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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 1, 1998
HELEN OF TROY LIMITED
(Exact name of registrant as specified in its charter)
BERMUDA 0-23312 74-2692550
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6827 MARKET AVENUE
EL PASO, TEXAS 79915
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (915) 779-6363
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ITEM 5. OTHER EVENTS
On December 1, 1998, the Board of Directors of Helen of Troy Limited (the
"Company") declared a dividend of one preference share purchase right (a
"Right") for each outstanding common share, par value $.10 per share, of the
Company (the "Common Shares"). The dividend is payable on December 15, 1998 (the
"Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth of a share
of Series A First Preference Shares, par value $1.00 per share, of the Company
(the "Preference Shares") at a price of $100.00 per one one-thousandth of a
Preference Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of December
1, 1998 (the "Rights Agreement") between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (with certain
exceptions, an "Acquiring Person") has acquired beneficial ownership of 15% or
more of the outstanding Common Shares or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificates together
with a copy of a Summary of Rights to Purchase Preference Shares of Helen of
Troy Limited (the "Summary of Rights") that will be mailed to the holders of
such stock as of the Record Date.
The Rights Agreement provides that, until the Distribution Date (or earlier
expiration of the Rights), the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier expiration of the
Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuances of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of the Summary of Rights, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on December 1, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Preference Shares or other
securities or property issuable, upon exercise of the Rights is 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
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (iii) upon
the distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends or dividends
payable in Preference Shares) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights is also subject to adjustment in the event
of a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
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Preference Shares purchasable upon exercise of the Rights will not be
redeemable. Each share of Preference Shares will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of $10.00 per
share but will be entitled to an aggregate dividend of 1,000 times the dividend
declared per share of Common Shares. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preference Shares will be entitled
to a minimum preferential liquidation payment of $1,000.00 per share (plus any
accrued but unpaid dividends) but will be entitled to an aggregate payment of
1,000 times the payment made per share of Common Shares. Each share of
Preference Shares will have 1,000 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
outstanding Common Shares are converted or exchanged, each share of Preference
Shares will be entitled to receive 1,000 times the amount received per share of
Common Shares. These rights are protected by customary anti-dilution provisions.
Because of the nature of the Preference Shares dividend, liquidation and
voting rights, the value of the one one-thousandth interest in a share of
Preference Shares purchasable upon exercise of each Right should approximate the
value of one share of Common Shares.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of Common Shares having a market value of two times the exercise price of the
Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provisions will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive upon the exercise of a Right that number of
Common Shares of the person with whom the Company has engaged in the foregoing
transaction (or its parent) which at the time of such transaction have a market
value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the earlier of one of the events described in the previous paragraph or the
acquisition by such Acquiring Person of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such Acquiring Person which will have become void), in
whole or in part, for Common Shares or Preference Shares (or a series of the
Company's Preference Shares having equivalent rights, preferences and
privileges), at an exchange ratio of one share of Common Shares, or a fractional
share of Preference Shares (or other Preference Shares) equivalent in value
thereto, per Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preference Shares or Common Shares will be
issued (other than fractions of Preference Shares which are integral multiples
of one one-thousandth of a share of Preference Shares, which may, at the
election of the Company, be evidenced by depositary receipts), and in lieu
thereof an adjustment in cash will be made based on the current market price of
the Preference Shares or the Common Shares.
At any time prior to the close of business on the tenth day following the
day an Acquiring Person becomes such, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may, except with
respect to the redemption price, amend the Rights Agreement in any manner. After
the Rights are no longer redeemable, the Company may, except with respect to the
redemption price, amend the Rights Agreement in any manner that does not
adversely affect the interests of holders of the Rights.
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Until a Right is exercised or exchanged, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in certain circumstances. Accordingly, the existence of the Rights may deter
certain acquirors from making takeover proposals or tender offers. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors of the Company since the Board of Directors may, at its
option, at any time prior to the close of business on the tenth day following
the day an Acquiring Person becomes such, redeem all but not less than all of
the then outstanding Rights at $.01 per Right.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B thereto the form
of Right Certificate, is attached hereto as Exhibit 4 and is incorporated herein
by reference. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the form of Rights
Agreement (and the exhibits thereto) attached hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4 -- Rights Agreement, dated as of December 1, 1998, between Helen of
Troy Limited and Harris Trust and Savings Bank, as Rights Agent,
which includes as Exhibit A the Form of Certificate of
Designations of Series A First Preference Shares of Helen of Troy
Limited, as Exhibit B the Form of Right Certificate, and as
Exhibit C the Summary of Rights to Purchase Preference Shares of
Helen of Troy Limited.
20 -- Press Release of the Company dated December 1, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HELEN OF TROY LIMITED
Date: December 4, 1998 By: /s/ Gerald J. Rubin
------------------------------------------
Gerald J. Rubin
Chairman and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4 -- Rights Agreement, dated as of December 1, 1998, between Helen of
Troy Limited and Harris Trust and Savings Bank, as Rights Agent,
which includes as Exhibit A the Form of Certificate of
Designations of Series A First Preference Shares of Helen of Troy
Limited, as Exhibit B the Form of Right Certificate, and as
Exhibit C the Summary of Rights to Purchase Preference Shares of
Helen of Troy Limited.
20 -- Press Release of the Company dated December 1, 1998.
