that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any securities if the agreement, arrangement
or understanding to vote such security arises (1) solely from a
revocable proxy or consent given in response to a public proxy
or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act
and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or (C)
"beneficial ownership" (as determined pursuant to Rule 13d-3 (or
any successor rule) of the General Rules and Regulations under
the Exchange Act); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding, whether or not in writing, for the
purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (d) or
disposing of any securities of the Company.
Notwithstanding anything in this definition to the contrary, (x) a
Person engaged in the business of underwriting securities shall not
be deemed the "Beneficial Owner" of, or to "beneficially own," any
securities acquired in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition
and (y) a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any securities which such Person has the right to
vote pursuant to a voting proxy provided by Management Letter
Agreements and Dealer Letter Agreements.
"Board of Directors" shall mean the Board of Directors of the
Company or any duly authorized committee thereof.
"Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 P.M., New
York City time, on such date, provided that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
"Common Stock" when used with reference to the Company shall
mean the Common Stock (currently $.01 par value per share) of the
Company. "Common Stock" when used with reference to any Person other
than the Company which shall be organized in corporate form shall
mean the capital stock or other equity security with the greatest per
share voting power of such Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be
organized in corporate form shall mean units of beneficial interest
which shall represent the right to participate in profits, losses,
deductions and credits of such Person and which shall be entitled to
exercise the greatest voting power per unit of such Person.
"Common Stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
"Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Dealer Letter Agreements" shall mean those certain dealer
subscription agreements entered into from time to time, between the
Company and dealers and of the Company's products that are investors
in Common Stock.
"Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
"equivalent Series C Preferred Stock" shall have the meaning set
forth in Section 11(b) hereof.
"Exchange Act" shall have the meaning set forth in Section 1(c)
hereof.
"Exchange Ratio" shall have the meaning set forth in Section
23(c) hereof.
"Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan or employee stock plan of the
Company or of any Subsidiary of the Company, or any person or entity
organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan.
"Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
"Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
"invalidation time" shall have the meaning set forth in Section
11(a)(ii) hereof.
"Management Letter Agreements" shall mean those certain
management subscription agreements entered into from time to time,
between the Company and management and other employees who are
investors in Common Stock or recipients of options and warrants to
purchase Common Stock.
"NASDAQ" shall have the meaning set forth in Section 11(d)
hereof.
"NYSE" shall mean the New York Stock Exchange.
"Person" shall mean any individual, firm, corporation,
partnership or other entity.
"Principal Party" shall have the meaning set forth in Section
13(b) hereof.
"Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
"Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
"Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
"Section 11(a)(ii) Event" shall mean any instance in which any
Person, alone or together with its Affiliates and Associates, shall
become an Acquiring Person.
"Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
"Section 13 Event" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
"Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d)
promulgated under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such or such earlier date
as a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.
"Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having
ordinary voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by such Person and any
corporation or other entity that is otherwise controlled by such
Person.
"Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
"Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
"Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13 Event.
Any determination required by the definitions contained or referred to in
this Section 1 shall be made by the Board of Directors in good faith.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) Until the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day after the Stock Acquisition Date
or (ii) the fifteenth Business Day (or such other date as may be determined
by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) following the commencement by any Person
(other than an Exempt Person) of, or the first public announcement of the
intent of any Person (other than an Exempt Person) to commence, a tender or
exchange offer upon the successful consummation of which such Person,
together with its Affiliates and Associates, would be the Beneficial Owner
of 15% or more of the outstanding Common Stock (irrespective of whether any
shares are actually purchased pursuant to any such offer), (x) the Rights
will be evidenced (subject to the provisions of Section 3(c) hereof) by the
certificates for the Common Stock registered in the names of the holders of
the Common Stock and not by separate Right Certificates, and (y) each Right
will be transferable only in connection with the transfer of a share
(subject to adjustment as hereinafter provided) of Common Stock, provided,
that if a tender offer or exchange offer referred to in clause (ii) above
is cancelled or withdrawn prior to the Distribution Date, such offer shall
be deemed, for purposes of this Rights Agreement, never to have been made.
As soon as practicable after the Distribution Date, the Rights Agent will
mail, by first-class, postage-prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution Date, as shown
by the records of the Company, at the address of such holder shown on such
records, a Right Certificate in substantially the form of Exhibit B hereto
("Right Certificate") evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. As of and after the
Distribution Date the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Series C
Preferred Stock, substantially in the form attached hereto as Exhibit C
("Summary of Rights"), by first-class, postage prepaid mail, to each record
holder of Common Stock as of the close of business on the Record Date, at
the address of such holder shown on the records of the Company.
(c) With respect to certificates for Common Stock outstanding as of
the Record Date, until the Distribution Date (or, if earlier, the
Expiration Date), the Rights will be evidenced by such certificates for
Common Stock registered in the names of the holders thereof together with a
copy of the Summary of Rights. Until the Distribution Date (or, if
earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such shares of Common Stock
shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the shares of Common Stock
which are no longer outstanding.
(d) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date and, in certain circumstances
provided for in Section 22 hereof, may be issued in respect of shares of
Common Stock that become outstanding after the Distribution Date.
Certificates issued for Common Stock (including, without limitation,
certificates issued upon original issuance, disposition from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earlier of the Distribution Date, the Expiration Date or the
Final Expiration Date (or, in certain circumstances as provided in Section
22 hereof, after the Distribution Date) shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between Ethan
Allen Interiors Inc. and Harris Trust and Savings Bank, as Rights
Agent, dated as of June 26, 1996 (the "Rights Agreement"), the terms
of which are incorporated herein by reference and a copy of which is
on file at the principal executive office of Ethan Allen Interiors
Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. Ethan Allen
Interiors Inc. will mail to the holder of this certificate a copy of
the Rights Agreement without charge within five days after receipt by
it of a written request therefor. Rights issued to or beneficially
owned by a Person who is or becomes an Acquiring Person or an
Associate or Affiliate of such Acquiring Person (as such terms are
defined in the Rights Agreement) or, under certain circumstances,
transferees thereof, will become null and void as provided in Section
11(a)(ii) of the Rights Agreement and thereafter may not be
transferred to any Person.
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock represented by such certificates
shall, until the Distribution Date, be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases
or acquires any shares of Common Stock after the Record Date but prior to
the Distribution Date, any Rights associated with such shares of Common
Stock shall be deemed cancelled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common
Stock which are no longer outstanding.
Section 4. Form of Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof), when, as and if issued, shall be substantially in the
form set forth in Exhibit B attached 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 Rights Agreement, or as may be
required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 11 and 22 hereof, the Right
Certificates, whenever issued, shall be dated as of the Record Date, and on
their face Right Certificates shall entitle the holders thereof to purchase
one one-hundredth (1/100) of one share of Series C Preferred Stock, or
other securities or property as provided herein, as the same may from time
to time be adjusted as provided herein, at the price per one one-hundredth
of a share set forth therein, as the same from time to time be adjusted as
provided herein (the "Purchase Price").
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President, Treasurer or Secretary,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date of
the execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the
Right Certificates, the date of each of the Right Certificates, and the
certificate numbers for each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions hereof, at any time after the close of
business on the Distribution Date and at or prior to the close of business
on the Expiration Date, any Right Certificate or Certificates may be (i)
transferred or (ii) split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a share of Series C
Preferred Stock as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer any Right Certificate shall surrender the Right Certificate at the
principal office of the Rights Agent with the form of assignment on the
reverse side thereof duly endorsed (or enclose with such Right Certificate
a written instrument of transfer in form satisfactory to the Company and
the Rights Agent), duly executed by the registered holder thereof or his
attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or
exchange any Right Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be split up, combined or exchanged at the principal office
of the Rights Agent. Thereupon the Rights Agent, subject to the provisions
hereof, shall countersign (by manual signature) and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection
with any transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
if requested by the Company, reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will
execute and deliver a new Right Certificate of like tenor to the Rights
Agent for delivery to the registered owner in lieu of the Right Certificate
so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Except as otherwise provided herein, the Rights shall become
exercisable at the close of business on the Distribution Date, and may be
exercised to purchase one one-hundredths of a share of Series C Preferred
Stock, except as otherwise provided herein, in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof duly executed
(with such signature duly guaranteed), to the Rights Agent at its principal
office, together with payment of the aggregate Purchase Price, subject to
adjustment as hereinafter provided, with respect to the number of one
one-hundredths of a share of Series C Preferred Stock (except as otherwise
provided herein) as to which such surrendered Rights are then being
exercised, at or prior to the close of business on the date (the
"Expiration Date") which is the earlier of (i) May 31, 2006 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed or
exchanged as provided in Section 23 hereof.
