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RIGHTS AGREEMENT
RAWLINGS SPORTING GOODS COMPANY, INC.
AND
MELLON INVESTOR SERVICES LLC
RIGHTS AGENT
DATED AS OF NOVEMBER 27, 2002
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions.............................................................................1
Section 2. Appointment of Rights Agent.....................................................................9
Section 3. Issue of Rights Certificates....................................................................9
Section 4. Form of Rights Certificates....................................................................12
Section 5. Countersignature and Registration..............................................................13
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.......................................13
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..................................14
Section 8. Cancellation and Destruction of Rights Certificates............................................17
Section 9. Reservation and Availability of Capital Stock..................................................17
Section 10. Securities Record Date.........................................................................19
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights............................................................................19
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................27
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................28
Section 14. Fractional Rights and Fractional Shares........................................................32
Section 15. Rights of Action...............................................................................33
Section 16. Agreement of Rights Holders....................................................................34
Section 17. Rights Certificate Holder Not Deemed a Stockholder.............................................34
Section 18. Concerning the Rights Agent....................................................................35
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................35
Section 20. Duties of Rights Agent.........................................................................36
Section 21. Change of Rights Agent.........................................................................39
Section 22. Issuance of New Rights Certificates............................................................39
Section 23. Redemption and Termination; Three-Year Independent Director Evaluation.........................40
Section 24. Exchange.......................................................................................41
Section 25. Notice of Certain Events.......................................................................42
Section 26. Notices........................................................................................43
Section 27. Supplements and Amendments.....................................................................44
Section 28. Successors.....................................................................................45
Section 29. Determinations and Actions by the Board of Directors, Etc......................................45
Section 30. Benefits of this Agreement.....................................................................45
Section 31. Severability...................................................................................45
Section 32. Governing Law..................................................................................46
Section 33. Counterparts...................................................................................46
Section 34. Descriptive Headings...........................................................................46
EXHIBIT A -- Form of Certificate of Designation, Preferences and Rights
EXHIBIT B -- Form of Rights Certificate
EXHIBIT C -- Form of Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 27, 2002 (the "Agreement"),
between Rawlings Sporting Goods Company, Inc., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey limited liability
company, as Rights Agent (the "Rights Agent").
WHEREAS, on November 27, 2002 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized the issuance of, and declared a
dividend payable in, one right for each share of Common Stock of the Company
outstanding at the close of business on December 9, 2002 (the "Record Date"),
each such right initially representing the right to purchase one one-thousandth
of a share of Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (individually, a "Right" and collectively, the
"Rights");
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one (as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(q) hereof) Right for each share of Common Stock issued
between the Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date, and, in certain circumstances
provided in Section 22 of this Agreement, after the Distribution Date; and
WHEREAS, on November 27, 2002, the Board of Directors adopted and
approved a Rights Agreement, dated as of November 27, 2002 (the "Rights
Agreement"), in the form hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean collectively any Person who
or which, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding (other than as a result of a Permitted Offer) or
was such a Beneficial Owner at any time after the date hereof, whether
or not such Person together with all Affiliates or Associates of such
Person continues to be the Beneficial Owner of 15% or more of the then
outstanding Common Stock. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, (iv) any Person or entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan (including, without limitation, any trust or
other entity organized, appointed, established or holding common stock
for or pursuant to the terms of any such plan), or (v) any Person
together with all Affiliates and Associates of such Person who or which
becomes the Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock as a result of the acquisition of Common Stock
directly from the Company (each of (i) through (v), an "Exempted
Person"); (B) no Person shall become an "Acquiring
Person" as a result of an acquisition of Common Stock by the Company
which, by reducing the number of such shares then outstanding,
increases the proportionate number of shares beneficially owned by such
Person together with all Affiliates and Associates of such Person to
15% or more of the outstanding Common Stock, except that if such
Person, after such share purchases by the Company, becomes the
Beneficial Owner of additional shares of Common Stock constituting 1%
or more of the then outstanding shares of Common Stock other than
pursuant to a Permitted Offer, such Person shall be deemed to be an
"Acquiring Person"; and (C) if the Board of Directors of the Company
determines in good faith that a Person, together with all Affiliates
and Associates of such Person, who would otherwise be an "Acquiring
Person" has become such inadvertently, and such Person, together with
all Affiliates and Associates of such Person, divests as promptly as
practicable a sufficient number of shares of Common Stock so that such
Person, together with all Affiliates and Associates of such Person,
would no longer be an Acquiring Person, then such Person shall not be
deemed to be an "Acquiring Person." The term "outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, 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
beneficially own hereunder.
(b) "Act" shall mean the Securities Act of 1933, as amended
and in effect on the date hereof.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) of this Agreement.