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EXHIBIT 4
HELEN OF TROY LIMITED
and
HARRIS TRUST AND SAVINGS BANK, as Rights Agent
RIGHTS AGREEMENT
Dated as of December 1, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1. Certain Definitions............................................................................. 2
Section 2. Appointment of Rights Agent..................................................................... 6
Section 3. Issue of Right Certificates..................................................................... 6
Section 4. Form of Right Certificates...................................................................... 8
Section 5. Countersignature and Registration............................................................... 8
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates.......................................................... 9
Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights................................... 9
Section 8. Cancellation and Destruction of Right Certificates.............................................. 11
Section 9. Availability of Preference Shares............................................................... 11
Section 10. Preference Shares Record Date................................................................... 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares and Number of Rights.................... 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...................................... 20
Section 13. Amalgamation, Merger or Sale or Transfer of Assets or Earning Power............................. 20
Section 14. Fractional Rights and Fractional Shares......................................................... 23
Section 15. Rights of Action................................................................................ 24
Section 16. Agreement of Right Holders...................................................................... 25
Section 17. Right Certificate Holder Not Deemed a Shareholder............................................... 25
Section 18. Concerning the Rights Agent..................................................................... 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent....................................... 26
Section 20. Duties of Rights Agent.......................................................................... 26
Section 21. Change of Rights Agent.......................................................................... 28
Section 22. Issuance of New Right Certificates.............................................................. 29
Section 23. Redemption...................................................................................... 29
Section 24. Exchange........................................................................................ 30
Section 25. Notice of Certain Events........................................................................ 31
Section 26. Notices......................................................................................... 31
Section 27. Supplements and Amendments...................................................................... 32
Section 28. Successors...................................................................................... 32
Section 29. Benefits of this Agreement...................................................................... 33
Section 30. Determinations and Actions by the Board of Directors............................................ 33
Section 31. Severability.................................................................................... 33
Section 32. Governing Law................................................................................... 33
Section 33. Counterparts.................................................................................... 33
Section 34. Descriptive Headings............................................................................ 33
EXHIBIT A. FORM OF CERTIFICATE OF DESIGNATIONS..................................................... A-1
EXHIBIT B. FORM OF RIGHT CERTIFICATE............................................................... B-1
EXHIBIT C. FORM OF SUMMARY OF RIGHTS TO PURCHASE PREFERENCE SHARES OF HELEN OF TROY LIMITED........ C-1
</TABLE>
-i-
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RIGHTS AGREEMENT
Rights Agreement, dated as of December 1, 1998 ("Agreement"),
between Helen of Troy Limited, a Bermuda company (the "Company"), and Harris
Trust and Savings Bank, as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preference share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding as of the Close
of Business (as defined below) on December 15, 1998 (the "Record Date"), each
Right representing the right to purchase one one-thousandth (subject to
adjustment) of a Preference Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right (subject to adjustment as provided herein)
with respect to each Common Share that shall become outstanding between the
Record Date and the earlier of the Distribution Date and the Expiration Date (as
such terms are hereinafter defined); provided, however, that Rights may be
issued with respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section
22.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meaning indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares then outstanding, but
shall not include an Exempt Person (as such term is hereinafter defined);
provided, however, that (i) if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an "Acquiring Person" became
such inadvertently (including, without limitation, because (A) such Person was
unaware that it beneficially owned a percentage of Common Shares that would
otherwise cause such Person to be an "Acquiring Person" or (B) such Person was
aware of the extent of its Beneficial Ownership of Common Shares but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and if such Person as promptly as practicable divested or divests
itself of Beneficial Ownership of a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," then such Person shall not
be deemed to be or to have become an "Acquiring Person" for any purposes of this
Agreement; (ii) if, as of the date hereof, any Person is the Beneficial Owner of
15% or more but less than 20% of the Common Shares outstanding, such Person
shall not be or become an "Acquiring Person" unless and until such time as such
Person shall become the Beneficial Owner of additional Common Shares (other than
pursuant to a dividend or distribution paid or made by the Company on the
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outstanding Common Shares in Common Shares or pursuant to a split or subdivision
of the outstanding Common Shares), unless, upon becoming the Beneficial Owner of
such additional Common Shares, such Person is not then the Beneficial Owner of
15% or more of the Common Shares then outstanding; and (iii) no Person shall
become an "Acquiring Person" as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of Common Shares beneficially owned by such Person to 15%
or more of the Common Shares then outstanding, provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Shares
then outstanding by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional Common Shares (other
than pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or subdivision
of the outstanding Common Shares), then such Person shall be deemed to be an
"Acquiring Person" unless upon becoming the Beneficial Owner of such additional
Common Shares such Person does not beneficially own 15% or more of the Common
Shares then outstanding. For all purposes of this Agreement, any calculation of
the number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date hereof.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, shall
be deemed to have "Beneficial Ownership" of and shall be deemed to "beneficially
own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates is deemed to beneficially own, directly or indirectly,
within the meaning of Rule l3d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date hereof;
(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 (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided, however,
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 or
on behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase, (y) securities which such
Person has a right to acquire upon the exercise of Rights at any time prior to
the time that any Person becomes an Acquiring Person or (z) securities issuable
upon the exercise of Rights from and after the time that any Person becomes an
Acquiring Person if such Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or
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pursuant to Section 3(a) or Section 22 hereof ("Original Rights") or pursuant to
Section 11(i) or Section 11(n) with respect to an adjustment to Original Rights;
or (B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security by reason of such
agreement, arrangement or understanding if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person and with respect to which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent contemplated
by the proviso to Section 1(c)(ii)(B)) or disposing of such securities of the
Company; provided, however, that no Person who is an officer, director or
employee of an Exempt Person shall be deemed, solely by reason of such Person's
status or authority as such, to be the "Beneficial Owner" of, to have
"Beneficial Ownership" of or to "beneficially own" any securities that are
"beneficially owned" (as defined in this Section l(c)), including, without
limitation, in a fiduciary capacity, by an Exempt Person or by any other such
officer, director or employee of an Exempt Person.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York or the
city in which the principal office of the Rights Agent is located are authorized
or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, 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.
(f) "Common Shares" when used with reference to the Company
shall mean the Common Shares, presently par value $.10 per share, of the
Company. "Common Shares" when used with reference to any Person other than the
Company shall mean the common shares (or, in the case of an unincorporated
entity, the equivalent equity interest) with the greatest voting power of such
other Person or, if such other Person is a subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(g) "Common Share Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(h) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
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(i) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(j) "Equivalent Preference Shares" shall have the meaning set
forth in Section 11(b) hereof.
(k) "Exempt Person" shall mean (i) the Company or any
Subsidiary (as such term is hereinafter defined) of the Company, in each case
including, without limitation, in its fiduciary capacity, or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
or trustee holding Common Shares for or pursuant to the terms of any such plan
or for the purpose of funding any such plan or funding other employee benefits
for employees of the Company or of any Subsidiary of the Company, or (ii) Gerald
J. Rubin or any Affiliate of Gerald J. Rubin.
(l) "Exchange Ratio" shall have the meaning set forth in
Section 24 hereof.
(m) "Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(n) "Flip-In Event" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(o) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(p) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotation System.
(q) "New York Stock Exchange" shall mean the New York Stock
Exchange, Inc.
(r) "Person" shall mean any individual, firm, company,
partnership, limited liability company, trust or other entity, and shall include
any successor (by merger or otherwise) to such entity.
(s) "Preference Shares" shall mean the Series A First
Preference Shares, par value $1.00 per share, of the Company having the rights
and preferences set forth in the Form of Certificate of Designation attached to
this Agreement as Exhibit A.
(t) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(u) "Purchase Price" shall have the meaning set forth in
Section 4 hereof.
(v) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(w) "Redemption Price" shall have the meaning set forth in
Section 23 hereof.
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(x) "Right Certificate" shall have the meaning set forth in
Section 3 hereof.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(aa) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(bb) "Share 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) of 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.
(cc) "Subsidiary" of any Person shall mean any company 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 company or other entity that is otherwise
controlled by such Person.
(dd) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ee) "Summary of Rights" shall have the meaning set forth in
Section 3 hereof.