(b) The Purchase Price shall initially be $125.00 for each one
one-hundredth (1/100) of a share of Series C Preferred Stock issued
pursuant to the exercise of a Right. The Purchase Price and the number of
one one-hundredths of a share of Series C Preferred Stock or other
securities to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof. The
Purchase Price shall be payable in lawful money of the United States of
America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 7(d) hereof, upon receipt of a
Right Certificate representing exercisable Rights with the form of election
to purchase duly executed, accompanied by payment of the aggregate Purchase
Price for the number of one one-hundredths of a share of Series C Preferred
Stock to be purchased and an amount equal to any applicable transfer tax,
by cash, certified or official bank check or money order payable to the
order of the Company or the Rights Agent, the Rights Agent shall, subject
to Section 20(j) hereof, thereupon promptly (i) requisition from any
transfer agent of the Series C Preferred Stock certificates for the number
of shares of Series C Preferred Stock so elected to be purchased (and/or
requisition from the depositary agent depositary receipts representing
interests in such number of fractional shares of Series C Preferred Stock
as are to be purchased, in which case certificates for the fractional
shares of Series C Preferred Stock so represented shall be deposited with
the depositary agent) and the Company will comply and hereby authorizes and
directs such transfer agent (and any such depositary agent) to comply with
all such requests, (ii) requisition from the Company the amount of cash to
be paid in lieu of issuance of fractional shares in accordance with Section
14(b) hereof, and (iii) promptly after receipt of such Series C Preferred
Stock certificates 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, when appropriate, after
receipt promptly deliver such depositary receipts and cash to or upon the
order of the registered holder of such Right Certificate, provided that in
the case of a purchase of securities, other than Series C Preferred Stock,
pursuant to Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding to the foregoing clauses (i) through
(iii). In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall reasonably
request.
(f) Notwithstanding any statement to the contrary contained in this
Agreement or in any Right Certificate, if the Distribution Date or the
Stock Acquisition Date shall occur prior to the Record Date, the provisions
of this Agreement, including (without limitation) Sections 3 and 11(a)(ii),
shall be applicable to the Rights upon their issuance to the same extent
such provisions would have been applicable if the Record Date were the date
of this Agreement.
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 cancelled form or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Shares of Series C
Preferred Stock.
(a) The Company covenants and agrees that at all times it will cause
to be reserved and kept available, out of and to the extent of its
authorized and unissued shares of Series C Preferred Stock not reserved for
another purpose (and, following the occurrence of a Triggering Event,
shares of Common Stock and other securities) or shares of Series C
Preferred Stock (and, following the occurrence of a Triggering Event,
shares of Common Stock and other securities) held in its treasury, the
number of shares of Series C Preferred Stock (and, following the occurrence
of a Triggering Event, shares of Common Stock and other securities) that,
as provided in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights,
provided that the Company shall not be required to reserve and keep
available shares of Common Stock or other securities sufficient to permit
the exercise in full of all outstanding Rights pursuant to the adjustments
set forth in Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof
unless the Rights become exercisable pursuant to such adjustments, and then
only to the extent the Rights become exercisable pursuant to such
adjustments.
(b) So long as the shares of Series C Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock and
other securities) issuable and deliverable upon the exercise of Rights may
be listed on any national securities exchange, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to, if then necessary to
permit the offer and issuance of shares of Series C Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock and
other securities) upon the exercise of Rights, register and qualify such
shares of Series C Preferred Stock (and, following the occurrence of a
Triggering Event, shares of Common Stock and other securities) under the
Securities Act and any applicable state securities or "blue sky" laws (to
the extent exemptions therefrom are not available), cause such registration
statement and qualifications to become effective as soon as possible after
such filing and keep such registration and qualifications effective until
the earlier of the date as of which the Rights are no longer exercisable
for such securities and the Expiration Date of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer
in effect. Notwithstanding any provision of this Agreement the contrary,
the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and
until a registration statement under the Securities Act (if required) shall
have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Series C Preferred
Stock (and following the occurrence of a Triggering Event, shares of Common
Stock and other securities) delivered upon exercise of Rights shall, to the
extent applicable, at the time of delivery of the certificates for such
shares (subject to payment of the aggregate Purchase Price in respect
thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares in accordance with applicable law.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Series C Preferred Stock (or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a
Person other than, or the issuance or delivery of certificates for Series C
Preferred Stock (or other securities, as the case may be) upon exercise of
Rights in a name other than that of, the registered holder of the Right
Certificate, and the Company shall not be required to issue or deliver a
Right Certificate or certificate for Series C Preferred Stock (or other
securities, as the case may be) to a person other than such registered
holder 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.
Section 10. Series C Preferred Stock Record Date. Each Person in
whose name any certificate for shares of Series C Preferred Stock (or other
securities, as the case may be) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the
Series C Preferred Stock (or other securities, as the case maybe)
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made.
Section 11. Adjustments to Number and Kind of Shares, Number of
Rights or Purchase Price.
The number and kind of shares subject to purchase upon the exercise
of each Right, the number of Rights outstanding and the Purchase Price 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 Record Date (A) declare or pay any dividend on Series C Preferred
Stock payable in shares of Series C Preferred Stock, (B) subdivide or
split the outstanding shares of Series C Preferred Stock into a
greater number of shares, (C) combine or consolidate the outstanding
shares of Series C Preferred Stock into a smaller number of shares or
effect a reverse split of the outstanding shares of Series C
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Series C Preferred Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in
effect immediately prior to the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Series C
Preferred Stock or capital stock, as the case may be, issuable upon
exercise of a Right on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of an amount equal to (x) the
Purchase Price in effect immediately prior to the record date or
effective date of such dividend, subdivision, combination or
reclassification multiplied by (y) the number of one one-hundredths
of a share of Series C Preferred Stock, or shares of capital stock,
as the case may be, as to which a Right was exercisable immediately
prior to such date, the aggregate number and kind of shares of Series
C Preferred Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date, the
holder thereof would have owned upon such exercise and been entitled
to receive, or would be deemed to have owned, by virtue of such
dividend, subdivision, combination or reclassification.
(ii) In the event that, at any time after the date of
this Agreement, any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person, then, subject to
Section 23 hereof, and except as otherwise provided in this Section
11, each holder of a Right shall thereafter have the right to
receive, upon exercise of a Right in accordance with the terms of
this Rights Agreement and payment of the aggregate Purchase Price
with respect to the total number of one one-hundredths of a share of
Series C Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event, in lieu of such number of one one-hundredths of a share of
Series C Preferred Stock, such number of shares of Common Stock of
the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-hundredths of a
share of Series C Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product by 50% of the Current Market
Price per share of Common Stock on the date of such first occurrence
(such number of shares is herein called the "Adjustment Shares"),
provided that the number of Adjustment Shares shall be further
appropriately adjusted to reflect any events of the type described in
Sections 11(a)(i), (b) or (c) hereof occurring in respect of the
Common Stock after the date of such first occurrence.
Notwithstanding anything in this Rights Agreement to the contrary,
from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, any Rights that are beneficially
owned by (x) such Acquiring Person (or any Associate or Affiliate of
such Acquiring Person), (y) a transferee of such Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee after the
invalidation time or (z) a transferee of such Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the invalidation time pursuant to either (I)
transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined
is part of a plan, arrangement or understanding which has the purpose
or effect of avoiding the provisions of this paragraph, and
subsequent transferees of such Persons, shall be void without any
further action and any holder of such Rights shall thereafter have no
rights whatsoever with respect to such Rights under any provision of
this Rights Agreement. The Company shall use all reasonable effort
to insure that the provisions of this Section 11(a)(ii) and of
Section 4(b) hereof are complied with, but shall have no liability to
any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From
and after the invalidation time, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights that
are or have become void pursuant to the provisions of this paragraph,
and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be cancelled.
(iii) In lieu of issuing shares of Common Stock in
accordance with Section 11(a)(ii) hereof, the Board of Directors may,
and, in the event that the number of shares of Common Stock which are
authorized by the Company's Restated Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with Section 11(a)(ii) hereof, the
Board of Directors shall, to the extent permitted by applicable law
and any material agreements then in effect to which the Company is a
party, (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value"),
over (2) the Purchase Price attributable to each Right times the
number of one one-hundredths of a share of Series C Preferred Stock
for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (such excess, the "Spread")
and (B) with respect to each Right (other than Rights which have
become void pursuant to Section 11(a)(ii) hereof), make adequate
provision to substitute for any or all such Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) other equity
securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock which, by virtue of having
dividend, voting and liquidation rights substantially comparable to
those of the Common Stock, are deemed in good faith by the Board of
Directors to have substantially the same value as shares of Common
Stock (such shares or units of shares of preferred stock are herein
called "Common Stock equivalents")), (3) debt securities of the
Company, (4) other assets, (5) a reduction of the Purchase Price or
(6) any combination of the foregoing having a value which, when added
to the value of the shares of Common Stock actually issued upon
exercise of such Right, shall have an aggregate value equal to the
Current Value, where such aggregate value has been determined in good
faith by the Board of Directors based upon the advice of a nationally
recognized independent investment banking firm selected in good faith
by the Board of Directors; provided that if the Company shall not
have made adequate provision to deliver value pursuant to clause (B)
above within thirty days following the date (the "Section 11(a)(ii)
Trigger Date") which is the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company's right
of redemption pursuant to Section 23(a) expires, then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary, cash,
which shares and cash have an aggregate value equal to the Spread.
