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As filed with the Securities and Exchange Commission on June 16, 1997.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
GARDEN RIDGE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
TEXAS 13-3671679
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
19411 ATRIUM PLACE, SUITE 170
HOUSTON, TEXAS 77084-6094
(Address of Principal Executive Offices) (Zip Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. [ ]
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [ ]
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
PREFERRED STOCK PURCHASE RIGHTS
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On June 3, 1997, the Board of Directors of Garden Ridge Corporation (the
"Company"), authorized the issuance of one preferred share purchase right (a
"Right") with respect to each outstanding share of common stock, par value of
one cent ($0.01) (the "Common Shares"), of the Company to the holders of record
of Common Shares on June 17, 1997. Each Right entitles the registered holder to
purchase from the Company one Unit (as such term is defined in the Rights
Agreement, initially being one one-thousandth (1/1000th)) of a Series A Junior
Participating Preferred Share ("Preferred Share") at a price of $50.00 per Unit
of a Preferred Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") dated June 4,1997, between the Company and Chase Mellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
DETACHMENT OF RIGHTS; EXERCISE. Initially, the Rights will attach to all
Common Share certificates representing outstanding shares and no separate Right
Certificate will be distributed. The Rights will separate from the Common Shares
and a Distribution Date (as defined in the Rights Agreement) will occur upon the
earlier of (i) 10 Business Days following a public announcement that a Person or
group of affiliated or associated Persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding Voting Shares (as defined
in the Rights Agreement) of the Company, or (ii) 10 Business Days following the
commencement or announcement of an intention to commence a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a Person or group of 15% or more of such outstanding Voting Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced by the certificates representing such
Common Shares, (ii) the Rights will be transferred with and only with the Common
Shares, (iii) new Common Share certificates issued after June 17, 1997, upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and (iv) the surrender for
transfer of any certificates for Common Shares outstanding as of June 17, 1997,
even without such notation, 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 (the "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 thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 3, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
If an Acquiring Person were to acquire 15% or more of the Voting Shares of
the Company
<PAGE>
(20% or more with respect to Teribe Limited, a British Virgin Islands
international business company), each Right then outstanding (other than Rights
beneficially owned by the Acquiring Person which would become null and void)
would become a right to buy that number of Preferred Shares that at the time of
such acquisition would have a market value of two times the Purchase Price of
the Right. If, however, the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an Acquiring Person, has become such
inadvertently, and such Person divests a sufficient number of Voting Shares by
such deadline as the Board of Directors shall set, then such Person shall not be
deemed to be an Acquiring Person for any purposes of this Agreement.
If the Company is acquired in a merger or other business combination
transaction or more than 50% of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
Upon exercise of a Right, the Company will have the option to sell Common
Shares of the Company having a market value equal to the Preferred Shares that
would be purchased upon exercise of a Right, instead of selling Preferred Shares
of the Company.
REGISTRATION AND LISTING OF COMMON SHARES. The offer and sale of the
Preferred Shares or other securities issuable upon exercise of the Rights will
be registered with the Securities and Exchange Commission but such registration
will not be effective until the Rights become exercisable. As described above,
however, the Rights will not be transferable separately from the Common Shares
until the Distribution Date.
ANTIDILUTION AND OTHER ADJUSTMENTS. The number of Preferred Shares or
other securities or property issuable upon exercise of the Rights, and the
Purchase Price payable, are subject to customary adjustments from time to time
to prevent dilution.
The number of outstanding Rights and the number of Preferred Shares or
other securities issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or 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.
EXCHANGE OPTION. At any time after the acquisition by a Person or group of
affiliated or associated Persons of beneficial ownership of 15% or more of the
outstanding Voting Shares of the Company and before the acquisition by a Person
or group of 50% or more of the outstanding Voting Shares of the Company, the
Board of Directors may, at its option, issue Common Shares of the Company in
mandatory redemption of, or in exchange for, all or part of the then outstanding
exercisable Rights (other than Rights owned by such Acquiring Person or group
which would become null and void) at an exchange ratio of one Common Share for
each Preferred Share for which each Right is then exercisable, subject to
adjustment.
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REDEMPTION OF RIGHTS. At any time prior to the first public announcement
that a Person or group has become the beneficial owner of 15% or more of the
outstanding Voting Shares, the Board of Directors of the Company may redeem all,
but not less than all, of the then outstanding Rights at a price of $0.01 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 the action of
the Board of Directors ordering 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.
NO RIGHTS AS STOCKHOLDER. Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
AMENDMENT OF RIGHTS. The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders of the Rights,
including amendment to extend the Final Expiration Date, and, provided a
Distribution Date has occurred, to extend the period during which the Rights may
be redeemed, except that after the Distribution Date no such amendment may
materially and adversely affect the interests of holders of the Rights.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit A thereto the form
of Right Certificate, is attached as Exhibit 1 to this Form 8-A 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. Capitalized terms in this
description are defined in the Rights Agreement.
ITEM 2. EXHIBITS.
Exhibit No. Description of Exhibit
- ----------- ----------------------
1 Rights Agreement dated as of June 4, 1997 between the Company and
Chase Mellon Shareholder Services, L.L.C., as Rights Agent, which
includes as EXHIBIT A the Form of Right Certificate, as EXHIBIT B
the Form of Certificate of Designations, Preferences and Rights of
Series A Junior Participating Preferred Stock, and as EXHIBIT C the
Summary of Rights to Purchase Preferred Stock.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
GARDEN RIDGE CORPORATION
Date: June 16, 1997 By: /s/ JANE L. ARBUTHNOT
Jane L. Arbuthnot
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
1 Rights Agreement dated as of June 4, 1997 between the Company and
Chase Mellon Shareholder Services, L.L.C., as Rights Agent, which
includes as EXHIBIT A the Form of Right Certificate, as EXHIBIT B
the Form of Certificate of Designations, Preferences and Rights of
Series A Junior Participating Preferred Stock, and as EXHIBIT C the
Summary of Rights to Purchase Preferred Stock.
EXHIBIT 1
GARDEN RIDGE CORPORATION
and
CHASE MELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
RIGHTS AGREEMENT
Dated as of June 4, 1997
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TABLE OF CONTENTS
Section 1. CERTAIN DEFINITIONS...............................................1
Section 2. APPOINTMENT OF RIGHTS AGENT.......................................6
Section 3. ISSUANCE OF RIGHT CERTIFICATES....................................7
Section 4. FORM OF RIGHT CERTIFICATES........................................8
Section 5. EXECUTION, AUTHENTICATION AND DELIVERY............................9
Section 6. REGISTRATION.....................................................10
Section 7. MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES.........11
Section 8. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS....11
Section 9. CANCELLATION OF RIGHT CERTIFICATES...............................13
Section 10. AUTHORIZATION OF SHARES.........................................13
Section 11. RECORD DATE.....................................................14
Section 12. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS..........................................................14
Section 13. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES......19
Section 14. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER...................................................20
Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.........................21
Section 16. RIGHTS OF ACTION................................................22
Section 17. AGREEMENT OF RIGHT HOLDERS......................................22
Section 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER...............23
Section 19. CONCERNING THE RIGHTS AGENT.....................................23
Section 20. DUTIES OF RIGHTS AGENT..........................................24
Section 21. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.......26
Section 22. CHANGE OF RIGHTS AGENT..........................................27
Section 23. ISSUANCE OF NEW RIGHT CERTIFICATES..............................28
Section 24. REDEMPTION......................................................28
Section 25. MANDATORY REDEMPTION AND EXCHANGE...............................29
Section 26. NOTICE OF CERTAIN EVENTS........................................30
Section 27. NOTICES.........................................................31
Section 29. SUPPLEMENTS AND AMENDMENTS......................................31
Section 30. SUCCESSORS......................................................32
Section 31. BENEFITS OF THIS AGREEMENT......................................32
Section 32. SEVERABILITY....................................................32
Section 33. GOVERNING LAW...................................................32
Section 34. COUNTERPARTS....................................................32
Section 35. DESCRIPTIVE HEADINGS............................................33
<PAGE>
RIGHTS AGREEMENT
This Rights Agreement, dated as of June 4, 1997, is between Garden Ridge
Corporation, a Delaware corporation (the "COMPANY"), and Chase Mellon
Shareholder Services, L.L.C., as Rights Agent.
WHEREAS, the Board of Directors of the Company, having determined its
actions to be in the best interests of the Company, has authorized the creation
of Rights, has authorized and directed the issuance to the holders of record of
Common Shares of the Company outstanding at the close of business on June 17,
1997 (the "Record Date") of one Right with respect to each Common Share of the
Company outstanding on the Record Date, and has further authorized and directed
the issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earlier of the Distribution Date,
the Redemption Date and the Final Expiration Date; and
WHEREAS, the Board of Directors of the Company has authorized and directed
that the terms and conditions under which the Rights are to be distributed,
including without limitation, those affecting the exercise thereof, the
securities or other property to be acquired thereby and the purchase price to be
paid therefor, shall be set forth in a written agreement between the Company and
a rights agent made for the benefit of the holders of the Rights to the extent
so provided therein.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
"ACQUIRING PERSON" shall mean:
(i) subject to the exception set forth in part (ii) of this definition,
any Person who or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 15% or more of the Voting Shares of the
Company then outstanding, but shall not include the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any trustee of or fiduciary with respect to any such plan when
acting in such capacity.