(ff) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
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. Issue of Right Certificates
(a) Until the Close of Business on the earlier of (i) the
tenth day after the Share Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which would
result in any Person (other than an Exempt Person) becoming the Beneficial Owner
of Common Shares aggregating 15% or more of the Common Shares then outstanding
(the earlier of such dates being herein referred to as the "Distribution Date";
provided, however, that if either of such dates occurs after the date of this
Agreement and on or prior to the Record Date, then the Distribution Date shall
be the Record Date), (x) the Rights will be evidenced (subject to the provisions
of Section 3(b)
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hereof) by the certificates for Common Shares registered in the names of the
holders thereof and not by separate Right Certificates, and (y) the Rights will
be transferable only in connection with the transfer of Common Shares. As soon
as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign and the Company will send or cause to
be sent (and the Rights Agent will, if requested, at the expense of the Company,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution Date (other than
any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right (subject to adjustment as provided herein)
for each Common Share so held. As of 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 Preference
Shares, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date (other than any Acquiring Person or
any Associate or Affiliate of any Acquiring Person), at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights. Until the Distribution Date
(or, if earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates issued for Common Shares (including, without
limitation, upon transfer of outstanding Common Shares, disposition of Common
Shares out of treasury stock or issuance or reissuance of Common Shares out of
authorized but unissued shares) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration 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
Helen of Troy Limited (the "Company") and Harris Trust and
Savings Bank, as Rights Agent, dated as of December 1, 1998 as
the same may be amended from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor.
Under certain circumstances, as set forth in the Rights
Agreement, Rights owned by or transferred to any Person who is
or becomes an
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<PAGE> 9
Acquiring Person (as defined in the Rights Agreement) and
certain transferees thereof will become null and void and will
no longer be transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or
otherwise acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.
(d) Notwithstanding anything in this Agreement to the
contrary, the Rights do not constitute an offer to, and may not be exercised by,
any person unless and until a prospectus or other appropriate document has been
prepared and filed with the Registrar of Companies in Bermuda. On the
Distribution Date, or as soon as practicable thereafter, the Company will
prepare a prospectus or other appropriate document for the Rights and file such
prospectus or other appropriate document with the Registrar of Companies in
Bermuda.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or interdealer quotation system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the provisions of
Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a Preference Share as
shall be set forth therein at the price per one one-thousandth of a Preference
Share set forth therein (the "Purchase Price"), but the number of such one
one-thousandths of a Preference Share and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration
(a) The Right Certificates shall be executed on behalf of the
Company by the President of the Company, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof
and shall be attested by the 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 countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall
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<PAGE> 10
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the Person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right 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 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 an office or agency designated for such purpose,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii), 13
and 14 hereof, at any time after the Distribution Date and prior to the
Expiration Date, any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a Preference Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office or agency of the
Rights Agent designated for such purpose. Thereupon the Rights Agent shall
countersign 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) Subject to the provisions of Section 11(a)(ii) hereof, at
any time after the Distribution Date and prior to the Expiration Date, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
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<PAGE> 11
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights.
(a) Except as otherwise provided herein, the Rights shall
become exercisable on the Distribution Date, and thereafter the registered
holder of any Right Certificate may, subject to Section 11(a)(ii) hereof and
except as otherwise provided herein, exercise the Rights evidenced thereby in
whole or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office or agency of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a Preference Share (or other securities, cash
or other assets, as the case may be) as to which the Rights are exercised, at
any time which is both after the Distribution Date and prior to the time (the
"Expiration Date") that is the earliest of (i) the Close of Business on December
1, 2008 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date") or (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be initially $100.00 for each one
one-thousandth of a Preference Share purchasable upon the exercise of a Right.
The Purchase Price and the number of one one-thousandths of a Preference Share
or other securities or property 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
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, 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 Preference Shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof, in cash or by certified check, cashier's check
or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preference
Shares certificates for the number of Preference Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing interests in such number of one one-thousandths of a Preference
Share as are to be purchased (in which case certificates for the Preference
Shares represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise less than all of the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the exercisable Rights remaining unexercised shall be
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<PAGE> 12
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 of Rights upon the
occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of assignment or form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such transfer or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preference Shares
(a) The Company covenants and agrees that it will maintain
sufficient authorized and unissued Preference Shares or that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) So long as the Preference Shares issuable upon the
exercise of Rights may be listed or admitted to trading on any national
securities exchange, or quoted on NASDAQ, 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 or admitted to trading on such exchange,
or quoted on NASDAQ, upon official notice of issuance upon such exercise.
(c) From and after such time as the Rights become exercisable,
the Company shall use its best efforts, if then necessary to permit the issuance
of Preference Shares upon the exercise of Rights, to register and qualify such
Preference Shares 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. The Company may
temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the
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<PAGE> 13
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 to 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 ensure that all Preference Shares delivered
upon exercise of Rights shall, at the time of delivery of the certificates
therefor (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(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 Preference Shares 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 or depositary receipts
for the Preference Shares in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for exercise or to issue or
deliver any certificates or depositary receipts for Preference Shares upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by that holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax is due.
Section 10. Preference Shares Record Date. Each Person in whose name
any certificate for Preference Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preference Shares 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; provided, however, that if the date of such surrender and
payment is a date upon which the Preference Share transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preference Share transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preference Shares for which
the Rights shall be exercisable, including, without limitation, the right to
vote or to receive dividends or other distributions, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares and
Number of Rights. The Purchase Price, the number of Preference Shares or other
securities or property purchasable upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
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<PAGE> 14
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare and pay a dividend on the Preference Shares
payable in Preference Shares, (B) subdivide the outstanding Preference Shares,
(C) combine the outstanding Preference Shares into a smaller number of
Preference Shares or (D) issue any shares of its capital stock in a
reclassification of the Preference Shares (including any such reclassification
in connection with an amalgamation or merger in which the Company is the
continuing or surviving company), except as otherwise provided in this Section
11(a), the Purchase Price in effect at 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 capital stock issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preference Share transfer
books of the Company were open, the holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person (the first occurrence of such event being
referred to hereinafter as the "Flip-In Event"), then (A) the Purchase Price
shall be adjusted to be the Purchase Price in effect immediately prior to the
Flip-In Event multiplied by the number of one one-thousandths of a Preference
Share for which a Right was exercisable immediately prior to such Flip-In Event,
whether or not such Right was then exercisable, and (B) each holder of a Right,
except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii)
hereof, shall thereafter have the right to receive, upon exercise thereof at a
price equal to the Purchase Price (as so adjusted), in accordance with the terms
of this Agreement and in lieu of Preference Shares, such number of Common Shares
as shall equal the result obtained by dividing the Purchase Price (as so
adjusted) by 50% of the current per share market price of the Common Shares
(determined pursuant to Section 11(d) hereof) on the date of such Flip-In Event;
provided, however, that the Purchase Price (as so adjusted) and the number of
Common Shares so receivable upon exercise of a Right shall, following the
Flip-In Event, be subject to further adjustment as appropriate in accordance
with Section 11(f) hereof. Notwithstanding anything in this Agreement to the
contrary, however, from and after the Flip-In Event, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate of
any Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the Flip-In Event or (z)
a transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-In Event pursuant to
either (i) a 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 Agreement.
The Company shall use all reasonable efforts to ensure that the
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<PAGE> 15
provisions of this Section 11(a)(ii) 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 Flip-In
Event, 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 canceled. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have not
been exercised pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only in accordance with Section 13 and not pursuant to this Section
11(a)(ii).