If, upon the occurrence of a Section 11(a)(ii) Event, the number of
shares of Common Stock that are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not
sufficient to permit exercise in full of the Rights in accordance
with Section 11(a)(ii) hereof, and if the Board of Directors shall
determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, then, if the Board of Directors so elects, the
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is herein called
the "Substitution Period"). To the extent that the Company
determines that some action must be taken pursuant to the first or
second sentence of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 11(a)(ii) hereof and the last sentence of
this Section 11(a)(iii), that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such times as the
suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market
Price per share of the Common Stock on the Section 11(a)(ii) Trigger
Date and the per share or per unit value of any "Common Stock
equivalent" shall be deemed to equal the Current Market Price per
share of the Common Stock on such date. The Board of Directors may,
but shall not be required to, establish procedures to allocate the
right to receive Common Stock upon the exercise of the Rights among
holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Series C
Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five calendar days after such record
date) shares of Series C Preferred Stock, shares having the same
rights, privileges and preferences as the Series C Preferred Stock
("equivalent Series C Preferred Stock") or securities convertible
into Series C Preferred Stock or equivalent Series C Preferred Stock
at a price per share of Series C Preferred Stock or equivalent Series
C Preferred Stock (or having a conversion price per share, if a
security convertible into Series C Preferred Stock or equivalent
Series C Preferred Stock) less than the Current Market Price per
share of Series C Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number
of shares of Series C Preferred Stock outstanding on such record
date, plus the number of shares of Series C Preferred Stock which the
aggregate offering price of the total number of shares of Series C
Preferred Stock and equivalent Series C Preferred Stock (and the
aggregate initial conversion price of the convertible securities so
to be offered, including the price required to be paid to purchase
such convertible security) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of
Series C Preferred Stock outstanding on such record date, plus the
number of additional shares of Series C Preferred Stock or equivalent
Series C Preferred Stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price
may be paid by delivery of consideration part or all of which may be
in a form other than cash, the value of such noncash consideration
shall be as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent. Shares of Series C Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event
that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Series C Preferred Stock (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidence of indebtedness, cash (other than a regular quarterly cash
dividend out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Series C Preferred Stock,
but including any dividend payable in stock other than Series C
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof ), the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price
per share of Series C Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Series C
Preferred Stock and the denominator of which shall be such Current
Market Price per share of Series C Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise of
one Right. Such adjustments shall be made successively whenever such
a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase
Price which would have been in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder
(including computations pursuant to Section 14 hereof), other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current
Market Price" per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such stock
for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purpose
of computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of
such stock for the ten (10) consecutive Trading Days immediately
following such date; provided, that in the event that the Current
Market Price per share of Common Stock is determined during a period
following the announcement by the issuer of such stock of (i) any
dividend or distribution on such stock (other than a regular
quarterly cash dividend) or (ii) any subdivision, combination or
reclassification of the stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as
set forth above, the exdividend date for such dividend or
distribution, or the effective date of such subdivision, combination
or reclassification occurs, then, and in each such case, the Current
Market Price shall be properly adjusted to take into account
exdividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the NYSE or, if the shares of Common Stock are not listed
or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are 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 Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the shares of
Common Stock are not stated by any such organization, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in such stock selected by the Board of
Directors. If on any such date no market maker is making a market in
the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors shall be used.
The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded,
"Current Market Price" per share shall mean the fair value per share
as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share of Series C Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock
in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the current market price per share of Series C
Preferred Stock cannot be determined in the manner provided above or
if the Series C Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d), the
"Current Market Price" per share of Series C Preferred Stock shall be
conclusively deemed to be an amount equal to one hundred (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalization with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current
market price per share of the Common Stock. If neither the Common
Stock nor the Series C Preferred Stock is publicly held or so listed
or traded, "Current Market Price" per share of the Series C Preferred
Stock shall mean the fair value per share as determined in good faith
by the Board of Directors, which determination shall be described in
a statement filed with the Rights Agent. For all purposes of this
Rights Agreement, the "Current Market Price" of one one-hundredth of
a share of Series C Preferred Stock shall be equal to the "Current
Market Price" of one share of Series C Preferred Stock divided by one
hundred.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price, provided that any adjustments
which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share, as the
case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment or (ii) one month prior to
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital
stock other than Series C Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the applicable provisions with respect to the shares of Series C
Preferred Stock contained in Section 7, 9, 10, 11, 13 and 14 hereof,
and such provisions shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Series C Preferred Stock purchasable
from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the
Purchase 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 evidence the right to
purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Series C Preferred Stock (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the
number of one one-hundredths of a share covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Rights.
Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for a number of one one-hundredths of a
share of Series C Preferred Stock equal to the number of one
one-hundredths of a share of Series C Preferred Stock for which a
Right was exercisable immediately prior to such adjustment multiplied
by a fraction, the numerator of which shall be the total number of
Rights outstanding immediately prior to such adjustment and the
denominator of which shall be the total number of Rights outstanding
immediately following such adjustment. The Company shall make a
public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be
at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record
date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a share of Series C
Preferred Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one one-hundredths of a
share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then
stated value of a share of Series Preferred Stock issuable upon
exercise of the Rights, the Company shall take any corporate action,
including using its best efforts to obtain any required stockholder
approvals, which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Series C Preferred Stock.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event, the issuance to the holder of any Right
exercised after such record date the shares of Series C Preferred
Stock and cash, other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the shares of Series
C Preferred Stock and cash, other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, that the
Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional
shares of Series C Preferred Stock and cash, other capital stock or
securities 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
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that in
their good faith judgment the Board of Directors shall determine to
be advisable in order that any (i) consolidation or subdivision of
the Series C Preferred Stock, (ii) issuance for cash of any shares of
Series C Preferred Stock at less than the current market price, (iii)
issuance for cash of shares of Series C Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares
of Series C Preferred Stock, (iv) stock dividends or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter
made by the Company shall not be taxable to holders of its Series C
Preferred Stock.
(n) The Company covenants and agrees that it shall not, at any
time after the earlier of the Distribution Date or the Stock
Acquisition Date, (i) consolidate with any other Person, (ii) merge
with or into any other Person or (iii) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction or a series
of related transactions, assets or earning power aggregating 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 if
(x) at the time of or immediately after such consolidation, merger,
sale or other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (y) prior to, simultaneously
with or immediately after such consolidation, merger, sale or other
transaction, the stockholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a)
hereof shall have received a distribution of Rights previously owned
by such Person or any of its Affiliates and Associates or (z) the
form or nature of organization of the Principal Party would preclude
or limit the exercisability of the Rights.
(o) The Company covenants and agrees that, after the earlier
of the Distribution Date or the Stock Acquisition Date, it will not,
except as permitted by Sections 23 or 26 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by
the Rights.
(p) Anything in this Rights Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the Record Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of the outstanding Common Stock,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such
event by a fraction the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certification of Adjustments. Whenever an adjustment is
made as provided in Sections 11 and 13 hereof, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts giving rise to such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a
copy of such certificate and (c) mail a brief summary thereof to each
record holder of a Right (or, if prior to the Distribution Date, to each
holder of Common Stock) in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give
such notice shall not affect the validity of or the force or effect of or
the requirement for such adjustment. The Rights Agent shall be fully
protected in relying upon any certificate prepared by the Company pursuant
to Sections 11 and 13 hereof and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, at any time on or after the Stock Acquisition
Date, directly or indirectly, (i) the Company shall consolidate with any
other Person or Persons or shall merge with and into any other Person or
Persons and the Company shall not be the surviving or continuing
corporation of such merger, or (ii) any Person or Persons shall merge with
and into the Company, and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part
of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or of the
Company or cash or any other property, or (iii) the Company or one or more
of its Subsidiaries shall sell or otherwise transfer to any other Person or
any Affiliate or Associate of such Person, in one or more transactions, or
the Company or one or more of its Subsidiaries shall sell or otherwise
transfer to any Person in one or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that (A)
each holder of record of a Right (other than Rights which have become void
pursuant to Section 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof and payment of the aggregate Purchase
Price with respect to the total number of one one-hundredths of a share for
which a Right was exercisable immediately prior to the first occurrence of
a Section 13 Event (or, if earlier, the first occurrence of a Section
11(a)(ii) Event) in accordance with the terms of this Rights Agreement,
such number of shares of validly issued, fully paid and non-assessable and
freely tradeable Common Stock of the Principal Party (as defined herein)
not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of one one-hundredths of a
share of Series C Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if
earlier, the first occurrence of a Section 11(a)(ii) Event), and (2)
dividing that product by 50% of the Current Market Price (determined as
provided in Section 11(d) hereof with respect to the Common Stock) per
share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event, provided that the Purchase Price and
the number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in this Rights
Agreement to reflect any events occurring after the date of the first
occurrence of a Section 13 Event, (B) such Principal Party shall thereafter
be liable for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this Rights
Agreement, (C) the term "Company" for all purposes of this Rights Agreement
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of a Section 13
Event, and (D) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its
Common Stock in accordance with Section 9 hereof) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights, provided that, upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all
of the assets, recapitalization, reclassification of shares, reorganization
or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of
a Right and payment of the Purchase Price, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for
such cash, shares, rights, warrants and other property and (E) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (i) or (ii) of
the first sentence of Section 13(a) hereof: (A) the Person that is
the issuer of the securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, or, if there
is more than one such issuer, the issuer the Common Stock of which
has the greatest aggregate market value of shares outstanding or (B)
if no securities are so issued, (x) the Person that is the other
party to the merger, if such Person survives said merger, or, if
there is more than one such Person, the Person the Common Stock of
which has the greatest aggregate market value of shares outstanding
or (y) if the Person that is the other party to the merger does not
survive the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person resulting
from the consolidation; and
(ii) in the case of any transaction described in (iii) of the
first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or earning
power cannot be determined, whichever of such Persons as is the
issuer of Common Stock having the greatest aggregate market value of
shares outstanding;
provided that in any such case described in the foregoing clause (b)(i) or
(b)(ii), if the Common Stock of such Person is not at such time or has not
been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and (1) if such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has
been so registered, the term "Principal Party" shall refer to such other
Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of all of which are and have been
so registered, the term "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest aggregate
market value of shares outstanding, or (3) if such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules
set forth in clauses (1) and (2) above shall apply to each of the owners
having an interest in the venture as if the Person owned by the joint
venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to
the total of such interests.