(ii) with respect to Teribe Limited, a British Virgin Islands
international business company, any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 20%
or more of the Voting Shares of the Company then outstanding.
(iii) notwithstanding the foregoing parts of this definition, no Person
shall become an "Acquiring Person" as the result of an acquisition of Voting
Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially
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owned by such Person to 15% (20% in the case of Teribe Limited) or more of the
Voting Shares of the Company then outstanding; PROVIDED, HOWEVER that, if a
Person shall become the Beneficial Owner of 15% (20% in the case of Teribe
Limited) or more of the Voting Shares of the Company then outstanding by reason
of share purchases by the Company and shall after such share purchases by the
Company and at a time when such Person is the Beneficial Owner of 15% (20% in
the case of Teribe Limited) or more of the Voting Shares of the Company then
outstanding, become the Beneficial Owner of any additional Voting Shares of the
Company, then such Person shall be deemed to be an "Acquiring Person."
(iv) notwithstanding the foregoing parts of this definition, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to parts (i), (ii), and
(iii) of this definition has become such inadvertently, and such Person divests
a sufficient number of Voting Shares so that such Person would no longer be an
"Acquiring Person," by such deadline as the Board of Directors shall set, then
such Person shall not be deemed to be an "Acquiring Person" for any purposes of
this Agreement.
"AGREEMENT" shall mean this Rights Agreement as hereafter amended from
time to time.
"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 of this Agreement.
"BENEFICIAL OWNER" shall mean, with respect to any security, any Person
who is deemed to be a "Beneficial Owner" of, or is deemed to "own beneficially"
such security. A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "own beneficially" any securities that (without duplication):
(i) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, within the meaning of either Section
13 or 16 of the Exchange Act;
(ii) 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
(other than these Rights), warrants or options, or otherwise; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; or
(iii) are beneficially owned, directly or indirectly, by any other Person
with which such Person or any of such Person's Affiliates or Associates has any
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 or
disposing of any securities of the Company; PROVIDED, HOWEVER, that, for
purposes
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of each clause of this definition, a Person shall not be deemed the Beneficial
Owner of, or to own beneficially, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; and PROVIDED, FURTHER, that, for purposes of each clause
of this definition, a Person shall not be deemed the Beneficial Owner of, or to
own beneficially, any security as a result of any agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding (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).
Notwithstanding anything in this definition to the contrary, the phrase
"then outstanding," when used with respect to a Beneficial Owner of securities
of the Company (or to the number of such securities "beneficially owned"), shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in the State of Texas are authorized or obligated
by law or executive order to close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., Houston time,
on such date; PROVIDED, HOWEVER, that if such date is not a Business Day it
shall mean 5:00 p.m., Houston time, on the next succeeding Business Day.
"CLOSING PRICE," with respect to any security, shall mean the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the Nasdaq National Market or such
other system then in use, or, in case such security is not then listed on such
system, then the last sale price, regular way, on a specific Trading Day or, in
case no such sale takes place on such Trading 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 on
the principal national securities exchange on which such security is listed or
admitted to trading or, if such security is not then listed or admitted to
trading on any national securities exchange, or, if on any such Trading Day such
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
such security selected by the Board of Directors of the Company. If such
security is not publicly held or so listed or traded, "Closing Price" shall mean
the fair value per unit of such security as determined in good faith by the
Board of Directors of the Company, whose determination shall be described and
the Closing Price set forth in a statement filed with Rights Agent.
"COMMON SHARES" when used with respect to the Company shall mean shares of
capital stock of the Company which have no preference over any other class of
stock with respect to dividends or assets, which are not redeemable at the
option of the Company and with respect to which no
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sinking, purchase or similar fund is provided and shall initially mean the
shares of common stock, having a par value of $0.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall, if used with reference to a corporation, mean the capital stock (or
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 and, if used with reference to
any other Person, mean the equity interest in such Person (or, if the net worth
determined in accordance with generally accepted accounting principles of
another Person (other than an individual) which controls such first-mentioned
Person is greater than such first-mentioned Person, then such other Person) with
the greatest voting power or managerial power with respect to the business and
affairs of such Person.
"COMPANY" shall mean Garden Ridge Corporation, a Delaware corporation, and
its successors.
"COMPANY ORDER" means a written request or order signed in the name of the
Company by its Chairman of the Board, its Chief Executive Officer, or President
or a Vice President, and by its Chief Financial Officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the Rights
Agent.
"CORPORATE TRUST OFFICE" means the principal office of the Rights Agent at
which it administers its corporate trust business, which, in the case of Chase
Mellon Shareholder Services, L.L.C., shall, until hereafter changed, be its
office at 85 Challenger Road, Ridgefield, New Jersey 07660-2108.
"DISTRIBUTION DATE" shall mean the earlier of (i) the tenth Business Day
after the Shares Acquisition Date and (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 commencement by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any trustee
of or fiduciary with respect to any such plan when acting in such capacity) of,
or after the date of the first public announcement of the intent of any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any trustee of or
fiduciary with respect to any such plan when acting in such capacity) to
commence a tender or exchange offer, the consummation of which would result in
any Person becoming the Beneficial Owner of 15% or more of the then outstanding
Voting Shares of the Company; PROVIDED, HOWEVER, that an occurrence described in
clause (ii) of this definition above shall not cause the occurrence of the
Distribution Date if the Board of Directors of the Company shall, prior to such
tenth Business Day (or such later date as described in clause (ii) above),
determine that such tender or exchange offer is spurious, unless, thereafter,
the Board of Directors of the Company shall make a contrary determination, in
which event the Distribution Date shall occur on the later to occur of such
tenth Business Day (or such later date as described in clause (ii) above) and
the date of such latter determination.
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute thereto.
"FINAL EXPIRATION DATE" shall mean the Close of Business on June 3, 2007.
"PERSON" shall mean any individual, firm, corporation, partnership,
limited partnership, limited liability company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"PREFERRED SHARE" shall mean one share of Series A Junior Participating
Preferred Stock issued by the Company having the rights and qualifications
described in EXHIBIT B.
"PURCHASE PRICE" shall mean the initial price at which the holder of a
Right may, subject to the terms and conditions of this Agreement, purchase one
Unit of a Preferred Share (which initial price is set forth in Section 8(b)
hereof), as such price shall be adjusted pursuant to the terms of this
Agreement.
"REDEMPTION DATE" shall mean the time at which the Rights are redeemed
pursuant to Section 24 herein or the time at which all of the Rights are
mandatorily redeemed and exchanged pursuant to Section 25 hereof.
"REDEMPTION PRICE" shall have the meaning specified in Section 24(b)
herein.
"RIGHT" shall mean one Preferred Share purchase right which initially
represents the right of the registered holder thereof to purchase one Unit of a
Preferred Share upon the terms and subject to the conditions herein set forth.
"RIGHT CERTIFICATE" shall mean a certificate, in substantially the form of
EXHIBIT A attached to this Rights Agreement, evidencing the Rights registered in
the name of the holder thereof.
"RIGHTS AGENT" shall mean Chase Mellon Shareholder Services, L.L.C. and
any successor thereto appointed in accordance with the terms hereof, in its
capacity as agent for the Company and the holders of the Rights pursuant to this
Agreement.
"RIGHTS REGISTER" and "RIGHTS REGISTRAR" shall have the meanings specified
in Section 6.
"SECTION 12(A)(II) EVENT" shall mean the event described in Section
12(a)(ii) hereof.
"SECTION 14 EVENT" shall mean the event described in Section 14 hereof.
"SHARES 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)
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or Section 16(a) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such.
"SUBSIDIARY" of any Person shall mean any corporation or other entity of
which a majority of the outstanding capital stock or other equity interests
having ordinary voting power in the election of directors or similar officials
is owned, directly or indirectly, by such Person.
"SUMMARY OF RIGHTS" shall mean a Summary of Rights to Purchase Preferred
Shares in substantially the form attached as EXHIBIT C to this Agreement.
"TRADING DAY" shall mean a day on which the principal national securities
exchange on which any of the Voting Shares of the Company are listed or admitted
to trading is open for the transaction of business or, if none of the Voting
Shares of the Company is listed or admitted to trading on any national stock
exchange, a Business Day.
"TRIGGERING EVENT" shall mean the Section 12(a)(ii) Event or any Section
14 Event.
"UNIT" shall, with respect to the Preferred Shares, mean one
one-thousandth (1/1000th) of a share.
"VOTING SHARES" shall mean (i) the Common Shares of the Company and (ii)
any other shares of capital stock of the Company entitled to vote generally in
the election of directors or entitled to vote together with the Common Shares in
respect of any merger or consolidation of the Company, any sale of all or
substantially all of the Company's assets or any liquidation, dissolution or
winding up of the Company. Whenever any provision of this Agreement requires a
determination of whether a number of Voting Shares comprising a specified
percentage of such Voting Shares is, was or will be beneficially owned or has
been voted, tendered, acquired, sold or otherwise disposed of, or a
determination of whether a Person has offered or proposed to acquire a number of
Voting Shares comprising such specified percentage, the number of Voting Shares
comprising such specified percentage of Voting Shares shall in every such case
be deemed to be the number of Voting Shares comprising the specified percentage
of all the Company's then outstanding Voting Shares.
"WHOLLY-OWNED SUBSIDIARY" of a Person shall mean any corporation or other
entity all the outstanding capital stock or other equity interests of which
having ordinary voting power in the election of directors or similar officials
are owned, directly or indirectly, by such Person.