(iii) The Company may at its option substitute for a Common
Share issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) a number of Preference Shares or fraction thereof such that
the current per share market price of one Preference Share multiplied by such
number or fraction is equal to the current per share market price of one Common
Share. In the event that there shall not be sufficient Common Shares issued but
not outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), 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 (such excess, the "Spread") of (1) the value of the Common Shares
issuable upon the exercise of a Right in accordance with the foregoing
subparagraph (ii) (the "Current Value") over (2) the Purchase Price (as adjusted
in accordance with the foregoing subparagraph (ii)), and (B) with respect to
each Right (other than Rights which have become void pursuant to the foregoing
subparagraph (ii)), make adequate provision to substitute for the Common Shares
issuable in accordance with the foregoing subparagraph (ii) upon exercise of the
Right and payment of the Purchase Price (as adjusted in accordance therewith),
(1) cash, (2) a reduction in such Purchase Price, (3) Preference Shares or other
equity securities of the Company (including, without limitation, preference
shares or fractions of preference shares which, by virtue of having dividend,
voting and liquidation rights substantially comparable to those of the Common
Shares, are deemed in good faith by the Board of Directors to have substantially
the same value as the Common Shares (such Preference Shares and preference
shares or fractions of preference shares are hereinafter referred to as "Common
Share Equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having a value which, when added to the
value of the Common Shares issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any reduction in
such Purchase Price), where such aggregate value has been determined by the
Board of Directors upon the advice of a nationally recognized investment banking
firm selected in good faith by the Board of Directors; provided, however, that
if the Company shall not make adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the Flip-In Event (the
"Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, to the extent permitted by applicable law and any material agreements
then in effect to which the Company is a party, upon the surrender for exercise
of a Right and without requiring payment of such Purchase Price, Common Shares
(to the extent available), and then, if necessary, such number or fractions of
Preference Shares (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If, upon
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<PAGE> 16
the occurrence of the Flip-In Event, the Board of Directors shall determine in
good faith that it is likely that sufficient additional Common Shares 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 shareholder
approval for the authorization of such additional shares (such thirty (30) day
period, as it may be extended, is herein called the "Substitution Period"). To
the extent that the Company determines that some action need be taken pursuant
to the second and/or third 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) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such second sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the current per share market price (as determined pursuant to Section
11(d)(i)) on the Section 11(a)(ii) Trigger Date and the per share or fractional
value of any "Common Share Equivalent" shall be deemed to equal the current per
share market price of the Common Shares. The Board of Directors of the Company
may, but shall not be required to, establish procedures to allocate the right to
receive Common Shares 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 Preference Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preference Shares (or shares having the same
rights, privileges and preferences as the Preference Shares ("Equivalent
Preference Shares")) or securities convertible into Preference Shares or
Equivalent Preference Shares at a price per Preference Share or Equivalent
Preference Shares (or having a conversion price per share, if a security
convertible into Preference Shares or Equivalent Preference Shares) less than
the then current per share market price of the Preference Shares (determined
pursuant to Section 11(d) hereof) 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 Preference Shares and Equivalent
Preference Shares outstanding on such record date plus the number of Preference
Shares and Equivalent Preference Shares which the aggregate offering price of
the total number of Preference Shares and/or Equivalent Preference Shares so to
be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of Preference Shares and Equivalent
Preference Shares outstanding on such record date plus the number of additional
Preference Shares and/or Equivalent Preference Shares 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 in a
consideration part or all
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<PAGE> 17
of which shall be in a form other than cash, the value of such consideration
shall be 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. Preference Shares and Equivalent Preference Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options 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 the making
of a distribution to all holders of the Preference Shares (including any such
distribution made in connection with an amalgamation or merger in which the
Company is the continuing or surviving company) of evidences of indebtedness or
assets (other than a regular quarterly cash dividend or a dividend payable in
Preference Shares) 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 then current per share market price of the Preference Shares
(determined pursuant to Section 11(d) hereof) 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 assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preference Share, and the denominator of which shall be such current per share
market price (determined pursuant to Section 11(d) hereof) of the Preference
Shares; 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 again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d)(i) Except as otherwise provided herein, for the purpose of
any computation hereunder, the "current per share market price" of any security
(a "Security" for the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per share of such Security
for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. 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 by the principal
consolidated transaction reporting system with respect
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to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the Security is 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 Security selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if the
Preference Shares are publicly traded, the "current per share market price" of
the Preference Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preference Shares are not publicly traded but
the Common Shares are publicly traded, the "current per share market price" of
the Preference Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined pursuant to Section 11(d)(i)
multiplied by the then applicable Adjustment Number (as defined in and
determined in accordance with the Certificate of Designation for the Preference
Shares). If neither the Common Shares nor the Preference Shares are publicly
traded, "current per share market price" shall mean the fair value per share 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.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
hundred-thousandth of a Preference Share or one-hundredth of a Common Share or
other share or security 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 requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than the Preference
Shares, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preference Shares contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof, as applicable, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preference
Shares shall apply on like terms to any such other shares.
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(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-thousandths of a
Preference Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and 11(c), 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-thousandths of a Preference Share (calculated to the nearest one
hundred-thousandth of a Preference Share) obtained by (i) multiplying (x) the
number of one one-thousandths of a share purchasable upon the exercise of a
Right immediately prior to such 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 pursuant to Sections 11(b) or 11(c) hereof to
adjust the number of Rights, in substitution for any adjustment in the number of
one one-thousandths of a Preference Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a
Preference Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-hundredth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. Such 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 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 may, 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 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-thousandths of a Preference Share issuable upon
the exercise of a Right, the
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<PAGE> 20
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-thousandths of a Preference 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 the then par value, if any, of the fraction of
Preference Shares or other shares of capital stock issuable upon exercise of a
Right, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preference Shares or other such shares at
such adjusted Purchase Price.
(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 issuing to the holder of any Right exercised after such record date the
Preference Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preference Shares and 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,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such adjustments in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preference
Shares, issuance wholly for cash of any Preference Shares at less than the
current market price, issuance wholly for cash of Preference Shares or
securities which by their terms are convertible into or exchangeable for
Preference Shares, dividends on Preference Shares payable in Preference Shares
or issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preference Shares shall
not be taxable to such shareholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare and
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of a dividend payable in Common
Shares) into a greater or lesser number of Common Shares, then, in each such
case, the number of Rights associated with each Common Share then outstanding,
or issued or delivered thereafter, shall be proportionately adjusted so that the
number of Rights thereafter associated with each Common Share following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event by a fraction
the numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event.