(c) The Company shall not consummate any consolidation, merger, sale
or transfer referred to in Section 13(a) hereof unless prior thereto the
Company and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance
with their terms and that such consolidation, merger, sale or transfer of
assets shall not result in a default by the Principal Party under this
Rights Agreement as the same shall have been assumed by the Principal Party
pursuant to Sections 13(a) and (b) hereof and providing that, as soon as
practicable after executing such agreement pursuant to this Section 13, the
Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with
applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on such securities exchange and, if the
Common Stock of the Principal Party shall not be listed on a national
securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by NASDAQ or
such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the
Principal Party subject to purchase upon exercise of outstanding
Rights. In the event that any of the transactions described in
Section 13(a) hereof shall occur at any time after the occurrence of
a transaction described in Section 11(a)(ii) hereof, the Rights which
have not theretofore been exercised shall thereafter be exercisable
in the manner described in Section 13(a) hereof.
(d) Furthermore, in case the Principal Party which is to be a party
to a transaction referred to in this Section 13 has provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction referred to
in this Section 13, shares of Common Stock of such Principal Party at less
than the then Current Market Price per share (determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into,
Common Stock of such Principal Party at less than such then Current Market
Price (other than to holders of Rights pursuant to this Section 13) or (ii)
providing for any special payment, tax or similar provisions in connection
with the issuance of the Common Stock of such Principal Party pursuant to
the provisions of Section 13, then, in such event, the Company hereby
agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have
been cancelled, waived or amended, or that the authorized securities shall
be redeemed, so that the applicable provision will have no effect in
connection with, or as a consequence of, the consummation of the proposed
transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. If
the Company shall not issue fractions of Rights, in lieu of such fractional
Rights, there shall be paid to the holders of record of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the then current
market value of a whole Right. For the purposes of this Section 14(a), the
then current market value of a Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which
fractional Rights would have been issuable, determined in the same manner
as the closing price of a share of Common Stock shall be determined
pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares
of Series Preferred C Stock or other securities of the Company upon
exercise of the Rights (other than fractions of shares of Series C
Preferred Stock which are integral multiples of one one-hundredth of a
share) or to distribute certificates which evidence interests in fractional
shares (other than fractions of shares of Series C Preferred Stock which
are integral multiples of one one-hundredth of a share); provided that in
lieu of issuing fractions of shares of Series C Preferred Stock, the
Company may, at its election, issue depositary receipts evidencing
fractions of shares pursuant to an appropriate agreement between the
Company and a depositary selected by it, but only if such agreement shall
provide that the holders of such depositary receipts shall have all of the
rights, privileges and preferences to which they would be entitled as
beneficial owners of the Series C Preferred Stock. With respect to
fractional shares that are not integral multiples of one one-hundredth of a
share, if the Company does not issue such fractional shares or depositary
receipts in lieu thereof, there shall be paid to the holders of record of
Right Certificates at the time such Right Certificates are exercised as
herein provided an amount in cash equal to the same fraction of the then
current market value of a share of Series C Preferred Stock or other
securities of the Company. For purposes of this Section 14(b), the then
current market value of a share of Series C Preferred Stock or other
securities of the Company shall be the closing price thereof for the
Trading Day immediately prior to the date of such exercise, as determined
pursuant to Section 11(d) hereof or in the same manner as the closing price
of a share of Series C Preferred Stock shall be determined pursuant to
Section 11(d) (ii) hereof, as the case may be.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one share of
Common Stock. For purposes of this Section 14(c), the current market value
of one share of Common Stock shall be the closing price of one share of
Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares
of Series C Preferred Stock or other securities of the Company upon
exercise of a Right, except as provided by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement are vested in the respective holders of record of the
Right Certificates (and, prior to the Distribution Date, the holders of
record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company or any other
Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Rights Agreement and,
accordingly, that they will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Rights
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by a Right Certificate and will be transferable only in
connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will
be transferable only on the registry books of the Rights Agent if
surrendered at the designated office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent or the transfer
agent of the Common Stock) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Rights Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Rights
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation,
provided that the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder of a Right, as such, shall be entitled to vote, receive
dividends in respect of or be deemed for any purpose to be the holder of
Series C Preferred Stock or any other securities of the Company which may
at any time be issuable upon the exercise of the Rights, nor shall anything
contained herein or in any Right Certificate be construed to confer upon
the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights in respect of any such stock or
securities, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution
of this Rights Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on the part of the
Rights Agent for anything done or omitted to be done by the Rights Agent in
connection with the acceptance and administration of this Rights Agreement,
including the cost and expenses of defending against any claim of liability
in the premises.
(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 Rights Agreement in reliance
upon any Right Certificate, certificate for Series C Preferred Stock or
other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary, guaranteed,
verified or acknowledged, by the proper Person or Persons.
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 Rights Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by
this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned, and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent, and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver such Right Certificates
so countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates shall have the full force provided
in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted to be taken by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board,
President, Treasurer or 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 Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company
only for, and shall indemnify and hold harmless the Company from and
against, any and all losses, liabilities, costs, damages and expenses
(including attorneys' fees) arising out of or in connection with the
Rights Agent's own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights
Agreement or in the Right Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not (i) be responsible for (A) the
validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or the
validity or execution of any Right Certificate (except its
countersignature thereof), (B) any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any
Right Certificate, (C) any adjustment required under the provisions
of Section 11 or 13 hereof or (D) the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual
notice of any such adjustment) or (ii) by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any shares of Series C Preferred Stock to be issued
pursuant to this Rights Agreement or any Right Certificate or as to
whether any shares of Series C Preferred Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent
of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, President, Treasurer or
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be
liable for and action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, 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
Rights Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other
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 reasonable care was exercised in the
selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained
in the form of assignment or the form of election to purchase set
forth on the reverse thereof, as the case may be, has either not been
completed or indicates an affirmative response to clause 1 or 2
thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Rights Agreement upon thirty days' notice in writing mailed to the
Company and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon thirty days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, in no event
shall the resignation or removal of a Rights Agent be effective until a
successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to make such appointment within a
period of thirty days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then
the incumbent Rights Agent or the holder of record of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or any State thereof, in good
standing, which is authorized under such laws to exercise corporate trust
or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000 or (b)
an Affiliate controlled by a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock, and mail a notice
thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by the Board of Directors
to reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution Date
and prior to the redemption or expiration of the Rights, the Company may,
with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities hereafter issued by
the Company, or in any other case, if deemed necessary or appropriate by
the Board of Directors, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale,
provided that (i) no such Right Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
Section 23. Redemption or Exchange.
(a) The Board of Directors may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights by the Board of Directors may be made effective at such time,
on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. If redemption of the Rights is to be
effective as of a future date, the Rights shall continue to be exercisable,
subject to Section 7 and Section 11, until the effective date of the
redemption, provided that nothing contained herein shall preclude the Board
of Directors from subsequently causing the Rights to be redeemed at a date
earlier than the previously scheduled effective date of the redemption.
The Company may, at its option, pay the Redemption Price in cash, shares of
Common Stock (based on the Current Market Price of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors.
(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights (or at the effective time of such redemption
established by the Board of Directors of the Company pursuant to paragraph
(a) of this Section 23), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption. The
Company may, at its option, discharge all of its obligations with respect
to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights, (ii) depositing with a bank or trust company
having a capital and surplus of at least $100,000,000, funds necessary for
such redemption, in trust, to be applied to the redemption of the Rights so
called for redemption and (iii) arranging for the mailing of the Redemption
Price to the registered holders of the Rights; then, and upon such action,
all outstanding Rights Certificates shall be null and void without further
action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23, or
in connection with the purchase of shares of Common Stock prior to the
Distribution Date.