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 upon prior written notice to the Rights Agent. In the
event the Company appoints one or more co-Rights Agents, the respective duties
of the Rights Agent and any co-Rights Agents shall be determined by the Company
with the consent of the Rights
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Agent, which consent shall not be unreasonably withheld. The Rights Agent shall
have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such co-Rights Agent.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) From and after June 17, 1997, until the earliest of the Distribution
Date, the Redemption Date, and the Final Expiration Date (i) outstanding Rights
will be evidenced (subject to the provisions of paragraph (b) of this Section 3)
by the certificates for outstanding Common Shares of the Company and not by
separate Right Certificates, and (ii) the Rights (and the right to receive Right
Certificates therefore) will be transferable only in connection with the
transfer of Common Shares of the Company. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the Close of Business on the Distribution Date, at the address of such holder
shown on the stock transfer records of the Company, a Right Certificate
evidencing one Right for each Common Share of the Company so held, subject to
adjustment as provided herein. From and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On June 17, 1997, or as soon thereafter as practicable, the Company
will send a copy of a Summary of Rights, by first-class, postage-prepaid mail,
to each record holder of Common Shares of the Company as of the Close of
Business on the Record Date, at the address of such holder shown on the stock
transfer records of the Company. With respect to Common Shares of the Company
outstanding on the Record Date, the certificates evidencing such Common Shares
of the Company shall, together with copies of such Summary of Rights, thereafter
also evidence the outstanding Rights (as such Rights may be amended or
supplemented) distributed with respect thereto until the earlier of the
Distribution Date or the date of surrender thereof to the Company's transfer
agent for registration of transfer or exchange of Common Shares of the Company.
Until the Distribution Date (or, if earlier, the Redemption Date or Final
Expiration Date), the surrender for registration of transfer or exchange of any
certificate for Common Shares of the Company in respect of which Rights have
been issued, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the surrender for registration of transfer or exchange of
the outstanding Rights associated with the Common Shares of the Company
represented thereby.
(c) The Company agrees that, at any time after the Record Date and prior
to the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, at which it issues any of its Common Shares upon original issue
or out of treasury, it will concurrently distribute to the holder of such Common
Shares one Right for each such Common Share.
(d) Certificates for Common Shares of the Company issued after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date, whether upon registration of transfer or exchange of
Common Shares outstanding on the Record Date or upon original issue or out of
treasury thereafter, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
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This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Garden Ridge Corporation
and Chase Mellon Shareholder Services, L.L.C. dated as of June 4, 1997
(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 Garden Ridge Corporation. 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. Garden Ridge Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor. As described in the Rights Agreement, Rights
issued to or acquired by any Acquiring Person or any Affiliate or
Associate thereof (each as defined in the Rights Agreement) shall, under
certain circumstances, become null and void.
With respect to certificates containing the foregoing legend, until the
Distribution Date, outstanding Rights associated with the Common Shares of the
Company represented by such certificates shall be evidenced by such certificates
alone and registered holders of Common Shares of the Company shall also be the
registered holders of the associated Rights, and the surrender of any such
certificate for registration of transfer or exchange of the Common Shares of the
Company evidenced thereby shall also constitute surrender for registration of
transfer or exchange of outstanding Rights (as such Rights may be amended or
supplemented) associated with the Common Shares of the Company represented
thereby.
(e) If the Company purchases or acquires any of its Common Shares after
the Record Date prior to the earliest of the Distribution Date, the Redemption
Date, and the Final Expiration 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 such Common Shares which are no
longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The form of Right Certificates (and
the forms of election to purchase and of assignment to be printed on the reverse
thereof) shall in form and substance be substantially the same as EXHIBIT A
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 on which the Rights may from time to time be listed or as may be
necessary to conform to usage. The Right Certificates shall be in a machine
printable format and in a form reasonably satisfactory to the Rights Agent.
Subject to the provisions of Section 23 hereof, the Right Certificates, whenever
issued, shall be dated as of the date of authentication thereof, but, regardless
of any adjustments of the Purchase Price or the number of Preferred Shares (or
other securities) as to which a Right is exercisable (whether pursuant to this
Agreement or any future amendments or supplements to this Agreement), or both,
occurring after the Record Date and prior to the date of such authentication,
such Right certificates may, on their face, without invalidating or otherwise
affecting any such adjustment, expressly entitle the holders
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<PAGE>
thereof to purchase such number of Preferred Shares at the Purchase Price per
Unit of a Preferred Share as to which a Right would be exercisable if the
Distribution Date were the Record Date; no adjustment of the Purchase Price or
the number of Preferred Shares (or other securities) as to which a Right is
exercisable, or both, effected subsequent to the date of authentication of any
Right Certificate shall be invalidated or otherwise affected by the fact that
such adjustment is not expressly reflected on the face or in the provisions of
such Right Certificate.
Pending the preparation of definitive Right Certificates, the Company may
execute, and upon Company Order the Rights Agent shall authenticate and send, at
the Company's expense, by first-class, insured, postage-prepaid mail to each
record holder of Common Shares of the Company as of the Close of Business on the
Distribution Date, temporary Right Certificates which are printed, lithographed,
typewritten, mimeographed or otherwise produced substantially of the tenor of
the definitive Right Certificates in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Right Certificates may determine, as evidenced by their
execution of such Right Certificates. If temporary Right Certificates are
issued, the Company will cause definitive Right Certificates to be prepared
without unreasonable delay. After the preparation of definitive Right
Certificates, the temporary Right Certificates shall be exchangeable for
definitive Right Certificates, upon surrender of the temporary Right
Certificates at the Corporate Trust Office of the Rights Agent, without charge
to the holder. Upon surrender for cancellation of any one or more temporary
Right Certificates, the Company shall execute and the Rights Agent shall
authenticate and deliver in exchange therefor one or more definitive Right
Certificates, evidencing a like number of Rights. Until so exchanged, the
temporary Right Certificates shall in all respects be entitled to the same
benefits under this Agreement as definitive Right Certificates.
Section 5. EXECUTION, AUTHENTICATION AND DELIVERY. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer, Chief Financial Officer,
or one of its Vice Presidents (including any Executive Vice President or Senior
Vice President), under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Right Certificates may be manual or facsimile.
Right Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Right
Certificates or did not hold such offices at the date of authentication of such
Right Certificates. Any time and from time to time after the execution and
delivery of this Agreement and prior to the Distribution Date, the Company may
deliver Right Certificates executed by the Company to the Rights Agent for
authentication, together with a Company Order for the authentication and
delivery of such Right Certificates; and the Rights Agent in accordance with
such Company Order shall authenticate and deliver such Right Certificates as in
this Agreement provided and not otherwise.
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No Right Certificate shall be entitled to any benefit under this Agreement
or be valid or obligatory for any purpose unless there appears on such Right
Certificate a certificate of authentication substantially in the form provided
for herein executed by the Rights Agent by manual signature of an authorized
signatory, which need not be the same authorized signatory for all of the Right
Certificates, and such certificate upon any Right Certificate shall be
conclusive evidence, and the only evidence, that such Right Certificate has been
duly authenticated and delivered hereunder.
Section 6. REGISTRATION. From and after the Distribution Date and prior to
the earlier of the Redemption Date and the Final Expiration Date, the Company
shall cause to be kept at the Corporate Trust Office of the Rights Agent a
Rights Register (a "Rights Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Right Certificates and of transfers of Rights. The Rights Agent is hereby
appointed the registrar and transfer agent (the "Rights Registrar") for the
purpose of registering Right Certificates and transfers of Rights as herein
provided and the Rights Agent agrees to maintain such Rights Register in
accordance with such regulations so long as it continues to be designated as
Rights Registrar hereunder. Upon surrender to the Rights Agent for registration
of transfer of any Right Certificate, the Company shall execute, and the Rights
Agent shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Right Certificates evidencing a like number of
Rights.
At the option of the holder, Right Certificates may be exchanged for other
Right Certificates upon surrender of the Right Certificates to be exchanged to
the Rights Agent. Whenever any Right Certificates are so surrendered for
exchange, the Company shall execute, and the Rights Agent shall authenticate and
deliver, the Right Certificates which the holder making the exchange is entitled
to receive.
All Right Certificates issued upon any registration of transfer or
exchange of Right Certificates shall be the valid obligations of the Company,
evidencing the same Rights, and entitled to the same benefits under this
Agreement, as the Right Certificates surrendered upon such registration of
transfer or exchange.
Every Right Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Rights Agent)
be duly endorsed, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Rights Registrar duly executed, by the
holder thereof or his attorney duly authorized in writing. No service charge
shall be made for any registration of transfer or exchange of Right
Certificates, but the Company may require payment by the holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Right Certificates,
other than exchanges not involving any transfer.
The provisions of this Section 6 shall be subject to the provisions of
Section 15.
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Section 7. MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES. If
any mutilated Right Certificate is surrendered to the Rights Agent, along with a
signature guarantee and such other and further documentation as the Rights Agent
may reasonably request, the Company shall execute and the Rights Agent shall
authenticate and deliver in exchange therefor a new Right Certificate of like
tenor, for a like number of Rights and bearing a registration number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Rights Agent (i)
evidence to their satisfaction of the destruction, loss or theft of a Right
Certificate and (ii) such security or indemnity, if any, as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Rights Agent that such Right Certificate
has been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Rights Agent shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Right Certificate, a new Right Certificate of like
tenor, for a like number of Rights and bearing a registration number not
contemporaneously outstanding.