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<PAGE> 21
(o) The Company agrees that, after the earlier of the
Distribution Date or the Share Acquisition Date, it will not, except as
permitted by Sections 23, 24 or 27 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.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares and the
Preference Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof (if so required under Section 25 hereof). The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
Section 13. Amalgamation, Merger or Sale or Transfer of Assets or
Earning Power
(a) In the event, directly or indirectly, at any time after
the Flip-In Event (i) the Company shall amalgamate with or shall merge into any
other Person, (ii) any Person shall merge with and into the Company and the
Company shall be the continuing or surviving company of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or one or more
wholly-owned Subsidiaries of the Company), then upon the first occurrence of
such event, proper provision shall be made so that: (A) each holder 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 at the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Agreement and in lieu of
Preference Shares or Common Shares of the Company, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable Common
Shares of the Principal Party (as such term is hereinafter defined), not subject
to any liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by dividing the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof) by 50% of the current per
share market price of the Common Shares of such Principal Party (determined
pursuant to Section 11(d) hereof) on the date of consummation of such
amalgamation, merger, sale or transfer; provided, however, that the Purchase
Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof) and
the number of Common Shares of such Principal Party so receivable upon exercise
of a Right shall be subject to further adjustment as appropriate in accordance
with Section 11(f) hereof to reflect any events occurring in respect of the
Common Shares of such Principal Party after the occurrence of such amalgamation,
merger, sale or transfer; (B) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such amalgamation, merger, sale or
20
<PAGE> 22
transfer, all the obligations and duties of the Company pursuant to this Rights
Agreement; (C) the term "Company" shall thereafter be deemed to refer to such
Principal Party; and (D) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common Shares
in accordance with Section 9 hereof) in connection with such consummation 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
Common Shares thereafter deliverable upon the exercise of the Rights; provided
that, upon the subsequent occurrence of any amalgamation, merger, sale or
transfer of assets 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 as provided in this
Section 13(a), such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party receivable upon the
exercise of a Right pursuant to this Section 13(a), 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.
(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 the Common Shares are converted in such
merger or amalgamation, or, if there is more than one such issuer, the issuer
the Common Shares of which have 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 Shares of which have 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 amalgamation; 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 is
the issuer of Common Shares having the greatest aggregate market value of shares
outstanding; provided, however, that in any such case described in the foregoing
clause (b)(i) or (b)(ii), if the Common Shares 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, then (1) if such Person is a direct or
indirect Subsidiary of another Person the Common Shares 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 Shares of all of which is and has been so registered, the
term "Principal Party" shall refer to whichever of such Persons is the issuer of
Common Shares having the
21
<PAGE> 23
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 amalgamation, 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 amalgamation, merger, sale or transfer of assets shall
not result in a default by the Principal Party under this 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 Shares of
the Principal Party shall be listed or admitted to trading on the New York Stock
Exchange or on another national securities exchange, to list or admit to trading
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the New York Stock Exchange or such securities
exchange, or, if the Common Shares of the Principal Party shall not be listed or
admitted to trading on the New York Stock Exchange or a national securities
exchange, to cause the Rights and the securities receivable upon exercise of the
Rights to be authorized for quotation on NASDAQ or on 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;
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the Principal Party subject
to purchase upon exercise of outstanding Rights; and
(v) prepare and file a prospectus or other
appropriate document with the Registrar of Companies in Bermuda.
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<PAGE> 24
(d) In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or bylaws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, Common Shares
or Common Share Equivalents of such Principal Party at less than the then
current market price per share thereof (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Shares or
Common Share Equivalents of such Principal Party at less than such then current
market price, or (ii) providing for any special payment, tax or similar
provision in connection with the issuance of the Common Shares 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 canceled,
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.
(e) The Company covenants and agrees that it shall not, at any
time after the Flip-In Event, enter into any transaction of the type described
in clauses (i) through (iii) of Section 13(a) hereof if (i) at the time of or
immediately after such amalgamation, merger, sale, transfer 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, (ii) prior to,
simultaneously with or immediately after such amalgamation, merger, sale,
transfer or other transaction, the shareholders of the Person who constitutes,
or would constitute, the Principal Party for purposes of Section 13(b) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates or (iii) the form or nature of organization
of the Principal Party would preclude or limit the exercisability of the Rights.
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
(except prior to the Distribution Date in accordance with Section 11(n) hereof).
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. 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 Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting
23
<PAGE> 25
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the Rights
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 NASDAQ or such other
system then in use or, if on any such date the Rights 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 Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preference Shares (other than fractions which are integral multiples of one
one-thousandth of a Preference Share) or to distribute certificates which
evidence fractional Preference Shares (other than fractions which are integral
multiples of one one-thousandth of a Preference Share) upon the exercise or
exchange of Rights. Interests in fractions of Preference Shares in integral
multiples of one one-thousandth of a Preference Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided, that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preference Shares represented by such depositary
receipts. In lieu of fractional Preference Shares that are not integral
multiples of one one-thousandth of a Preference Share, the Company shall pay to
the registered holders of Right Certificates at the time such Rights are
exercised or exchanged as herein provided an amount in cash equal to the same
fraction of the current market value of a whole Preference Share (as determined
in accordance with Section 14(a) hereof) for the Trading Day immediately prior
to the date of such exercise or exchange.
(c) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares upon the exercise or exchange of Rights. In lieu of such fractional
Common Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Common Share (as determined in accordance with Section 14(a)
hereof) for the Trading Day immediately prior to the date of such exercise or
exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise or exchange of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent
24
<PAGE> 26
or of the holder of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), on his own behalf and for his own benefit, may
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate (or, prior to the Distribution
Date, such Common Shares) in the manner provided therein and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and 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 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 be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(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 Common Shares certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preference Shares or
any other securities of the Company which may at any time be issuable on the
exercise or exchange of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in this Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised or exchanged in
accordance with the provisions hereof.
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<PAGE> 27
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
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
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. The costs and expenses of
enforcing this right of indemnification shall also be paid by the Company. The
indemnification provided for hereunder shall survive the expiration of the
Rights and the termination of this Agreement.
(b) The Rights Agent may conclusively rely upon and shall be
protected and shall incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for the
Preference Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
(c) Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent
(a) Any company into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any company
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any company succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, that such company would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor 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 Agreement.
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<PAGE> 28
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, 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 by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking 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 President and the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights provided for in Sections 3, 11, 13, 23 and
24, or the ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate furnished pursuant to Section
12, describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any
27
<PAGE> 29
representation or warranty as to the authorization or reservation of any
Preference Shares or other securities to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preference Shares or other securities
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any person reasonably believed by the Rights Agent to be one of the President or
the 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 any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date any officer of the
Company actually receives such application unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing
28
<PAGE> 30
that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) The Rights Agent shall not be required to take notice or
be deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
(l) 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 not been completed to certify the holder is not
an Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent
shall not take any further action with respect to such requested exercise or
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 Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preference Shares by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares or Preference Shares by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
company organized and doing business under the laws of the United States or the
laws of any state of the United States or the District of Columbia, in good
standing, having an office in the State of Texas or the State of New York, 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 million. 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 Shares or Preference Shares, and,
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<PAGE> 31
following the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such forms
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the Expiration Date, the Company may with respect to Common Shares so
issued or sold pursuant to (i) the exercise of stock options, (ii) under any
employee plan or arrangement, (iii) upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Company or (iv) a contractual
obligation of the Company, in each case existing prior to the Distribution Date,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale.
Section 23. Redemption
(a) The Board of Directors of the Company may, at any time
prior to the Close of Business on the 10th day following the Share Acquisition
Date, redeem all but not less than all of 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
(the redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. The Redemption Price shall be payable, at the option of the Company,
in cash, Common Shares, or such other form of consideration as the Board of
Directors shall determine.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), 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. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights (or such later time as
the Board of Directors may establish for the effectiveness of such redemption),
the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state the method by
which the payment of the Redemption Price will be made.