(c) The Board of Directors may, at its option, at any time after the
occurrence of a Triggering Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii) hereof)
for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than
an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Stock
then outstanding.
(d) Immediately upon the effective time of the exchange of the
Rights as specified by the action of the Board of Directors ordering the
exchange of any Rights pursuant to Section 23(c) and without any further
action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be
to receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of shares of Common
Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 11
(a)(ii) hereof) held by each holder of Rights.
(e) In any exchange pursuant to Section 23(c), the Company, at its
option, may substitute shares of Series C Preferred Stock (or equivalent
Series C Preferred Stock, as such term is defined in Section 11(b) hereof)
for shares of Common Stock exchangeable for Rights, at the initial rate of
one one-hundredth of a share of Series C Preferred Stock (or equivalent
Series C Preferred Stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Series C
Preferred Stock pursuant to the terms thereof, so that the fraction of a
share of Series C Preferred Stock delivered in lieu of each share of Common
Stock shall have the same voting rights as one share of Common Stock.
In the event that there shall not be sufficient shares of Common
Stock or shares of Series C Preferred Stock issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 23, the Company shall take all such action as
may be necessary to authorize additional shares of Common Stock or Series C
Preferred Stock for issuance upon exchange of the Rights.
(f) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock,
the Company shall pay to the registered holders of the Right Certificates
with regard to which such fractional shares of Common Stock would otherwise
be issuable an amount in cash equal to the same fraction of the current
market value of a whole share of Common Stock. For the purposes of this
Section 23(f), the current market value of a whole share of Common Stock
shall be the Current Market Price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to Section 23(c)
hereof.
Section 24. Notice of Proposed Actions.
(a) In case the Company, after the earlier of the Distribution Date
or the Stock Acquisition Date, shall propose (i) to effect any of the
transactions referred to in Section 11(a)(i) hereof or to pay any dividend
to the holders of record of its Series C Preferred Stock payable in stock
of any class or to make any other distribution to the holders of record of
its Series C Preferred Stock (other than a regular quarterly cash
dividend), or (ii) to offer to the holders of record of its Series C
Preferred Stock options, warrants, or other rights to subscribe for or to
purchase shares of Series C Preferred Stock (including any security
convertible into or exchangeable for Series C Preferred Stock) or shares of
stock of any class or any other securities, options, warrants, convertible
or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Series C Preferred Stock or any recapitalization or
reorganization of the Company, or (iv) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the
Company shall give to each holder of record of a Right Certificate, in
accordance with Section 25 hereof, notice of such proposed action, which
shall specify the record date for the purposes of such transaction referred
to in Section 11(a)(i), or such dividend or distribution, or the date on
which such reclassification, recapitalization, reorganization, liquidation,
dissolution or winding up is to take place and the record date for
determining participation therein by the holders of record of Series C
Preferred Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at
least ten (10) days prior to the record date for determining holders of
record of Series C Preferred Stock for purposes of such action, and in the
case of any such other action, at least ten (10) days prior to the date of
the taking of such proposed action or the date of participation therein by
the holders of record of Series C Preferred Stock, whichever shall be the
earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) In case any of the transactions referred to in Section 13 of
this Rights Agreement are proposed after the Stock Acquisition Date, then,
in any such case, (i) the Company shall give to each holder of Rights, in
accordance with Section 25 hereof, notice of the proposal of such
transaction at least ten (10) days prior to consummating such transaction,
which notice shall specify the proposed event and the consequences of the
event to holders of Rights under Section 13 hereof, and, upon consummating
such transaction, shall similarly give notice thereof to each holder of
Rights and (ii) all references in the preceding paragraph (a) to Series C
Preferred Stock shall be deemed thereafter to refer to Common Stock or
other securities of the Principal Party, as appropriate.
Section 25. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of
record of any Right Certificate or Right to or on behalf of 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:
Ethan Allen Interiors Inc.
Ethan Allen Drive
Danbury, Connecticut 06813
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or
by the holder of record of any Right Certificate or Right to or on the
Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Company) as follows:
Harris Trust and Savings Bank
311 West Monroe, 14th Floor
Chicago, Illinois 60606
Attention: ___________________
Notices or demands authorized by this Rights Agreement to be given or made
by the Company or the Rights Agent to the holder of record of any Right
Certificate or Right shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address
of such holder as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Transfer
Agent.
Section 26. Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary
or desirable, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect
the interests of the holders of Rights.
Section 27. Successors. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 28. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the Common Stock)
any legal or equitable right, remedy or claim under this Rights Agreement,
and this Rights Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the holders of record of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
Section 29. Delaware Contract. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 30. Counterparts. This Rights Agreement may be executed in
any number of counterparts, each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 31. Descriptive Headings. Descriptive headings of the
several sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
Section 32. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, illegal, or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Rights Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
Section 33. Determinations and Actions by the Board of Directors.
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board or the Company or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend the Agreement). All such
actions, interpretations and determinations (including, for purpose of
clause (y) below, all omissions with respect to the foregoing) which are
done or made by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Right
Certificates and all other parties and (y) not subject the Board of
Directors to any liability to the holders of the Right Certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above
written.
Attest: ETHAN ALLEN INTERIORS INC.
By_________________________ By___________________________
Name: Name:
Title: Title:
Attest: HARRIS TRUST AND SAVINGS BANK
By_________________________ By____________________________
Name: Name:
Title: Title:
TABLE OF CONTENTS
Page
Section 1. Certain Definitions................................. 2
Section 2. Appointment of Rights Agent......................... 10
Section 3. Issuance of Right Certificates...................... 11
Section 4. Form of Certificates................................ 14
Section 5. Countersignature and Registration................... 15
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates............................... 16
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights........................................... 18
Section 8. Cancellation and Destruction of Right Certificates.. 22
Section 9. Reservation and Availability of Shares of Series C
Preferred Stock.................................. 22
Section 10. Series C Preferred Stock Record Date................ 26
Section 11. Adjustments to Number and Kind of Shares, Number of Rights
or Purchase Price................................ 26
Section 12. Certification of Adjustments........................ 47
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................... 48
Section 14. Fractional Rights and Fractional Shares............. 56
Section 15. Rights of Action.................................... 58
Section 16. Agreement of Right Holders.......................... 59
Section 17. Right Certificate Holder Not Deemed a Stockholder... 60
Section 18. Concerning the Rights Agent......................... 61
Section 19. Merger or Consolidation or Change of Name of Rights Agent 62
Section 20. Duties of Rights Agent.............................. 63
Section 21. Change of Rights Agent.............................. 67
Section 22. Issuance of New Right Certificates.................. 69
Section 23. Redemption or Exchange.............................. 70
Section 24. Notice of Proposed Actions.......................... 75
Section 25. Notices............................................. 77
Section 26. Supplements and Amendments.......................... 78
Section 27. Successors.......................................... 78
Section 28. Benefits of this Rights Agreement................... 78
Section 29. Delaware Contract................................... 79
Section 30. Counterparts........................................ 79
Section 31. Descriptive Headings................................ 79
Section 32. Severability........................................ 79
Section 33. Determinations and Actions by the Board of Directors 80
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF
SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
(Without Par Value)
OF
ETHAN ALLEN INTERIORS INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Ethan Allen Interiors Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Company"), DOES HEREBY
CERTIFY:
1. That pursuant to authority conferred on the Board of Directors of
the Company by its Certificate of Incorporation and the provisions of the
Section 151(g) of the General Corporation Law of the State of Delaware, the
Board of Directors on May 31, 1996 adopted the following resolution
establishing in their entireties the voting powers, preferences, and
relative, participating, optional or other special rights of the shares of
the Series C Preferred Stock, and the qualifications, limitations or
restrictions thereof.
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Company by its Restated Certificate of Incorporation and
by the provisions of Section 151(g) of the General Corporation Law of the
State of Delaware, the voting powers, preferences and relative
participating, optional or other special rights of the Series C Junior
Preferred Stock of the Company, and the qualifications, limitations or
restrictions thereof, be, and the same hereby are to be as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated "Series C Junior Participating Preferred Stock" ("Series C
Preferred Stock") and the number of shares constituting such series shall
be ____________.
Section 2. Dividends and Distributions.