Upon the issuance of any new Right Certificate under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
Every new Right Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Right Certificate shall constitute an additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Right Certificate shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Agreement equally and proportionately
with any and all other Right Certificates duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Right Certificates.
Section 8. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at its Corporate Trust
Office, together with payment of the Purchase Price for each Unit of a Preferred
Share (or other securities) as to which the Rights are exercised, prior to the
earliest of (i) the Close of Business on the Final Expiration Date, (ii) the
time of redemption on the Redemption Date and (iii) the time at which such
Rights are mandatorily redeemed and exchanged as provided in Section 25 hereof.
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<PAGE>
(b) The Purchase Price for each Unit of a Preferred Share pursuant to the
exercise of a Right shall initially be Fifty Dollars ($50.00), shall be subject
to adjustment from time to time as provided in Sections 12 and 14 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the securities 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 10 in cash, or by
certified check or cashier's check payable to the order of the Company, together
with such other and further documentation as the Rights Agent may reasonably
require, the Rights Agent shall thereupon promptly (i) requisition from any
transfer agent of the Preferred Shares (or other securities) certificates for
such number of Units of a Preferred Share (or other securities) as are to be
purchased and registered in such name or names as may be designated by the
registered holder of such Right Certificate or, if appropriate, in the name of a
depositary agent or its nominee, and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, (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 15, (iii) promptly after receipt
of such certificates registered in such name or names as may be designated by
such holder, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate and (iv) when appropriate, after
receipt, promptly deliver such cash to or upon the order of such holder.
(d) If the registered holder of the Right Certificate shall exercise less
than all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equal to the Rights remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 15 hereof.
(e) Notwithstanding any other provision of this Agreement, from and after
the occurrence of the Section 12(a)(ii) Event, any Rights that are or were
acquired or beneficially owned by (i) any such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person), (ii) a transferee of any such
Acquiring Person (or of any such Associate or Affiliate of such Acquiring
Person) who becomes a transferee after such Acquiring Person becomes such, or
(iii) a transferee of any such Acquiring Person (or of any such Associate or
Affiliate of such Acquiring Person) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement, or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 8(e), shall be null and void and any holder of such
Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
this Agreement that represents Rights beneficially owned by an Acquiring Person
whose Rights would be null and void pursuant to the preceding sentence or by any
Associate or Affiliate thereof;
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<PAGE>
no Right Certificate shall be issued at any time upon the transfer of any Rights
to an Acquiring Person whose Rights would be null and void pursuant to the
preceding sentence or to any Associate or Affiliate thereof or to any nominee
(acting in its capacity as such) of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be null and void pursuant to the
preceding sentence or to any Associate or Affiliate thereof or to any nominee
(acting in its capacity as such) of such Acquiring Person, Associate or
Affiliate shall be canceled.
Section 9. CANCELLATION 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 any of its agents, be delivered
to the Rights Agent for such purpose and for cancellation or, if surrendered to
the Rights Agent for such purpose, shall be canceled by it. No Right
Certificates shall be authenticated in lieu of or in exchange for any Right
Certificates canceled as provided in this Section 9 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 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 Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 10. AUTHORIZATION OF SHARES. The Company covenants and agrees that
it will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares or any Preferred Shares held in its treasury (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Shares and/or other securities or out of its
authorized and issued shares held in its treasury), the number of Preferred
Shares (and, following the occurrence of a Triggering Event, Common Shares
and/or other securities) that will be sufficient to permit the exercise of
outstanding Rights pursuant to the adjustments set forth in Section 12(a)(ii) or
Section 14 or otherwise until such time as the Rights become exercisable.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that each Unit of a Preferred Share (and, following the
occurrence of a Triggering Event, the Common Shares and/or other securities)
issued upon exercise of Rights shall (subject to payment of the Purchase Price)
be duly authorized, validly issued, fully paid and nonassessable. 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 certificates for a number
of Units of a Preferred Share upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable (i) in
respect of any transfer or delivery of Right Certificates to a Person other than
the registered holder of the Right Certificate evidencing Rights surrendered for
transfer or exercise, or (ii) in respect of the issuance or delivery of
certificates for a number of Units of a Preferred Share upon exercise of Rights
evidenced by Right Certificates in a name other than that of the registered
holder of the Right Certificate evidencing Rights surrendered for transfer or
exercise. Neither shall the Company be required to issue or deliver any
certificates for Preferred Shares of the Company upon the exercise
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of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender
thereof) or until it has been established to the Company's satisfaction that no
such tax is due.
Section 11. RECORD DATE. Each Person in whose name any certificate for a
number of Units of a Preferred Share is issued upon the exercise of, or upon
mandatory redemption and exchange of, Rights shall for all purposes be deemed to
have become the holder of record of the Preferred Shares represented thereby on,
and such certificate shall be dated, (i) in the case of the exercise of Rights,
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, or (ii) in the case of the mandatory redemption and exchange of
Rights, the date of such mandatory redemption and exchange; PROVIDED, HOWEVER,
that, if the date of such surrender and payment or mandatory redemption and
exchange is a date upon which the transfer books of the Company for its
Preferred Shares (or Common Shares and/or other securities, as the case may be)
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 such transfer books of the Company are open. Prior to the exercise of
(or the mandatory redemption and exchange of) the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a
stockholder of the Company for which the Rights shall be exercisable, including
without limitation, the rights to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 12. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number and kind of shares of capital stock of
the Company covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 12.
(a) (i) If the Company shall at any time (A) declare a dividend on any
outstanding Preferred Shares payable in Preferred Shares, (B) subdivide any
outstanding Preferred Shares, (C) combine any outstanding Preferred Shares into
a smaller number of Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 12(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 thereafter shall be entitled to receive, upon
payment of the Purchase Price for which a Right was exercisable immediately
prior to such date, the aggregate number and kind of shares of capital stock
which, if such Right had been duly exercised immediately prior to such date (at
a time when the transfer books of the Company were open), such holder would have
acquired upon such exercise and been entitled to receive upon payment or
effectuation of such dividend, subdivision, combination or reclassification. If
an event occurs which would require an adjustment under both Section 12(a)(i)
and Section 12(a)(ii), the
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adjustment provided for in this Section 12(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 12(a)(ii).
(ii) Subject to action of the Board of Directors of the Company pursuant
to Section 25 of this Agreement, if any Person shall become an Acquiring Person,
each Right will no longer represent the right to purchase Preferred Shares of
the Company, and each holder of a Right shall thereafter only have a right to
receive, upon exercise thereof at a price equal to the then current Purchase
Price, in accordance with the terms of this Agreement, such number of Common
Shares of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of Units of a Preferred Share for
which a Right is then exercisable, and (y) dividing that product by fifty
percent (50%) of the then current per share market price of the Common Shares
(determined pursuant to Section 12(d)) on the date such Person became an
Acquiring Person. If any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.
(iii) In the event that there shall not be sufficient issued but not
outstanding, or authorized but unissued, Common Shares to permit the exercise or
exchange in full of all outstanding Rights in accordance with the foregoing
subparagraph (ii) or Section 25, the Company covenants that it shall take such
action as shall be necessary to ensure and provide, to the extent permitted by
applicable law and any agreements or instruments in effect on the Shares
Acquisition Date to which the Company is a party, that each Right shall
thereafter constitute the right to receive, in the Company's discretion, either
(A) in return for the Purchase Price, debt or equity securities (including, in
the Company's discretion, any available Common Shares) or other assets (or a
combination thereof) having a fair value equal to twice the Purchase Price, or
(B) if the Company elects to exchange the Rights in accordance with Section 25,
debt or equity securities (including, in the Company's discretion, any available
Common Shares) or other assets (or a combination thereof) having a fair value
equal to the product of the current per share market price of a Preferred Share
as of the Shares Acquisition Date (determined pursuant to Section 12(d))
multiplied by the number of Preferred Shares that the holder of the Rights would
be entitled to receive from the Company in mandatory redemption of, and in
exchange for, the outstanding Rights pursuant to Section 25, where in any case
set forth in (A) or (B) above the fair value of such debt or equity securities
or other assets shall be as determined in good faith by the Board of Directors
of the Company, after consultation with a nationally recognized investment
banking firm.
(b) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares (or shares having the same rights privileges and
preferences as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into or exchangeable for Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(together with any additional consideration required upon conversion or exchange
in the case of a security convertible into or exchangeable for Preferred Shares
or equivalent preferred shares), less than the then current per share market
price of the Preferred Shares (determined pursuant to Section 12(d) on such
record date), the Purchase Price to
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<PAGE>
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 Preferred Shares outstanding on
such record date plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares and/or equivalent
preferred shares so to be offered (together with the aggregate of any additional
consideration required upon conversion or exchange in the case of any
convertible or exchangeable securities so to be offered) would purchase at such
current per share market price of the Preferred Shares and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into or for which the
convertible or exchangeable securities so to be offered are initially
convertible or exchangeable). In case all or part of such subscription or
purchase price may be paid 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. Preferred Shares owned by or held for the account of the
Company or any of its Subsidiaries shall not be deemed outstanding for the
purpose of any computation described in this Section 12(b). The adjustment
described in this Section 12(b) shall be made successively whenever such a
record date is fixed; and, if no such rights, options or warrants are 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) If the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Common Shares) or subscription rights or warrants (excluding those referred to
in Section 12(b)), 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 Preferred Shares (determined pursuant
to Section 12(d)) 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 Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares. Such adjustments shall be made successively whenever such a
record date is fixed; and, if 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) For the purpose of any computation hereunder, the "current per
share market price" of the Common Shares on any date shall be deemed to be the
average of the daily Closing Prices per share of such Common Shares for the 30
consecutive Trading Days immediately prior to such date; PROVIDED, HOWEVER,
that, if the issuer of such Common Shares shall announce (A) a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares or (B) any subdivision, combination or
reclassification of such Common
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Shares, and the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, shall occur
during such period of 30 Trading Days, then, and in each such case, the current
per share market price of the Common Shares shall be appropriately adjusted to
reflect the current market price per Common Share equivalent.