30
<PAGE> 32
Section 24. Exchange
(a) The Board of Directors of the Company may, at its option,
at any time after the Flip-In 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 Common
Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such amount per Right 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 an
Acquiring Person shall have become the Beneficial Owner of Common Shares
aggregating 50% or more of the Common Shares then outstanding. From and after
the occurrence of an event specified in Section 13(a) hereof, any Rights that
theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 24(a). The exchange 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.
(b) Immediately upon the effectiveness of the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant
to paragraph (a) of this Section 24 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 Common
Shares 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 shall
promptly mail a notice of any such exchange to all of the holders of the Rights
so exchanged 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 the Common Shares 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.
(c) The Company may at its option substitute, and, in the
event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit an exchange of Rights for
Common Shares as contemplated in accordance with this Section 24, the Company
shall substitute to the extent of such insufficiency, for each Common Share that
would otherwise be issuable upon exchange of a Right, a number of Preference
Shares or fraction thereof (or equivalent preference shares, as such term is
defined in Section 11(b)) such that the current per share market price
(determined pursuant to Section 11(d) hereof) of one Preference Share (or
equivalent preference share) multiplied by such number or fraction is equal to
the current per share market price of one Common Share (determined pursuant to
Section 11(d) hereof) as of the date of such exchange.
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<PAGE> 33
Section 25. Notice of Certain Events
(a) In case the Company shall at any time after the earlier of
the Distribution Date or the Share Acquisition Date propose (i) to pay any
dividend payable in shares of any class to the holders of its Preference Shares
or to make any other distribution to the holders of its Preference Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of its
Preference Shares rights or warrants to subscribe for or to purchase any
additional Preference Shares or shares of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preference Shares
(other than a reclassification involving only the subdivision or combination of
outstanding Preference Shares), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) to pay any dividend on the Common Shares
payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of the Common Shares
and/or Preference Shares, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the Preference
Shares for purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or
Preference Shares, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or
Section 13 shall occur then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate (or if occurring prior to the
Distribution Date, the holders of the Common Shares) in accordance with Section
26 hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under Section
11(a)(ii) and Section 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by registered
or certified mail and shall be deemed given upon receipt, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Helen of Troy Limited
c/o Helen of Troy, L.P.
6827 Market Avenue
El Paso, Texas 79915
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or
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<PAGE> 34
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
700 Louisiana, Suite 3350
Houston, TX 77002
Attention: Rights Agent, Helen of Troy Limited
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, (iii) shorten or lengthen any time
period hereunder, or (iv) change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such amendment may cause the Rights again to become
redeemable or cause the Agreement again to become amendable other than in
accordance with this sentence. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Notwithstanding anything in this Agreement to the contrary, no supplement or
amendment that changes the rights and
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<PAGE> 35
duties of the Rights Agent under this Agreement will be effective against the
Rights Agent without the execution of such supplement or amendment by the Rights
Agent.
Section 30. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of Bermuda
and for all purposes shall be governed by and construed in accordance with the
laws of Bermuda applicable to contracts to be made and performed entirely within
Bermuda; provided, however, that the rights and obligations of the Rights Agent
shall be governed by the laws of the State of New York.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
HELEN OF TROY LIMITED
By: /s/ Gerald J. Rubin
------------------------------------------------
Name: Gerald J. Rubin
----------------------------------------------
Title: Chairman/Chief Executive Officer
---------------------------------------------
Date: December 1, 1998
----------------------------------------------
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By: /s/ Lorraine Rodewald
------------------------------------------------
Name: Lorraine Rodewald
----------------------------------------------
Title: Assistant Vice-President
---------------------------------------------
Date: December 1, 1998
----------------------------------------------
35
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EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A FIRST PREFERENCE SHARES
of
HELEN OF TROY LIMITED
Helen of Troy Limited, a company organized and existing under the laws
of Bermuda (the "Company"), in accordance with the provisions of the Companies
Act 1981 as amended from time to time thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Bye-laws of the Company, the said Board of
Directors on December 1, 1998 adopted the following resolution creating a series
of 50,000 Preference Shares designated as "Series A First Preference Shares":
RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Company in accordance with the
provisions of the Bye-laws of the Company, a class of
Preference Shares, which may be divided into one or more
series, par value $1.00 per share, of the Company be and
hereby is created, and that the designation and number of
shares thereof and the voting and other powers, preferences
and relative, participating, optional or other rights of the
shares of such series and the qualifications, limitations and
restrictions thereof are as follows:
SERIES A FIRST PREFERENCE SHARES
1. Designation and Amount. There shall be a series of Preference Shares
that shall be designated as "Series A First Preference Shares," and the number
of shares constituting such series shall be 50,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of Series A First Preference
Shares to less than the number of shares then issued and outstanding plus the
number of shares issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by the Company.
A-1
<PAGE> 38
2. Dividends and Distribution.
(A) Subject to the prior and superior rights of the holders of any
shares of any class or series of stock of the Company ranking prior and superior
to the Series A First Preference Shares with respect to dividends, the holders
of Series A First Preference Shares, in preference to the holders of shares of
any class or series of stock of the Company ranking junior to the Series A First
Preference Shares in respect thereof, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of March, June,
September and December, in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a Series A First Preference Share or
fraction of a Series A First Preference Share, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10.00 or (b) the Adjustment
Number (as defined below) times the aggregate per share amount of all cash
dividends, and the Adjustment Number times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in Common Shares or a subdivision of the outstanding Common
Shares (by reclassification or otherwise), declared on the Common Shares, par
value $.10 per share, of the Company (the "Common Shares") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any Series A First
Preference Share or fraction of a Series A First Preference Share. The
"Adjustment Number" shall initially be 1000. In the event the Company shall at
any time after December 1, 1998 (the "Rights Declaration Date") (i) declare and
pay any dividend on Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares or (iii) combine the outstanding Common Shares into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series A First Preference Shares as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Shares (other than a
dividend payable in Common Shares).
(C) Dividends shall begin to accrue and be cumulative on
outstanding Series A First Preference Shares from the Quarterly Dividend Payment
Date next preceding the date of issue of such Series A First Preference Shares,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Series A First Preference Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the Series A First
A-2
<PAGE> 39
Preference Shares in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of Series A
First Preference Shares entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 60 days
prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of Series A First Preference Shares shall
have the following voting rights:
(A) Each Series A First Preference Share shall entitle the holder
thereof to a number of votes equal to the Adjustment Number on all matters
submitted to a vote of the shareholders of the Company.
(B) Except as required by law and by Section 10 hereof, holders of
Series A First Preference Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Shares as set forth herein) for taking any corporate
action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A First Preference Shares as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on Series A First Preference Shares
outstanding shall have been paid in full, 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
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A First Preference Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A First Preference
Shares, except dividends paid ratably on the Series A First Preference Shares
and all such parity shares 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; or
(iii) purchase or otherwise acquire for consideration any
Series A First Preference Shares, or any shares ranking on a parity with the
Series A First Preference Shares, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of Series A First Preference Shares, or to such holders and holders
of any such shares ranking on a parity therewith, 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.