(a) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series C Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, (i) cash dividends in an amount per
share (rounded to the nearest cent) equal to 100 times the aggregate per
share amount of all cash dividends declared or paid on the Common Stock,
$.01 par value per share, of the Company ("Common Stock") and (ii) a
preferential cash dividend (a "Preferential Dividend"), if any, on the
first day of February, May, August and November of each year (each 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 C Preferred Stock, in an amount equal to $1.00 per share of
Series C Preferred Stock less the per share amount of all cash dividends
declared on the Series C Preferred Stock pursuant to clause (i) of this
sentence 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 C Preferred
Stock. In the event the Company shall, at any time after the issuance of
any share or fraction of a share of Series C Preferred Stock, make any
distribution on the shares of Common Stock, whether by way of a dividend or
a reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Company or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other
property (other than cash dividends subject to clause (i) of the
immediately preceding sentence and other than a distribution of shares of
Common Stock or other capital stock of the Company and other than a
distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for any such share), at a
price less than the Current Market Price of such share, then and in each
such event the Company shall simultaneously pay on each then outstanding
share of Series C Preferred of the Company a distribution, in like kind, of
100 times (subject to the provisions for adjustment hereinafter set forth)
such distribution paid on a share of Common Stock. The dividends and
distributions on the Series C Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
the second sentence of this paragraph are hereinafter referred to as
"Participating Dividends," and the multiple of cash and noncash dividends
on the Common Stock applicable to the determination of the Participating
Dividends, which shall be 100 initially but shall be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "Dividend
Multiple." In the event the Company shall at any time after June __, 1996
declare or pay any dividend or make any distribution on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock,
then in each such event the Dividend Multiple thereafter applicable to the
determination of the amount of Participating Dividends which holders of
shares of Series C Preferred Stock shall be entitled to receive shall be
the Dividend Multiple applicable immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Company shall declare each Participating Dividend at the
same time it declares any cash or noncash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or noncash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required shall be paid or set
aside for payment of the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid or set aside for payment on the Series C Preferred
Stock.
(c) Preferential Dividends shall begin to accumulate on outstanding
shares of Series C Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issuance of any shares of Series C Preferred
Stock. Accumulated but unpaid Preferential Dividends shall cumulate but
shall not bear interest. Preferential Dividends paid on the shares of
Series C Preferred Stock in an amount less than the total amount of such
dividends at the time accumulated and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time out-standing.
Section 3. Voting Rights. The holders of shares of Series C
Preferred Stock shall have the following voting rights:
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series C Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the
Company. The number of votes which a holder of Series C Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Vote Multiple."
In the event the Company shall at any time after June __, 1996 declare or
pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Vote Multiple
thereafter applicable to the determination of the number of votes per share
to which holders of shares of Series C Preferred Stock shall be entitled
after such event shall be the Vote Multiple immediately prior to such event
multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided herein, in the Certificate of
Incorporation, in any resolution or resolutions of the Board of Directors
of the Company providing for the issue of any other series of Preferred
Stock or by law, the holders of shares of Series C Preferred Stock, the
holders of shares of Common Stock and the holders of shares of any other
class or series of capital stock of the Company entitled to vote generally
for the election of directors shall vote together as one class on all
matters submitted to a vote of stockholders of the Company.
(c) In the event that the Preferential Dividends accrued on the
Series C Preferred Stock for four or more consecutive quarterly dividend
periods shall not have been declared and paid or set apart for payment, the
holders of record of the Series C Preferred Stock, voting together with the
holders of record of any other series of Preferred Stock of the Company
which shall then have the right, expressly granted by the Restated
Certificate of Incorporation of the Company or in any resolution or
resolutions of the Board of Directors of the Company providing for the
issue of such shares of Preferred Stock, to elect directors upon such a
default in the payment of dividends by the Company, shall have the right,
at the next meeting of stockholders called for the election of directors,
voting together as a class, to elect two members to the Board of Directors,
which directors shall be in addition to the number provided for pursuant to
the Company's By-laws prior to such event, to serve until the next Annual
Meeting and until their successors are elected and qualified or their
earlier resignation, removal or incapacity or until such earlier time as
all accrued and unpaid Preferential Dividends upon the outstanding shares
of Series C Preferred Stock shall have been paid (or set aside for payment)
in full. The holders of shares of Series C Preferred Stock shall continue
to have the right to elect directors as provided by the immediately
preceding sentence until all accrued and unpaid Preferential Dividends upon
the outstanding shares of Series C Preferred Stock shall have been paid (or
set aside for payment) in full. Such directors may be removed and replaced
by such stockholders, and vacancies in such directorships may be filled
only by such stockholders (or by the remaining director elected by such
stockholders, if there be one) in the manner permitted by law. Subject to
the foregoing, any directors elected pursuant to this paragraph 3(c) shall
be elected annually and shall not constitute members of any Class of
directors as contemplated by Article Sixth of the Company's Restated
Certificate of Incorporation.
(d) Except as otherwise required by law or set forth herein, holders
of Series C 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 herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(a) Whenever Preferential Dividends or Participating Dividends are
in arrears or the Company shall be in default in payment thereof,
thereafter and until all accumulated and unpaid Preferential Dividends and
Participating Dividends, whether or not declared, on shares of Series C
Preferred Stock outstanding shall have been paid or set aside for payment
in full, and in addition to any and all other rights which any holder of
shares of Series C Preferred Stock may have in such circumstances, the
Company shall not
(i) declare or pay dividends on, make any other distributions
on or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock;
(ii) declare or pay dividends or make any other distributions
on any shares of stock ranking on a parity as to dividends with the
Series C Preferred Stock, unless dividends are paid ratably on the
Series C Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) except as permitted by subparagraph (iv) of this
paragraph (A), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior
(both as to dividends and upon liquidation, dissolution or winding
up) to the Series C Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series C Preferred Stock, or any shares of stock ranking on a
parity with the Series C Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company ranking junior to the Series C Preferred Stock unless the Company
could, under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
(c) The Company shall not issue any shares of Series C Preferred
Stock except upon exercise of Rights issued pursuant to that certain Rights
Agreement dated as of June __, 1996 between the Company and Harris Trust
and Savings Bank (the "Rights Agreement"), a copy of which is on file with
the Secretary of the Company at the principal executive office of the
Company and shall be made available to holders of record of Common Stock or
Series C Preferred Stock without charge upon written request therefor
addressed to the Secretary of the Company. Notwithstanding the foregoing
sentence, nothing contained in the provisions hereof shall prohibit or
restrict the Company from issuing for any purpose any series of Preferred
Stock with rights and privileges similar to, different from, or greater
than those of the Series C Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series C Preferred
Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, no distribution shall be made (i) to the holders of shares of
stock ranking junior to the Series C Preferred Stock (either as to
dividends or upon liquidation, dissolution or winding up) unless the
holders of shares of Series C Preferred Stock shall have received, subject
to adjustment as hereinafter provided, the greater of (A) $100.00 per share
plus an amount equal to all accumulated and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, and (B) the amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with
the Series C Preferred Stock, unless simultaneously therewith distributions
are made ratably on the Series C Preferred Stock and all other shares of
such parity stock in proportion to the total amounts to which the holders
of shares of Series C Preferred Stock are entitled under clause (i) (A) of
this sentence and to which the holders of such parity shares are entitled,
in each case upon such liquidation, dissolution or winding up. The amount
to which holders of Series C Preferred Stock shall be entitled upon
liquidation, dissolution or winding up of the Company pursuant to clause
(i)(B) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount," and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Company applicable pursuant to said clause
to the determination of the Participating Liquidation Amount, which shall
be 100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Liquidation Multiple." In the
event the Company shall at any time after June __, 1996 declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of
the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, then in each such case the Liquidation Multiple
thereafter applicable to the determination of the Participating Liquidation
Amount to which holders of Series C Preferred Stock shall be entitled after
such event shall be the Liquidation Multiple applicable immediately prior
to such event multiplied by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Certain Reclassification and Other Events.
(a) In the event that holders of shares of Common Stock receive
after June __, 1996 in respect of their shares of Common Stock any share of
capital stock of the Company (other than any share of Common Stock of the
Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise
("Transaction"), then in each such event the dividend rights and rights
upon the liquidation, dissolution or winding up of the Company of the
shares of Series C Preferred Stock shall be adjusted so that after such
event the holders of Series C Preferred Stock shall be entitled, in respect
of each share of Series C Preferred Stock held, in addition to such rights
in respect thereof to which such holder was entitled immediately prior to
such adjustment, to (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such Transaction multiplied by the
additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such
capital stock, (ii) such additional voting rights as equal the Vote
Multiple in effect immediately prior to such Transaction multiplied by the
additional voting rights which the holder of a share of Common Stock shall
be entitled to receive by virtue of the receipt in the Transaction of such
capital stock, and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple
in effect immediately prior to such Transaction multiplied by the
additional amount which the holder of a share of Common Stock shall be
entitled to receive upon liquidation, dissolution or winding up of the
Company by virtue of the receipt in the Transaction of such capital stock,
as the case may be, all as provided by the terms of such capital stock.
(b) In the event that holders of shares of Common Stock receive
after June __, 1996 in respect of their shares of Common Stock any right or
warrant to purchase Common Stock (including as such a right, for all
purposes of this paragraph, any security convertible into or exchangeable
for Common Stock) at a purchase price per share less than the Current
Market Price (as hereinafter defined) of a share of Common Stock on the
date of issuance of such right or warrant, then in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution
or winding up of the Company of the shares of Series C Preferred Stock
shall each be adjusted so that after such event the Dividend Multiple, the
Vote Multiple and the Liquidation Multiple shall each be the product of the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple, as the
case may be, in effect immediately prior to such event multiplied by a
fraction the numerator of which shall be the number of shares of Common
Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock which could be acquired
upon exercise in full of all such rights or warrants and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
before such issuance of rights or warrants plus the number of shares of
Common Stock which could be purchased, at the Current Market Price of the
Common Stock at the time of such issuance, by the maximum aggregate
consideration payable upon exercise in full of all such rights or warrants.