(ii) For the purpose of any computation hereunder, the "current per share
market price" of the Preferred Shares shall be determined in the same manner as
set for the Common Shares in clause (i) of this Section 12(d). If the current
per share market price of the Preferred Shares cannot be determined in the
manner provided above or if the Preferred Shares are not publicly held or listed
or traded in a manner described in clause (i) of this Section 12(d), the
"current per share market price" of the Preferred Shares shall be conclusively
deemed to be an amount equal to 1000 (as such number shall be appropriately
adjusted for such events as stock splits, stock dividends, and recapitalizations
with respect to the Common Shares occurring after the date hereof) multiplied by
the current per share market price of the Common Shares. For all purposes of
this Agreement, the current per share market price of one one-thousandth
(1/1000th) of a Preferred Share shall be equal to one Preferred Share divided by
1000.
(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
12(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 12
shall be made to the nearest cent or to the nearest ten-thousandth of a Common
Share or other share, as the case may be, and references herein to the "number
of Preferred Shares" (or similar phrases) shall be construed to include
fractions of a Preferred Share. Notwithstanding the first sentence of this
Section 12(e), any adjustment required by this Section 12 shall be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment and (ii) the thirtieth day preceding the Final
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 12(a), the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares contained
in this Section 12, and the provisions of this Agreement, including without
limitation, Sections 8, 10, 11 and 14, with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall, whether or not the Right
Certificate evidencing such Rights reflects such adjusted Purchase Price,
evidence the right to purchase, at the adjusted Purchase Price, the number of
Units of a Preferred Share purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
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(h) Unless the Company shall have exercised its election as provided in
Section 12(i), upon each adjustment of the Purchase Price pursuant to Section
12(b) or 12(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price per Unit of a Preferred Share, that number of Units of a
Preferred Share obtained by first multiplying the number of Units of a Preferred
Share covered by a Right immediately prior to this adjustment by the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
second, dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights outstanding in lieu of any
adjustment in the number of Units of a Preferred Share purchasable upon the
exercise of a Right. Each Right outstanding after such adjustment of the number
of Rights shall be exercisable for the number of Units of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment of the
Purchase Price. 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
ten-thousandth) 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, along with simultaneous written notice to the Rights Agent,
of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have been issued, shall be
at least 10 days later than the date of the public announcement. Until such
record date, however, any adjustment in the number of Units of a Preferred Share
for which a Right shall be exercisable made as required by this Agreement shall
remain in effect. If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 12(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 15 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 authenticated 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 Units of a Preferred Share issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of Units of a Preferred Share which were
expressed in the initial Right Certificates issued hereunder.
(k) In any case in which this Section 12 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
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occurrence of such event the issuance to the holder of any Right exercised after
such record date of the Preferred Shares or other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the Preferred
Shares or 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 securities upon the occurrence of the event requiring
such adjustment.
(l) Anything in this Section 12 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 12, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) combination or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any of the Preferred Shares at less than the current
market price, (iii) issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
(iv) dividends payable in Preferred Shares or (iv) issuance of rights, options
or warrants referred to in subsection (b) of this Section 12, hereafter effected
by the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(m) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time prior to the Distribution Date (i)
declare a dividend on the outstanding Common Shares payable in Common Shares,
(ii) subdivide the outstanding Common Shares, (iii) combine the outstanding
Common Shares into a smaller number of shares or (iv) otherwise reclassify the
outstanding Common Shares, the number of Rights associated with each Common
Share then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionally 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 "Adjustment
Fraction"), the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event. In lieu of such adjustment
in the number of Rights associated with one Common Share, the Company may elect
to adjust the number of Units of a Preferred Share purchasable upon the exercise
of one Right and the Purchase Price. If the Company makes such election, the
number of Rights associated with one Common Share shall remain unchanged, and
the number of Units of a Preferred Share purchasable upon exercise of one Right
and the Purchase Price shall be proportionally adjusted so that (i) the number
of Units of a Preferred Share purchasable upon exercise of a Right following
such adjustment shall equal the product of the number of Units of a Preferred
Share purchasable upon exercise of a Right immediately prior to such adjustment
multiplied by the Adjustment Fraction, and (ii) the Purchase Price following
such adjustment shall equal the product of the Purchase Price immediately prior
to such adjustment multiplied by the Adjustment Fraction.
Section 13. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 12 or 14 hereof, the
Company shall (a) promptly prepare
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a certificate setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Shares of the Company a copy of such
certificate and (c) mail a brief summary thereof to each holder of record of a
Right Certificate in accordance with Section 28 hereof.
Section 14. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. If, directly or indirectly, (a) the Company shall consolidate with, or
merge with and into, any other Person, (b) any Person shall merge with and into
the Company and the Company shall be the continuing or surviving corporation of
such merger and, in connection with any such merger, all or part of the
Preferred Shares of the Company shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other
property, or (c) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or a series of two or
more transactions, assets of the Company or its Subsidiaries which constitute
more than 50% of the assets or which produce more than 50% of the earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or any
Affiliate or Associate of such Person other than the Company or one or more of
its Wholly Owned Subsidiaries, then, and in each such case, the Company agrees
that, as a condition to engaging in any such transaction, it will make or cause
to be made proper provision so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable and freely tradeable
Common Shares of such other Person (including the Company as successor thereto
or as the surviving corporation) or, if such other Person is a Subsidiary of
another Person, of the Person or Persons (other than individuals) which
ultimately control such first-mentioned Person, as shall be equal to the result
obtained by first multiplying the then current Purchase Price by the number of
Units of a Preferred Share for which a Right is then exercisable (without taking
into account any adjustment previously made pursuant to Section l2(a)(ii)), and
second dividing that product by fifty percent (50%) of the current per share
market price of the Common Shares of such other Person (determined pursuant to
Section 12(d)) on the date of consummation of such consolidation, merger, sale
or transfer; (ii) the issuer of such Common Shares shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company," as used herein, shall thereafter be deemed
to refer to such issuer; and (iv) such issuer shall take such steps in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Preferred Shares thereafter deliverable upon the exercise
of the Rights. The Company shall not enter into any transaction of the kind
referred to in this Section 14 if at the time of such transaction there are
outstanding any rights, warrants, instruments or securities or any agreement or
arrangements which, as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent an agreement supplemental to
this Agreement complying with the provisions of this Section 14. The provisions
of this Section 14 shall similarly apply to successive mergers or consolidations
or sales or other transfers. For the purposes of this Section 14, 50% of the
assets of
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the Company and its Subsidiaries shall be determined by reference to the book
value of such assets as set forth in the most recent consolidated balance sheet
of the Company and its Subsidiaries (which need not be audited) and 50% of the
earning power of the Company and its Subsidiaries shall be determined by
reference to the mathematical average of the operating income resulting from the
operations of the Company and its Subsidiaries for the two most recent full
fiscal years as set forth in the consolidated and consolidating financial
statements of the Company and its Subsidiaries for such years; PROVIDED;
HOWEVER, that if the Company has, during such period, engaged in one or more
transactions to which purchase accounting is applicable, such determination
shall be made by reference to the pro forma operating income of the Company and
its Subsidiaries giving effect to such transactions as if they had occurred at
the commencement of such two-year period.
Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue or distribute Right
Certificates which evidence fractional Rights. If, on the Distribution Date or
thereafter, as a result of any adjustment effected pursuant to Section 12(i) or
otherwise hereunder, a Person would otherwise be entitled to receive a Right
Certificate evidencing a fractional Right, the Company shall, in lieu thereof,
pay or cause to be paid to such Person an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purposes of this
Section 15(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.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
(1/1000th) of a Preferred Share) upon exercise of the Rights or to distribute
scrip or certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth (1/1000th) of a
Preferred Share). If, on the Distribution Date or thereafter, a Person would
otherwise be entitled to receive a fractional Preferred Share (other than
fractions which are integral multiples of one one-thousandth (1/1000th) of a
Preferred Share), the Company shall, in lieu thereof, pay to such Person at the
time such Right is exercised as herein provided an amount in cash equal to the
same fraction (which is not an integral multiple of one one-thousandth
(1/1000th) of a Preferred Share) of the current market value of one Preferred
Share. For purposes of this Section 15(b), the current market value of a
Preferred Share shall be Closing Price of a Common Share for the Trading Day
immediately prior to the date of such exercise.