A-3
<PAGE> 40
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of the Company unless
the Company could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
5. Reacquired Shares. Any Series A First Preference Shares purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired
promptly after the acquisition thereof. All such shares shall upon their
retirement become authorized but unissued Preference Shares and may be reissued
as part of a new series of Preference Shares to be created by resolution or
resolutions of the Board of Directors, subject to any conditions and
restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the
Company, voluntary or otherwise, no distribution shall be made to the holders of
shares ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A First Preference Shares unless, prior thereto,
the holders of Series A First Preference Shares shall have received an amount
per share (the "Series A Liquidation Preference") equal to the greater of (i)
$1,000.00 plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, or (ii) the
Adjustment Number times the per share amount of all cash and other property to
be distributed in respect of the Common Shares upon such liquidation,
dissolution or winding up of the Company.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other classes and series of stock of the
Company, if any, that rank on a parity with the Series A First Preference Shares
in respect thereof, then the assets available for such distribution shall be
distributed ratably to the holders of the Series A First Preference Shares and
the holders of such parity shares in proportion to their respective liquidation
preferences.
(C) Neither the merger or amalgamation of the Company into or with
another company nor the merger or amalgamation of any other company into or with
the Company shall be deemed to be a liquidation, dissolution or winding up of
the Company within the meaning of this Section 6.
7. Amalgamation, Merger, Etc. In case the Company shall enter into any
amalgamation, merger, combination or other transaction in which the outstanding
Common Shares are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each Series A First Preference
Share shall at the same time be similarly exchanged or changed in an amount per
share equal to the Adjustment Number times
A-4
<PAGE> 41
the aggregate amount of shares, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each Common Share
is changed or exchanged.
8. No Redemption. Series A First Preference Shares shall not be subject
to redemption by the Company.
9. Ranking. The Series A First Preference Shares shall rank junior to
all other series of the Preference Shares as to the payment of dividends and as
to the distribution of assets upon liquidation, dissolution or winding up,
unless the terms of any such series shall provide otherwise, and shall rank
senior to the Common Shares as to such matters.
10. Amendment. At any time that any Series A First Preference Shares
are outstanding, the Bye-Laws of the Company shall not be amended in any manner
which would materially alter or change the powers, preferences or special rights
of the Series A First Preference Shares so as to affect them adversely without
the affirmative vote of the holders of two-thirds of the outstanding Series A
First Preference Shares, voting separately as a class.
11. Fractional Shares. Series A First Preference Shares may be issued
in fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A First Preference Shares.
A-5
<PAGE> 42
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
1st day of December, 1998.
HELEN OF TROY LIMITED
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
A-6
<PAGE> 43
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R-______ Number of Rights _______
NOT EXERCISABLE AFTER DECEMBER 1, 2008 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
NOT EXERCISABLE IN ANY JURISDICTION IF:
(i) SUCH EXERCISE SHALL NOT BE PERMITTED UNDER
APPLICABLE LAW; OR
(ii) A PROSPECTUS OR REGISTRATION STATEMENT IN
RESPECT OF THE RIGHTS SHALL NOT HAVE BEEN FILED OR DECLARED
EFFECTIVE IN BERMUDA.
RIGHT CERTIFICATE
HELEN OF TROY LIMITED
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 December 1, 1998, as the same may be amended
from time to time (the "Rights Agreement"), between Helen of Troy Limited, a
Bermuda company (the "Company"), and Harris Trust and Savings Bank, as Rights
Agent (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M., New York City time, on December 1, 2008 at the office or agency of
the Rights Agent designated for such purpose, or of its successor as Rights
Agent, one one-thousandth of a fully paid non-assessable Series A First
Preference Share, par value $1.00 per share (the "Preference Shares"), of the
Company at a purchase price of $100.00 per one one-thousandth of a Preference
B-1
<PAGE> 44
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of one
one-thousandths of a Preference Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of December 1, 1998, based on the Preference Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price, the number of one one-thousandths of a Preference Share (or other
securities or property) which may be purchased upon the exercise of the Rights
and the number of Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned office or agency of the Rights Agent. The
Company will mail to the holder of this Right Certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preference Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon 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 (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Shares, par value $.10 per share, or Preference Shares.
No fractional Preference Shares or Common Shares will be issued upon
the exercise or exchange of any Right or Rights evidenced hereby (other than
fractions of Preference Shares which are integral multiples of one
one-thousandth of a Preference Share, which may, at the election of the Company,
be evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preference
Shares or of any other securities of the Company which may at any time be
issuable on the exercise or exchange 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 shareholder of the Company or any right to vote for
B-2
<PAGE> 45
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in 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 or exchanged as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
HELEN OF TROY LIMITED
By:
--------------------------------------
Name:
------------------------------------
President
ATTEST:
By:
---------------------------------
Name:
-------------------------------
Secretary
Countersigned:
HARRIS TRUST AND SAVINGS BANK, as Rights Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
B-3
<PAGE> 46
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto _______________________________________________________________
(Please print name and address of transferee)_________________________________
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.
Dated:
-------------------------
---------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.
...............................................................................
(To be completed)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------------------
Signature
B-4
<PAGE> 47
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To HELEN OF TROY LIMITED:
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Right Certificate to purchase the Preference Shares (or
other securities or property) issuable upon the exercise of such Rights and
requests that certificates for such Preference Shares (or such other securities)
be issued in the name of:
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
----------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
Dated:
-----------------------------
---------------------------------------
Signature
(Signature must conform to holder specified on Right Certificate)
Signature Guaranteed:
Signature must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.
B-5
<PAGE> 48
Form of Reverse Side of Right Certificate - continued
- -------------------------------------------------------------------------------
(To be completed)
The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
---------------------------------------
Signature
- -------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.
B-6
<PAGE> 49
EXHIBIT C
FORM OF SUMMARY OF RIGHTS TO PURCHASE PREFERENCE SHARES
OF HELEN OF TROY LIMITED.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
THE RIGHTS DO NOT CONSTITUTE AN OFFER TO, AND MAY NOT BE EXERCISED BY, ANY
PERSON UNLESS AND UNTIL A PROSPECTUS OR OTHER APPROPRIATE DOCUMENT HAS
BEEN PREPARED AND FILED WITH THE REGISTRAR OF COMPANIES IN BERMUDA.