(c) In the event that holders of shares of Common Stock receive
after June __, 1996 in respect of their shares of Common Stock any right or
warrant to purchase capital stock of the Company (other than shares of
Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock
of the Company (other than Common Stock), at a purchase price per share
less than the Current Market Price of such shares of capital stock on the
date of issuance of such right or warrant, then in each such event the
dividend rights, voting rights and rights upon liquidation, dissolution or
winding up of the Company of the shares of Series C Preferred Stock shall
each be adjusted so that after such event each holder of a share of Series
C Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such event, to receive
(i) such additional dividends as equal the Dividend Multiple in effect
immediately prior to such event multiplied, first, by the additional
dividends to which the holder of a share of Common Stock shall be entitled
upon exercise of such right or warrant by virtue of the capital stock which
could be acquired upon such exercise and multiplied again by the Discount
Fraction (as hereinafter defined), (ii) such additional voting rights as
equal the Vote Multiple in effect, immediately prior to the event
multiplied, first, by the additional voting rights to which the holder of a
share of Common Stock shall be entitled upon exercise of such right of
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied, again, by the Discount Fraction, and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately prior to
such event multiplied, first, by the additional amount which the holder of
a share of Common Stock shall be entitled to receive upon liquidation,
dissolution or winding up of the Company upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction the numerator
of which shall be the difference between the Current Market Price (as
hereinafter defined) of a share of the capital stock subject to a right or
warrant distributed to holders of shares of Common Stock as contemplated by
this paragraph immediately after the distribution thereof and the purchase
price per share for such share of capital stock pursuant to such right or
warrant and the denominator of which shall be the Current Market Price of a
share of such capital stock immediately after the distribution of such
right or warrant.
(d) For purposes of this Section 7, the "Current Market Price" of a
share of capital stock of the Company (including a share of Common Stock)
on any date shall be deemed to be the average of the daily closing prices
per share thereof over the 30 consecutive Trading Days (as such-term is
hereinafter defined) immediately prior to such date, provided that in the
event that such Current Market Price of any such share of capital stock is
determined during a period which includes any date that is within 30
Trading Days after the ex-dividend date for (i) a dividend or distribution
on stock payable in shares of such stock or securities convertible into
shares of such stock or (ii) any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then
in each such event, the Current Market Price shall be appropriately
adjusted by the Board of Directors to reflect the Current Market Price of
such stock to take into account ex-dividend trading. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if the shares are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the shares are listed or admitted to trading or, if the shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or if on any such date the
shares are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the shares selected by the Board of Directors. The term "Trading
Day" shall mean a day on which the principal national securities exchange
on which the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or admitted to
trading on any national securities exchange, on which the New York Stock
Exchange or such other national securities exchange as may be selected by
the Board of Directors is open. If the shares are not publicly held or not
so listed or traded on any day within the period of 30 Trading Days
applicable to the determination of current Market Price thereof as
aforesaid, "Current Market Price" shall mean the fair market value thereof
per share as determined in good faith by the Board of Directors. In either
case referred to in the foregoing sentence, the determination of Current
Market Price shall be described in a statement filed with the Secretary of
the Company.
Section 8. Consolidation, Merger, etc. In the event that the
Company shall enter into any consolidation, merger, combination or other
transaction in which shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such event each outstanding share of Series C Preferred Stock shall at the
same time be similarly exchanged for or changed into the aggregate amount
of stock, securities, cash and other property (payable in like kind), as
the case may be, for which or into which each share of Common Stock is
changed or exchanged multiplied by the highest of the Dividend Multiple,
the Vote Multiple or the Liquidation Multiple in effect immediately prior
to such event.
Section 9. Effective Time of Adjustments.
(a) Adjustments to the Series C Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(b) The Company shall give prompt written notice to each holder of a
share of Series C Preferred Stock of the effect on any such shares of any
adjustment to the dividend rights, voting rights or rights upon
liquidation, dissolution or winding up of the Company required by the
provisions hereof. Notwithstanding the foregoing sentence, the failure of
the Company to give such notice shall not affect the validity of or the
force or effect of or the requirement for such adjustment.
Section 10. No Redemption. The shares of Series C Preferred Stock
shall not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Series C Preferred Stock in any other manner permitted by
law, the provisions of the Certificate of Designations setting forth the
rights, powers and preferences of the Series C Preferred Stock and the
Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the Certificate
of Incorporation or a certificate of designations relating to a subsequent
series of Preferred Stock of the Company, the Series C Preferred Stock
shall rank junior to all other series of the Company'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.
Section 12. Amendment. After the Distribution Date (as defined in
the Rights Agreement), the provisions of the Amended Certificate of
Designations setting forth the rights, powers and preferences of the Series
C Preferred Stock and the Restated Certificate of Incorporation shall not
be amended in any manner which would materially affect the rights,
privileges or powers of the Series C Preferred Stock without, in addition
to any other vote of stockholders required by law, the affirmative vote of
the holders of 66 2/3% or more of the outstanding shares of Series C
Preferred Stock, voting together as a single class.
2. This Certificate of Designations shall become effective at 5:01
pm. on June __, 1996.
IN WITNESS WHEREOF, Ethan Allen Interiors, Inc. has caused this
Certificate of Designations to be signed and attested this ___ day of June,
1996.
Ethan Allen Interiors Inc.
By____________________________________________
Name:
Title:
ATTEST:
_____________________
Name:
Title:
EXHIBIT B
[Form of Right Certificate]
Certificate No. _________ Rights
NOT EXERCISABLE AFTER MAY 31, 2006 OR EARLIER IF
REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $0.01 PER RIGHT (SUBJECT TO
ADJUSTMENT) ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY A
PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR AN
ASSOCIATE OR AFFILIATE OF SUCH ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR,
UNDER CERTAIN CIRCUMSTANCES, TRANSFEREES THEREOF, WILL
BECOME NULL AND VOID AS PROVIDED IN SECTION 11(A)(II)
OF THE RIGHTS AGREEMENT AND THEREAFTER MAY NOT BE
TRANSFERRED TO ANY PERSON.
Right Certificate
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement dated as of June __, 1996 ("Rights Agreement")
between Ethan Allen Interiors Inc. a Delaware corporation (the "Company"),
and Harris Trust and Savings Bank (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as that term is
defined in the Rights Agreement) and prior to 5:00 p.m. (New York City
time) on May 31, 2006 at the principal office of the Rights Agent, or its
successors as Rights Agent, in New York, New York, one one-hundredth
(1/100) of a fully paid and nonassessable share of Series C Junior
Participating Preferred Stock, without par value ("Series C Preferred
Stock"), of the Company at a purchase price of $125.00 per one
one-hundredth of a share; as the same may from time to time be adjusted in
accordance with the Rights Agreement (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Series C Preferred Stock which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events and,
upon the happening of certain events, securities other than shares of
Series C Preferred Stock, or other property, may be acquired upon exercise
of the Rights evidenced by this Right Certificate, as provided by the
Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are incorporated herein by reference and made a part hereof, and reference
to the Rights Agreement is made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of record of Right Certificate. Copies
of the Rights Agreement are on file at the principal executive office of
the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent designated for
that purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder
of record to purchase the same aggregate number of shares of Series C
Preferred Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered entitled that holder to purchase. If this Right
Certificate is exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Right Certificate or Right Certificates for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company by action of
the Board of Directors at its option at a redemption price of $0.01 per
Right at any time prior to the earlier of the close of business on (i) the
tenth day following the Stock Acquisition Date (as that time period may be
extended pursuant to the Rights Agreement) and (ii) the Final Expiration
Date.
No fractional shares of Series C Preferred Stock or other securities
of the Company are required to be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions of shares of Series C
Preferred Stock which are integral multiples of one one-hundredth of a
share), and in lieu thereof, as provided in the Rights Agreement, a cash
payment may be made. As provided in the Rights Agreement, interests in
fractions of shares of Series C Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Series C
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement) or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been counter-signed by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of June , 1996.
ATTEST: ETHAN ALLEN INTERIORS INC.
________________________________ By:___________________________________
Name:
Title:
Countersigned:
HARRIS TRUST AND SAVINGS BANK
__________________, as Rights Agent
By__________________________
Authorized signature
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if that holder desires to
transfer the Rights represented by the Right certificate)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto _____________________________________________________________
____________________________________________________________________________
(please print name and address of transferee)
________ Rights evidenced by this Right Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute
and appoint _____ Attorney to transfer this Right Certificate on the books
of ____________________ with full power of substitution.
Dated:_____________ , ____
_______________________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as those terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or any transferee of such
Persons.