(c) Should any adjustment contemplated by Section l2(a)(ii) or any
mandatory redemption and exchange contemplated by Section 25 occur, the Company
shall not be required to issue fractions of Preferred Shares upon exercise of
the Rights or to distribute scrip or certificates which evidence fractional
Preferred Shares. If after any such adjustment or mandatory redemption and
exchange, a Person would otherwise be entitled to receive a fractional Preferred
Share of the Company upon exercise of any Right Certificate or upon mandatory
redemption and exchange as contemplated by Section 25, the Company shall, in
lieu thereof, pay to such Person at the time such Right is exercised as herein
provided or upon such mandatory redemption and exchange an amount
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in cash equal to the same fraction of the Closing Price of a Common Share for
the Trading Day immediately prior to the date of such exercise or the date of
such mandatory redemption and exchange.
(d) The holder of a Right by the acceptance thereof expressly waives his
right to receive any fractional Rights or any fractional shares upon exercise or
mandatory redemption and exchange of a Right (except as provided above).
Section 16. RIGHTS OF ACTION.
(a) All rights of action in respect of the obligations and duties owed to
the holders of the Rights under this Agreement are vested in the registered
holders of the Rights; and, without the consent of the Rights Agent or of the
holder of any other Rights, any registered holder of any Rights may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding, judicial or otherwise, against the Company to
enforce, or otherwise to act in respect of, such holder's right to exercise such
Rights in the manner provided in the Right Certificate evidencing such Rights
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.
(b) No right or remedy herein conferred upon or reserved to the registered
holder of Rights is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy, whether hereunder or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
(c) No delay or omission of any registered holder of Rights to exercise
any right or remedy accruing hereunder shall impair any such right or remedy or
constitute a waiver of any default hereunder or an acquiescence therein. Every
right and remedy given hereunder or by law, to such holders may be exercised
from time to time, and as often as may be deemed expedient, by such holders.
Section 17. 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 of the Company;
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<PAGE>
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the Corporate
Trust Office of the Rights Agent duly endorsed or accompanied by a proper
instrument of transfer, along with such other and further documentation as the
Rights Agent may reasonably request;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common 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 associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes, and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; PROVIDED that the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Right (whether or not then evidenced by a Right Certificate)
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of Preferred Shares of the Company or any other securities of the Company
which may at any time be issuable on the exercise (or mandatory redemption and
exchange) of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon any such holder, as
such, any of the rights of a stockholder of the Company, including without
limitation, any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, to give or withhold consent to
any corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 26) or to receive dividends or
subscription rights until the Right or Rights evidenced by such Right
Certificate shall have been exercised (or mandatorily redeemed and exchanged) in
accordance with the provisions hereof.
Section 19. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to the
Rights Agent such compensation as shall be agreed to in writing between the
Company and the Rights Agent 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 expenses 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
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against any claim of liability in the premises. In no case will the Rights Agent
be liable for special, indirect, incidental 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 possibility of such loss or damage.
The Rights Agent shall be protected and shall incur no liability for, or
in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Shares of the Company or other securities of the Company,
Company Order, 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
executed by the proper Person or Persons and, where necessary, verified or
acknowledged, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
The provisions of this Section 19 shall survive the expiration of the
Rights and the termination of this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations expressly imposed by this Agreement, and no implied duties or
obligations shall be read into this Agreement against the Rights Agent, upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its selection (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 any one of the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent, and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company or 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 authentication thereof)
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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 have any responsibility with respect to the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or with respect to the validity or
execution of any Right Certificate (except its authentication 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 l2(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 12, 14, 24 and 25, or the ascertainment 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 actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares, Common Shares, or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Shares, Common Shares, or other securities will,
when issued, be duly authorized, validly issued, fully paid and nonassessable;
nor shall the Rights Agent be responsible for the legality of the terms hereof
in its capacity as an administrative agent.
(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
one of the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant 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 to be taken 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 such
application on or after the date specified in such application (which date shall
not be less than three Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to any 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.
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(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company.
(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, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss of the Company resulting from any such act,
omission, 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 that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the portion of the form of assignment or form of
election to purchase (as the case may be) certifying that the Rights are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof
has not been completed or indicates that such Rights are beneficially owned by
such Person, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without the written consent of the Company.
(l) In addition to the foregoing, the Rights Agent shall be protected and
shall incur no liability for, or in respect of, any action taken or omitted by
it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to exercise attached to any Right Certificate unless the Rights
Agent shall have actual knowledge that, as executed, such certification is
untrue, or (ii) the non-execution of such certification including, without
limitation, any refusal to honor any otherwise permissible assignment or
election by reason of such non-execution.
(m) The Company agrees to give the Rights Agent prompt written notice of
any event or ownership which would prohibit the exercise or transfer of the
Right Certificates.
Section 21. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust business
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights
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Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 22. If at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right Certificates
shall have been authenticated but not delivered, any such successor Rights Agent
may adopt the authentication of the predecessor Rights Agent and deliver such
Right Certificates so authenticated, and, if at that time any of the Right
Certificates shall not have been authenticated, any successor Rights Agent may
authenticate 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.
If at any time the name of the Rights Agent shall be changed and at such
time any of the Right Certificates shall have been authenticated but not
delivered, the Rights Agent may adopt the authentication under its prior name
and deliver Right Certificates so authenticated; and, in case at that time any
of the Right Certificates shall not have been authenticated, the Rights Agent
may authenticate 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 22. 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 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, by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. Notwithstanding the foregoing provisions of this
Section 22, in no event shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been appointed and accepted
such appointment. 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 registered holder of a Right Certificate
(or, prior to the Distribution Date, of Common Shares), then the Rights Agent or
any registered holder of a Right Certificate (or, prior to the Distribution
Date, of Common Shares) 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 either (A) a corporation organized
and doing business under the laws of the United States or of any state of the
United States, in good standing, authorized under such laws to exercise
corporate trust or stock transfer powers, and subject to supervision or
examination by federal or state authority and which has at the time of its
appointment a Rights Agent as combined capital and surplus of at least $50
million or (B) an affiliate of such a corporation. 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
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<PAGE>
effective date of any such appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent for the
Company and mail a notice thereof in writing to the registered holders of the
Right Certificates. Failure to give any notice provided for in this Section 22,
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 23. 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 form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of shares or other
securities purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 24. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of Directors of the
Company pursuant to paragraph (b) of this Section 24, or may be redeemed and
exchanged by action of the Board of Directors of the Company pursuant to Section
25 herein, but shall not be redeemed in any other manner.
(b) The Board of Directors of the Company may at its option, at any time
prior to the time any Person becomes an Acquiring Person redeem all but not less
than all the then outstanding Rights at a redemption price of one cent ($0.0l)
per Right then outstanding, appropriately adjusted to reflect any adjustment in
the number of Rights outstanding pursuant to Section 12(i) herein (such
redemption price being hereinafter referred to as the "Redemption Price"). Any
such redemption of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish, PROVIDED, however that no such authorization
may occur for a period of ninety (90) days after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the Directors in office
at the commencement of such solicitation, PROVIDED, FURTHER, that if any Person
who is or was a participant in such solicitation has stated (or if upon the
commencement of such solicitation, a majority of the Board of Directors of the
Company has determined in good faith) that such Person (or any of its Affiliates
or Associates) has taken or intends to take, or may consider taking, any action
that would result in such Person becoming an Acquiring Person, then the Rights
may be so redeemed only if there are Continuing Directors (as hereinafter
defined) in office and such redemption is authorized by a majority of such
Continuing Directors. "Continuing Director" shall mean (i) any member of the
Board of Directors of the Company who, while such Person is a member of the
Board is not an Acquiring Person, or an Affiliate or an Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board prior to the Record Date,
or (ii) any Person who subsequently becomes a member of the Board who, while
such Person is a member of the Board, is not an Acquiring Person, or an
Affiliate or an Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate,
28
<PAGE>
if such Person's nomination for election or election to the Board is recommended
or approved by a majority of the Continuing Directors.
(c) The right of the registered holders of Right Certificates to exercise
the Right evidenced thereby or, if the Distribution Date has not theretofore
occurred, the inchoate right of the registered holders of Rights to exercise the
same shall, without notice to such holders or to the Rights Agent and without
further action, terminate and be of no further force or effect effective as of
the time of adoption by the Board of Directors of the Company of a resolution
authorizing and directing the redemption of the Rights pursuant to paragraph (b)
of this Section 24 (or, alternatively, if the Board of Directors qualified such
action as to time, basis or conditions, then at such time, on such basis and
with such conditions as the Board of Directors may have established pursuant to
such paragraph (b)); thereafter, the only right of the holders of Rights shall
be to receive the Redemption Price. The Company shall promptly give public
notice of any redemption resolution pursuant to paragraph (b) of this Section
24; 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
the adoption of any redemption resolution pursuant to paragraph (b) of this
Section 24, the Company shall give notice of such redemption to the Rights Agent
and to the holders of the then outstanding Rights by mailing such notice to all
such holders 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 agents 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.
(d) Neither the Company nor any of its Affiliates or Associates may
acquire (other than, in the case of such Affiliates and Associates, in their
capacity as holders of Common Shares of the Company), redeem or purchase for
value any Rights at any time in any manner other than as specifically set forth
in this Section 24 or in Section 25 herein, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
Section 25. MANDATORY REDEMPTION AND EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, issue Preferred Shares or Common
Shares of the Company in mandatory redemption of, and in exchange for, all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
l2(a)(ii) hereof) at an exchange ratio of one Unit of a Preferred Share or one
Common Share for each Right which is then exercisable pursuant to the provisions
of Section l2(a)(ii) hereof. Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such redemption and exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any such Subsidiary, or any
trustee of or fiduciary with respect to any such plan when acting in such
capacity), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Voting Shares then outstanding.