On December 1, 1998, the Board of Directors of Helen of Troy Limited
(the "Company") declared a dividend of one preference share purchase right (a
"Right") for each outstanding common share, par value $.10 per share, of the
Company (the "Common Shares"). The dividend is payable on December 15, 1998 (the
"Record Date") to the shareholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth of a
Series A First Preference Share, par value $1.00 per share, of the Company (the
"Preference Shares") at a price of $100.00 per one one-thousandth of a
Preference Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of December
1, 1998, as the same may be amended from time to time (the "Rights Agreement"),
between the Company and Harris Trust and Savings Bank, as Rights Agent (the
"Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (with
certain exceptions, an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding Common Shares or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to
such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the outstanding
Common Shares (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share certificate
together with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution Date (or
earlier expiration of the Rights), the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier expiration of
the Rights), new Common Share certificates
<PAGE> 50
issued after the Record Date upon transfer or new issuances of Common Shares
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on December 1, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Preference Shares or
other securities or property issuable, upon exercise of the Rights is 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
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (iii) upon
the distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends or dividends
payable in Preference Shares) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights is subject to adjustment in the event
of a stock dividend on the Common Shares payable in Common Shares or
subdivisions, amalgamation or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
Preference Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preference Share will be entitled, when, as and if declared, to
a minimum preferential quarterly dividend payment of $10.00 per share but will
be entitled to an aggregate dividend of 1000 times the dividend declared per
Common Share. In the event of liquidation, dissolution or winding up of the
Company, the holders of the Preference Shares will be entitled to a minimum
preferential payment of $1,000.00 per share (plus any accrued but unpaid
dividends) but will be entitled to an aggregate payment of 1000 times the
payment made per Common Share. Each Preference Share will have 1000 votes,
voting together with the Common Shares. Finally, in the event of any merger,
amalgamation or other transaction in which outstanding Common Shares are
converted or exchanged, each Preference Share will be entitled to receive 1000
times the amount received per Common Share. These rights are protected by
customary antidilution provisions.
<PAGE> 51
Because of the nature of the Preference Shares's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a Preference
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of Common Shares having a market value of two times the exercise price of the
Right.
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provisions will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive upon the exercise of a Right that number of
Common Shares of the person with whom the Company has engaged in the foregoing
transaction (or its parent) that at the time of such transaction have a market
value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the earlier of one of the events described in the previous paragraph or
the acquisition by such Acquiring Person of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such Acquiring Person which will have become void),
in whole or in part, for Common Shares or Preference Shares (or a series of the
Company's Preference Shares having equivalent rights, preferences and
privileges), at an exchange ratio of one Common Share, or a fractional
Preference Share (or other preference share) equivalent in value thereto, per
Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preference Shares or Common Shares will be
issued (other than fractions of Preference Shares which are integral multiples
of one one-thousandth of a Preference Share, which may, at the election of the
Company, be evidenced by depositary receipts), and in lieu thereof an adjustment
in cash will be made based on the current market price of the Preference Shares
or the Common Shares.
At any time prior to the close of business on the tenth day following
the day an Acquiring Person becomes such, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
<PAGE> 52
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights Agreement in any manner.
After the Rights are no longer redeemable, the Company may, except with respect
to the redemption price, amend the Rights Agreement in any manner that does not
adversely affect the interests of holders of the Rights.
Until a Right is exercised or exchanged, 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.
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 dated
______, 1998. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
as the same may be amended from time to time, which is hereby incorporated
herein by reference.
<PAGE> 1
EXHIBIT 20
Helen of Troy Ltd. Adopts Shareholder Rights Plan
EL PASO, Texas, Dec. 2 /PRNewswire/ -- Helen of Troy Ltd., (Nasdaq, NM: HELE),
designer, developer and worldwide marketer of brand name personal care products,
today announced that its Board of Directors adopted a shareholder rights plan at
its quarterly meeting Tuesday, December 1, 1998.
Gerald J. Rubin, Chairman of the Board and Chief Executive Officer, stated: "The
Rights are designed to assure that all of Helen of Troy's shareholders receive
fair and equal treatment in the event of any proposed takeover of the Company
and to guard against partial tender offers, squeeze-outs, open market
accumulations and other abusive tactics to gain control of Helen of Troy without
paying all shareholders a control premium. The plan is not being adopted in
response to any unsolicited takeover proposals."
The shareholder rights plan is intended to enable all shareholders to realize
the long-term value of their investment in Helen of Troy. The plan will not
prevent a takeover, but should encourage anyone seeking to acquire Helen of Troy
to negotiate with the Board of Directors prior to attempting a takeover.
The Board of Directors adopted the Shareholder Rights Plan on December 1, 1998,
in which rights will be distributed as a dividend at the rate of one Right for
each share of common stock, par value $0.01 per share, of the Company held by
shareholders of record as of the close of business on December 15, 1998. The
Rights will expire on December 1, 2008.
Each Right initially will entitle shareholders to buy one unit of a share of
preferred stock for $100.00. The Rights will be exercisable only if a person or
group acquires beneficial ownership of 15% or more of the Company's common stock
or commences a tender or exchange offer upon consummation of which such person
or group would beneficially own 15% or more of the Company's common stock.
If any person becomes the beneficial owner of 15% or more of the Company's
common stock, then each Right not owned by the 15% or more shareholder or
related parties will entitle its holder to purchase, at the Right's then current
exercise price, shares of the Company's common stock (or in certain
circumstances cash, property, or other securities) having a value of twice the
Right's then current exercise price. In addition, if after any person has become
a 15% or more shareholder, Helen of Troy Limited is involved in a merger or
other business combination transaction with another person in which the Company
does not survive or in which its common stock is changed or exchanged, or sells
50% or more of its assets or earning power to another person, each Right not
owned by the 15% or more shareholder or related parties will entitle its holder
to purchase, at the Right's then current exercise price, shares of common stock
of such other person having a value of twice the Right's then current exercise
price.
At any time after a person acquires 15% or more of the Company's common stock
and prior to the earlier of the time (i) the Company is involved in a merger or
other business combination transaction with another person in which the Company
does not survive or in which its common stock is changed or exchanged, (ii) the
Company sells 50% or more of its assets or earning power to another person, or
(iii) any person becomes the owner of 50% or more of the Company's common stock,
the Company may exchange each Right (other than Rights owned by the 15% or more
shareholder which shall have become void) for a number of shares of common stock
of the Company (or in certain circumstances preferred stock of the Company)
having a value equal to the difference between the market value of the shares of
common stock receivable upon exercise of the Rights and the exercise price of
the Right.
The Company will generally be entitled to redeem the Rights at $0.01 per Right
at any time until a 15% position has been acquired.
Details of the Shareholder Rights Plan are outlined in a letter, which will be
mailed to all shareholders.
Helen of Troy designs, produces and markets brand-name hair dryers, curling
irons, hair setters, women's shavers, brushes, combs, hair accessories, mirrors,
artificial fingernails and "comfort products" such as foot baths and body
massagers. Helen of Troy products are sold primarily through mass merchandisers,
drug chains, warehouse clubs
<PAGE> 2
and grocery stores under the tradenames Vidal Sassoon, Revlon, Dr. Scholl's,
Dazey, Caruso, Karina and DCNL with the Kurl*Mi, Heat*Mi and Detangle*Mi lines
of brushes and rollers. The company also markets products under the Helen of
Troy, Hot Tools, Hot Spa, Salon Edition, Gallery Series and Wigo tradenames to
the professional beauty salon industry.
This press release may contain certain forward-looking statements, which are
subject to change. The actual results may differ materially from those described
in any forward-looking statements. Additional information concerning potential
factors that could affect the company's financial results are included in the
company's Form 10-K for the year ended February 28, 1998.
/CONTACT: Robert D. Spear, Vice President and CIO of Helen of Troy Ltd.,
915-779-6363 ext. 220/