Dated:_____________ , ____
________________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Right Certificate in every particular,
without alteration, enlargement or any other change.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if that holder
desires to exercise the Rights represented by
the Right Certificate)
To:
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the shares of
Series C Preferred Stock issuable upon the exercise of those Rights and
requests that certificates for those share(s) be issued in the name:
Please insert social security
or other identifying number
____________________________________________________________________________
(Please print name and address)
____________________________________________________________________________
If the number of Rights exercised does not constitute all of the Rights
evidenced by this Right Certificate, a new Right Certificate for the
balance of Rights remaining shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
Dated: ______________, ____
________________________________________
Signature (Signature must conform in all
respects to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
those terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or any transferee of such
Persons.
Dated:_______________, ____
__________________________________
Signature
Signature Guaranteed:
PRIVILEGED AND
CONFIDENTIAL
--------------
EXHIBIT C
---------
ETHAN ALLEN INTERIORS INC.
UNDER CERTAIN CIRCUMSTANCES, AS PROVIDED IN THE RIGHTS
AGREEMENT, DATED AS OF JUNE __, 1996, BETWEEN ETHAN ALLEN INTERIORS
INC. AND HARRIS TRUST AND SAVINGS BANK, AS RIGHTS AGENT ("RIGHTS
AGREEMENT"), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY A PERSON WHO
IS OR BECOMES AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF
SUCH ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR, UNDER CERTAIN CIRCUMSTANCES, TRANSFEREES THEREOF, WILL
BECOME NULL AND VOID AS PROVIDED IN SECTION II(A)(II) OF THE RIGHTS
AGREEMENT AND THEREAFTER MAY NOT BE TRANSFERRED TO ANY PERSON.
SUMMARY OF RIGHTS TO PURCHASE
SERIES C PARTICIPATING PREFERRED STOCK
On May 31, 1996, the Board of Directors ("Board") of Ethan Allen
Interiors Inc. ("Company") declared a dividend of one preferred stock
purchase right ("Right") for each outstanding share of common stock of $.01
par value ("Common Stock") of the Company. The dividend is payable to
stockholders of record at the close of business on July 10, 1996 ("Record
Date"). Each Right entitles the registered holder to purchase from the
Company one one-hundredth (1/100) of a share of the Company's Series C
Junior Participating Preferred Stock ("Series C Preferred Stock") at a
purchase price of $125.00. The terms and conditions of the Rights are
contained in a Rights Agreement.
Initially the Rights will not be exercisable, certificates for the
Rights will not be issued and the Rights will automatically trade with the
Common Stock. Until the close of business on the Distribution Date, which
will occur on the earlier of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons,
other than the Company, any subsidiary of the Company or any employee
benefit plan or employee stock plan of the Company (each, an "Exempt
Person"), has acquired, or has obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Stock (each, an
"Acquiring Person") (the "Stock Acquisition Date") or (ii) the fifteenth
business day following the commencement of or public announcement of the
intent to commence a tender or exchange offer which, if consummated, would
result in the ownership of 15% or more of the outstanding Common Stock,
irrespective of whether any shares of Common Stock are acquired pursuant to
such offer (the earlier of such dates referenced in clauses (i) or (ii)
above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate, together with a copy of this
Summary of Rights. The Rights Agreement excludes from the calculation of
beneficial ownership of shares of Common Stock of a Person, any shares
which such Person has the right to vote pursuant to a voting proxy provided
by Management Letter Agreements and Dealer Letter Agreements (as such terms
are defined in the Rights Agreement). The Rights Agreement provides that
the Distribution Date may be extended by the Board prior to the expiration
of either of the time periods referenced in the preceding sentence. It
further provides that until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be represented by and
transferred with, and only with, the Common Stock. Until the Distribution
Date (or the earlier redemption or expiration of the Rights), the new
Common Stock certificates issued after June __, 1996 will contain a legend
incorporating the Rights Agreement by reference and the surrender for
transfer of any of the Company's Common Stock certificates, with or without
the aforesaid legend or a copy of this Summary of Rights attached thereto,
will also constitute the simultaneous transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate Right Certificates
("Rights Certificates") will be mailed to holders of record of Common Stock
at the close of business on the Distribution Date, and, thereafter, the
Right Certificates alone will evidence the Rights, and the Rights will be
transferable separate and apart from the Common Stock.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on May 31, 2006, unless
redeemed or exchanged earlier as described below.
The Series C Preferred Stock will be nonredeemable and, unless
otherwise provided in connection with the creation of a subsequent series
of preferred stock, will be subordinate to all other series of the
Company's preferred stock. The Series C Preferred Stock will not be issued
except upon exercise of Rights. Each share of Series C Preferred Stock
will be entitled to receive, when, as and if declared, a quarterly dividend
in an amount equal to the greater of $1.00 per share or 100 times the
quarterly cash dividend declared on the Company's Common Stock. In
addition, the Series C Preferred Stock is entitled to 100 times any noncash
dividends declared on the Common Stock, in like kind. In the event of
dissolution, liquidation or winding-up of the Company, the holders of
Series C Preferred Stock will be entitled to receive a liquidation payment
in an amount equal to the greater of $100 per share or 100 times the
liquidation payment made per share of Common Stock. Each share of Series C
Preferred Stock will have 100 votes, voting together with the Common Stock.
In the event of any merger, consolidation or other transaction in which
common shares are exchanged, each share of Series C Preferred Stock will be
entitled to receive 100 times the amount received per share of Common
Stock. The rights of the Series C Preferred Stock as to dividends,
liquidation payments and voting rights are protected by antidilution
provisions.
The Purchase Price payable and the number of shares of Series C
Preferred Stock or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series C Preferred Stock, (ii) upon the grant to
holders of the Series C Preferred Stock of certain rights or warrants to
subscribe for the purchase of Series C Preferred Stock or convertible
securities at less than the current market price of the Series C Preferred
Stock or (iii) upon the distribution to holders of the Series C Preferred
Stock of evidences of indebtedness or assets (excluding regular cash
dividends and dividends payable in Series C Preferred Stock) or of
subscription rights or warrants.
If any Person (other than an Exempt Person) becomes the beneficial
owner of 15% or more of the then outstanding shares of Common Stock, each
holder of a Right, other than the Acquiring Person, will have the right to
receive, upon payment of the Purchase Price, in lieu of Series C Preferred
Stock, a number of shares of Common Stock having a market value equal to
twice the Purchase Price. In lieu of issuing shares of Common Stock upon
exercise of Rights, the Company may, and to the extent that insufficient
shares of Common Stock are available for the exercise in full of the
Rights, the Company shall, issue cash, property or other securities of the
Company, or any combination thereof (which may be accompanied by a
reduction in the Purchase Price) in proportion determined by the Company,
so that the aggregate value received is equal to twice the Purchase Price.
The Rights Agreement contains an exemption for any issuance of Common Stock
by the Company directly to any person (for example, in a private placement
or an acquisition by the Company in which Common Stock is used as
consideration), even if that person would become the beneficial owner of
15% or more of the Common Stock, provided that such person does not acquire
any additional shares of Common Stock. Notwithstanding the foregoing,
after the acquisition of shares of Common Stock as described in this
paragraph, Rights that are (or, under certain circumstances, Rights that
were) beneficially owned by an Acquiring Person will be null and void.
The Board may, at its option, at any time after a person becomes an
Acquiring Person exchange all or part of the then outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right; provided, however, the Board may not
effect such exchange after the time that any Person becomes the beneficial
owner of 50% or more of the Common Stock then outstanding.
Unless the Rights are redeemed earlier, if, after the Stock
Acquisition Date, the Company is acquired in a merger or other business
combination (in which any shares of the Common Stock are changed into or
exchanged for other securities or assets) or more than 50% of the assets or
earnings power of the Company and its subsidiaries (taken as a whole) are
sold or transferred in one or a series of related transactions, the Rights
Agreement provides that proper provision shall be made so that each holder
of record of a Right will from and after that time have the right to
receive, upon payment of the Purchase Price, that number of shares of
common stock of the acquiring company which has a market value at the time
of such transaction equal to twice the Purchase Price.
At any time after the date of the Rights Agreement until the time
that a person becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), which may (at the option of the Company) be paid
in cash, shares of Common Stock or other consideration deemed appropriate
by the Board of Directors. Upon the effectiveness of any action of the
Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The provisions of the Rights Agreement may be amended by the Company,
except that any amendment adopted after the time that a person becomes an
Acquiring Person may not adversely affect the interests of holders of
Rights.
As of May 30, 1996, there were 14,556,503 shares of Common Stock
outstanding and _______ shares of Common Stock reserved for issuance under
employee benefit plans. Each outstanding share of Common Stock on July 10,
1996 will receive one Right. ____________ (_________) shares of Series C
Preferred Stock will be reserved for issuance in the event of exercise of
the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired, and under certain
circumstances the Rights beneficially owned by such a person or group may
become void. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors because, if the
Rights would become exercisable as a result of such merger or business
combination, the Board of Directors may, at its option, at any time prior
to the time that any Person becomes an Acquiring Person, redeem all (but
not less than all) of the then outstanding Rights at the Redemption Price.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A.
A copy of the Rights Agreement is available free of charge from the Company
by written request, Ethan Allen Interiors Inc., Ethan Allen Drive, Danbury,
Connecticut 06813, Attention: Secretary. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated in this summary
description by reference.