29
<PAGE>
(b) Immediately upon the action of the Board of Directors of the Company
ordering the mandatory redemption and exchange of any Rights pursuant to
subsection (a) of this Section 25, (which action may be conditioned on the
occurrence of one or more events or on the existence of one or more facts or may
be effective at some future time) 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 such number of
Preferred Shares or Common Shares as is provided in paragraph (a) of this
Section 25. The Company shall promptly give public notice of any such redemption
and exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in,
such notice shall not affect the validity of such redemption and exchange. The
Company promptly shall mail a notice of any such redemption and exchange to the
Rights Agent and to all the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of mandatory redemption and
exchange shall state the method by which the redemption and exchange of the
Preferred Shares or Common Shares for Rights will be effected and, in the event
of any partial redemption and exchange, the number of Rights which will be
redeemed and exchanged. Any partial redemption and exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become null
and void pursuant to the provisions of Section l2(a)(ii) hereof) held by each
holder of Rights.
Section 26. NOTICE OF CERTAIN EVENTS. If the Company shall, on or after
the Distribution Date, propose (a) to pay any dividend or other distribution
payable in stock of any class of the Company or any Subsidiary of the Company to
the holders of its Preferred Shares, (b) to offer to the holders of its
Preferred Shares rights, options or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights, options or warrants, (c) to make any other distribution to
the holders of its Preferred Shares (other than a regular quarterly cash
dividend), (d) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (e) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries
(determined as provided in Section 14 herein) to, any other Person (other than
the Company or a Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries), (f) to
effect the liquidation, dissolution or winding up of the Company or (g) if the
Rights have theretofore become exercisable with respect to Common Shares
pursuant to Section l2(a)(ii) herein, to declare or pay any dividend or other
distribution on the Common Shares payable in Common Shares or in stock of any
other class of the Company or any Subsidiary of the Company or to effect a
subdivision or combination of the Preferred Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) then, in each such
case, the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 28 hereof, notice of such proposed
action, which shall specify the date of authorization by the Board of Directors
of the Company of, and record date for, such stock dividend or such distribution
of rights or warrants or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, winding up, subdivision or
combination is to take place and the date of participation therein by the
holders of the Preferred Shares of the Company if any such date is to be
30
<PAGE>
fixed. Such notice shall be so given in the case of any action covered by clause
(a), (b), (c) or (g) above at least 20 days prior to the record date for
determining holders of the Preferred Shares of the Company, for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Preferred Shares of the Company, whichever shall be the
earlier.
If any of the events set forth in Section l2(a)(ii) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right Certificate,
in accordance with Section 28 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section l2(a)(ii) hereof.
Section 27. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Garden Ridge Corporation
19411 Atrium Place, Suite 170
Houston, Texas 77084-6094
Attn: Secretary
Any notice or demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:
Chase Mellon Shareholder Services, L.L.C.
2323 Bryan Street, Suite 2300
Dallas, Texas 75201
Attn: David Cary
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 Rights
Register of the Company or, prior to the Distribution Date, on the stock
transfer records for the Common Shares of the Company.
Section 29. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement (which supplement or amendment shall be
evidenced by a writing signed by the Company and the Rights Agent) without the
approval of any holders of Right Certificates in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, to make any other provisions in
regard
31
<PAGE>
to matters or questions arising hereunder, or to add, delete, modify or
otherwise amend any provision, which the Company may deem necessary or
desirable, including without limitation, extending the Final Expiration Date
and, provided that at the time of such amendment or supplement the Distribution
Date has not occurred, the period during which the Rights may be redeemed;
PROVIDED, HOWEVER, that, from and after such time as any Person becomes an
Acquiring Person, any such amendment shall not materially and adversely affect
the interests of the holders of Right Certificates. Without limiting the
foregoing, the Board of Directors of the Company may by resolution, adopted at
any time prior to such time as any Person becomes an Acquiring Person, amend
this Agreement to lower the threshold set forth in the definitions of Acquiring
Person and Distribution Date herein to a percentage not less than the greater of
(i) any percentage greater than the largest percentage of the outstanding Voting
Shares then known to the Company to be beneficially owned by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any trustee of or fiduciary
with respect to any such plan when acting in such capacity), and (ii) 10%.
Notwithstanding any other provision hereof, the Rights Agent's consent
must be obtained regarding any amendment or supplement pursuant to this Section
29 which alters the Rights Agent's rights or duties.
Section 30. 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 31. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights.
Section 32. 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 33. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State, provided, however, that the rights and
obligations of the Rights Agent shall be governed by and construed in accordance
with the State of New York.
Section 34. 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 but one and
the same instrument.
32
<PAGE>
Section 35. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
GARDEN RIDGE CORPORATION
Attest:
By: /s/ JANE L. ARBUTHNOT By: /s/ JACK E. LEWIS
Title: Chief Financial Officer Title: President
CHASE MELLON SHAREHOLDER
SERVICES, L.L.C., As Rights Agent
Attest:
By: /s/ STACY A. PECK By: /s/ DAVID M. CARY
Title: Relationship Manager Title: Relationship Manager
33
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- _______________ Rights
NOT EXERCISABLE AFTER JUNE 3, 2007 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED
IN SECTION 1 OF THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.
GARDEN RIDGE CORPORATION
This certifies that ______________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of June 4, 1997 (the "Rights Agreement"), between
Garden Ridge Corporation, a Delaware corporation (the "Company"), and Chase
Mellon Shareholder Services, L.L.C. (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 the Final Expiration Date (as such term is
defined in the Rights Agreement), at the Corporate Trust Office of the Rights
Agent (or at the office of its successor as Rights Agent), one Unit (as that
term is defined in the Rights Agreement, initially being one one-thousandth
(1/1000th)) of a fully paid nonassessable Series A Junior Participating
Preferred Share, having a par value of $0.01 (the "Preferred Shares"), of the
Company, at a purchase price of Fifty Dollars ($50.00) per Unit of a Preferred
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 Right Certificate (and the number of Units of a
Preferred 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
June 17, 1997, based on the Preferred Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of Units of
a Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
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
<PAGE>
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 Corporate Trust Office of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the Corporate Trust office of the Rights Agent, 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
Preferred 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
$0.01 per Right or (ii) may be exchanged by the Company in whole or in part for
Preferred Shares or Common Shares of the Company.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth (1/1000th) of a Preferred Share), but in lieu
thereof a cash payment will be made as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any manner submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be entitled to any benefit under the
Rights Agreement or be valid or obligatory for any purpose until it shall have
been authenticated by the Rights Agent.
<PAGE>
WITNESS the facsimile signatures of the proper officers of the Company and
is corporate seal.
Dated as of
ATTEST: GARDEN RIDGE CORPORATION
_______________________ By: _______________________
Secretary President
Date of Authentication:
This is one of the Right Certificates referred to in the within-mentioned
Rights Agreement.
Chase Mellon Shareholder Services, L.L.C., as Rights Agent
By: __________________________
Authorized Signatory
<PAGE>
[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)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated as of ___________,_________.
__________________________
Signature
Signature Guarantee:
Signatures must be guaranteed.
________________________________________________________________________________
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
__________________________
Signature
<PAGE>
[Form of Reverse Side of Right Certificate--continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
TO GARDEN RIDGE CORPORATION:
The undersigned hereby irrevocably elects to exercise Rights represented
by this Right Certificate to purchase the Preferred Shares (or other securities
issuable upon the exercise of such Rights) and requests that certificates for
such Preferred Shares (or other securities) be issued in the name of:
Please insert social security or other identifying number: _____________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights 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)
________________________________________________________________________________
Date as of _____________, _____________.
____________________________
Signature
<PAGE>
[Form of Reverse Side of Right Certificate - continued]
Signature Guaranteed:
Signatures must be guaranteed.
________________________________________________________________________________
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
________________________________
Signature
The signature in the foregoing Form of Assignment or Form of Election to
Purchase 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, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
<PAGE>
EXHIBIT B
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
GARDEN RIDGE CORPORATION
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
GARDEN RIDGE CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Restated Certificate of Incorporation of
the said Corporation, the said Board of Directors on June 3, 1997 adopted the
following resolution creating a series of 100,000 shares of Preferred Stock
designated as "Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of the
Restated Certificate of Incorporation, a series of Preferred Stock, par
value $.01 per share, of the Corporation 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 JUNIOR PARTICIPATING PREFERRED STOCK
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock that
shall be designated as "Series A Junior Participating Preferred Stock," and the
number of shares constituting such series shall be 100,000. 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 shares of Series
A Junior Participating Preferred Stock 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 Corporation.
2. DIVIDENDS AND DISTRIBUTIONS.
a. Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating
<PAGE>
Preferred Stock, in preference to the holders of shares of any class or series
of stock of the Corporation ranking junior to the Series A Junior Participating
Preferred Stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the 15th day of March, June, September and December
of each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10 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
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, par
value $.01 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. The
"Adjustment Number" shall initially be 1,000. In the event the Corporation shall
at any time after June 3, 1997 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock 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 shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
b. The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in Paragraph A above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the net
subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
c. Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock 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
<PAGE>
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Junior Participating
Preferred Stock shall have the following voting rights:
a. Each share of Series A Junior Participating Preferred Stock shall
entitled the holder thereof to a number of votes equal to the Adjustment Number
on all matters submitted to a vote of the stockholders of the Corporation.
b. Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
c. i. If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of period (herein called a "default period") that shall extend until such time
when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each such default period, all holders
of Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) upon which these or like voting rights have been conferred and
are exercisable (the "Voting Preferred Stock") with dividends in arrears in an
amount equal to six quarterly dividends thereon, voting as a class, irrespective
of series, shall have the right to elect two Directors.
ii. During any default period, such voting rights of the
holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3.C or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting right nor the right
of the holders of any other series of Voting Preferred Stock, if any, to
increase, in certain cases, the authorized number of Directors shall be
exercised unless the holders of ten percent in number of shares of Voting
Preferred Stock outstanding shall be present in person or by proxy. The absence
of a quorum of the holders of Common Stock shall not affect the exercise by the
holders of Voting Preferred Stock of such voting right. At any meeting at which
the holders of Voting Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two Directors, or, if such right is exercised at an annual
meeting, to elect two Directors. If the
<PAGE>
number that may be so elected at any special meeting does not amount to the
required number, the holders of the Voting Preferred Stock shall have the right
to make such increase in the number of Directors as shall be necessary to permit
the election of them of the required number. After the holders of the Voting
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not e increased or decreased except by vote of the holders of
Voting Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or PARI PASSU with the Series A Junior
Participating Preferred Stock.
iii. Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent of the total
number of shares of Voting Preferred Stock outstanding, irrespective of series,
may request the calling of a special meeting of the holders of Voting Preferred
Stock, which meeting shall thereupon be called by the Chairman of the Board, the
President, a Vice President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Voting Preferred Stock are
entitled to vote pursuant to this paragraph C(iii) shall be given to each holder
of record of Voting Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and not later than
60 days after such order or request or, in default of the calling of such
meeting within 60 days after such order or request, such meeting may be called
on similar notice by any stockholder or stockholders owning in the aggregate not
less than ten percent of the total number of shares of Voting Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph C(iii), no such
special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
iv. In any default period, the holders of Common Stock, and
other classes of stock of the Corporation, if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Voting
Preferred Stock shall have exercised their right to elect two Directors voting
as a class, after the exercise of which right (x) the Directors so elected by
the holders of Voting Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the expiration of
the default period, and (y) any vacancy in the Board of Directors may (except as
provided in paragraph C(ii) of this Section 3) be filled by vote of a majority
of the remaining Directors theretofore elected by the holders of the class of
stock which elected the Director whose office shall have become vacant.
References in this paragraph C to Directors elected by the holders of a
particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
v. Immediately upon the expiration of a default period, (x)
the right of the holders of Voting Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the Restated Certificate of
Incorporation or Bylaws irrespective of any increase made pursuant to the
provisions of paragraph
<PAGE>
C(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the Restated Certificate of
Incorporation of Bylaws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by
a majority of the remaining Directors.
d. Except as set forth herein, holders of Series A Junior
Participating Preferred Stock 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 Stock 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 Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
i. declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
ii. declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series A
Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
iii. redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Series A Junior Participating
Preferred Stock; or
iv. redeem or purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
<PAGE>
b. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Paragraph A of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
5. REACQUIRED SHARES. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock 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 (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) the Adjustment Number. Following the payment of
the full amount of the Series A Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate shares of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and
Common Stock, on a per share basis, respectively.
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 series of Preferred Stock, if any, that
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratable to the holders of Common Stock.
7. CONSOLIDATION, MERGER, ETC. In the case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any
<PAGE>
such case the shares of Series A Junior Participating Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per share equal to
the Adjustment Number times the aggregate amount of stock, securities, cash/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged.
8. REDEMPTION. The shares of the Series A Junior Participating Preferred
Stock shall not be redeemable.
9. RANKING. The Series A Junior Participating Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
10. AMENDMENT. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
11. FRACTIONAL SHARES. Series A Junior Participating Preferred Stock 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 Junior Participating Preferred Stock.
IN WITNESS WHEREOF, the undersigned have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this 9th day of June, 1997.
GARDEN RIDGE CORPORATION
By: /s/ JACK E. LEWIS
Jack E. Lewis
President
Attest:
/s/ JANE L. ARBUTHNOT
Secretary
<PAGE>
EXHIBIT C
GARDEN RIDGE CORPORATION
STOCKHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On June 3, 1997, the Board of Directors of Garden Ridge Corporation (the
"Company"), authorized the issuance of one preferred share purchase right (a
"Right") with respect to each outstanding share of common stock, par value of
one cent ($0.01) (the "Common Shares"), of the Company to stockholders of record
at the close of business on June 17, 1997. Each Right entitles the registered
holder to purchase from the Company one Unit (as such term is defined in the
Rights Agreement, initially being one one-thousandth (1/1000th)) of a Preferred
Share at a price of $50.00 per Unit of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") dated June 4, 1997, between the
Company and Chase Mellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agent").
DETACHMENT OF RIGHTS; EXERCISE. Initially, the Rights will attach to all
Common Share certificates representing outstanding shares and no separate Right
Certificate will be distributed. The Rights will separate from the Common Shares
and a Distribution Date (as defined in the Rights Agreement) will occur upon the
earlier of (i) 10 Business Days following a public announcement that a Person or
group of affiliated or associated Persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding Voting Shares (as defined
in the Rights Agreement) of the Company, or (ii) 10 Business Days following the
commencement or announcement of an intention to commence a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a Person or group of 15% or more of such outstanding Voting Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced by the certificates representing Common
Shares, (ii) the Rights will be transferred with and only with the Common
Shares, (iii) new Common Share certificates issued after June 17, 1997, upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and (iv) the surrender for
transfer of any certificates for Common Shares outstanding as of June 17, 1997,
even without such notation, 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 (the "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 thereafter
evidence the Rights.
<PAGE>
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 3, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
If an Acquiring Person were to acquire 15% or more of the Voting Shares of
the Company (20% or more with respect to Teribe Limited), each Right then
outstanding (other than Rights beneficially owned by the Acquiring Person which
would become null and void) would become a right to buy that number of Preferred
Shares that at the time of such acquisition would have a market value of two
times the Purchase Price of the Right. If, however, the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an
Acquiring Person, has become such inadvertently, and such Person divests a
sufficient number of Voting Shares by such deadline as the Board of Directors
shall set, then such Person shall not be deemed to be an Acquiring Person for
any purposes of this Agreement.
If the Company were acquired in a merger or other business combination
transaction or more than 50% of its consolidated assets or earning power were
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
Upon exercise of a Right, the Company will have the option to sell Common
Shares of the Company having a market value equal to the Preferred Shares that
would be purchased upon exercise of a Right, instead of selling Preferred Shares
of the Company.
REGISTRATION AND LISTING OF COMMON SHARES. The offer and sale of the
Preferred Shares or other securities issuable upon exercise of the Rights will
be registered with the Securities and Exchange Commission but such registration
will not be effective until the Rights become exercisable. As described above,
however, the Rights will not be transferable separately from the Common Shares
until the Distribution Date.
ANTIDILUTION AND OTHER ADJUSTMENTS. The number of Preferred Shares or
other securities or property issuable upon exercise of the Rights, and the
Purchase Price payable, are subject to customary adjustments from time to time
to prevent dilution.
The number of outstanding Rights and the number of Preferred Shares or
other securities issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or 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.
EXCHANGE OPTION. At any time after the acquisition by a Person or group of
affiliated or associated Persons of beneficial ownership of 15% or more of the
outstanding Voting Shares of the
<PAGE>
Company and before the acquisition by a Person or group of 50% or more of the
outstanding Voting Shares of the Company, the Board of Directors may, at its
option, issue Common Shares of the Company in mandatory redemption of, or in
exchange for, all or part of the then outstanding exercisable Rights (other than
Rights owned by such Acquiring Person or group which would become null and void)
at an exchange ratio of one Common Share for each Preferred Share for which each
Right is then exercisable, subject to adjustment.
REDEMPTION OF RIGHTS. At any time prior to the first public announcement
that a Person or group has become the beneficial owner of 15% or more of the
outstanding Voting Shares, the Board of Directors of the Company may redeem all,
but not less than all, of the then outstanding Rights at a price of $0.01 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 the action of
the Board of Directors ordering 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.
NO RIGHTS AS STOCKHOLDER. Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
AMENDMENT OF RIGHTS. The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders of the Rights,
including amendment to extend the Final Expiration Date, and, provided a
Distribution Date has occurred, to extend the period during which the Rights may
be redeemed, except that after the Distribution Date no such amendment may
materially and adversely affect the interests of holders of the Rights.
THIS SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, WHICH IS
HEREBY INCORPORATED HEREIN BY REFERENCE.
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
June 10, 1997. A copy of the Rights Agreement is available free of charge from
the Company.
<PAGE>
LEGEND FOR STOCK CERTIFICATES
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN GARDEN RIDGE CORPORATION AND
CHASE MELLON SHAREHOLDER SERVICES, L.L.C., DATED AS OF JUNE 4, 1997 (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 GARDEN RIDGE
CORPORATION. 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. GARDEN RIDGE CORPORATION WILL MAIL TO THE HOLDER
OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
OF A WRITTEN REQUEST THEREFOR. AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO OR ACQUIRED BY ANY ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE
THEREOF (EACH AS DEFINED IN THE RIGHTS AGREEMENT) SHALL, UNDER CERTAIN
CIRCUMSTANCES, BECOME NULL AND VOID.