(d) "Affiliate" shall have the meaning set forth in Rule 12b-2
of the General Rules and Regulations under the Exchange Act as amended
and in effect on the date hereof.
(e) "Associate" of a Person shall mean (i) with respect to a
corporation (other than the Company or a majority-owned Subsidiary of
the Company), any officer or director thereof or of any Subsidiary (as
such term is hereinafter defined) thereof, or any Beneficial Owner (as
such term is hereinafter defined) of 10% or more of any class of equity
security thereof, (ii) with respect to an association, joint venture or
other unincorporated organization, any officer or director thereof or
of a Subsidiary thereof or any Beneficial Owner of 10% or more
ownership interest therein, (iii) with respect to a partnership, any
general partner thereof or any limited partner thereof who is, directly
or indirectly, the Beneficial Owner of a 10% or greater ownership
interest therein, (iv) with respect to a limited liability company, any
officer, director or manager thereof or of a Subsidiary thereof or any
member thereof who is, directly or indirectly, the Beneficial Owner of
a 10% or greater ownership interest therein, (v) with respect to a
business trust, any officer o trustee thereof or of any Subsidiary
thereof, (vi) with respect to any other trust or an estate, any
trustee, executor or similar fiduciary or any Person who has a 10% or
greater interest as a beneficiary in the income from or principal of
such trust or estate, (vii) with respect to a natural person, any
relative or spouse of such person, or any relative of such spouse, who
has the same home as such person, and (viii) any Affiliate of such
Person.
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(f) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right or obligation to acquire (whether such right or
obligation is exercisable immediately or only after the
passage of time or the fulfillment of a condition or any or
all of the foregoing) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, other rights
(other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon exercise
of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof ("Original
Rights") or pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as amended and in effect on
the date hereof), including pursuant to any agreement,
arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) arises solely
from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the rules and
regulations under the Exchange Act as amended and as in effect
on the date hereof, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report, other than by reference to a
proxy or consent solicitation being conducted by such Person);
or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in the proviso to subparagraph (ii) of this
paragraph (f)) or disposing of any voting securities of the
Company;
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provided, however, that nothing in this paragraph (f) shall cause a
person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities
acquired through such person's participation in good faith in a bona
fide firm commitment underwriting until the expiration of forty days
after the date of such acquisition. Notwithstanding anything in this
definition of Beneficial Owner to the contrary, a Person who, prior to
the Distribution Date, is a member of the Board of Directors or an
officer of the Company or who is an Affiliate or Associate of a member
of the Board of Directors or officer of the Company (each, an "Excluded
Person") shall not be deemed to "beneficially own" shares of Common
Stock held by another Excluded Person solely by reason of any
agreement, arrangement or understanding, written or otherwise, entered
into in opposition to any transaction or in support of a Permitted
Offer.
(g) "Board of Directors" shall mean the Board of Directors of
the Company as constituted from time to time.
(h) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the States of
Missouri, New York or New Jersey are authorized or obligated by law or
executive order to close.
(i) "Close of business" on any given date shall mean 5:00
p.m., New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m., New York City time,
on the next succeeding Business Day.
(j) "Common Stock" shall mean the common stock, par value $.01
per share, of the Company (or in the event of a subdivision,
combination or reclassification with respect to such shares of Common
stock, the shares of Common Stock resulting from such subdivision,
combination or reclassification), except, subject to the proviso in
Section 13(b) of this Agreement, that "Common Stock" when used with
reference to any Person other than the Company (A) which shall be
organized in corporate form, shall mean the capital stock or other
equity security or equity interest with the greatest voting power to
control the management of such Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person, or (B) which shall not be
organized in corporate form, shall mean units of beneficial interest
which shall represent the right to participate in profits, losses,
deductions and credits of such Person and which shall be entitled to
exercise the greatest voting power to direct the management of such
Person, or if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(k) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) of this Agreement.
(l) "Company" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(m) "Current Market Price" shall have the meaning set forth in
Section 11(d).
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(n) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) of this Agreement.
(o) "Distribution Date" shall have the meaning set forth in
Section 3(a) of this Agreement.
(p) "Equivalent preferred stock" shall have the meaning set
forth in Section 11(b) of this Agreement.
(q) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect on the date hereof.
(r) "Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
(s) "Excluded Person" shall have the meaning set forth in
Section 1(f) of this Agreement.
(t) "Exempted Person" shall have the meaning set forth in
Section 1(a) of this Agreement.
(u) "Expiration Date" shall have the meaning set forth in
Section 7(a) of this Agreement.
(v) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) of this Agreement.
(w) "Interested Stockholder" shall mean any Acquiring Person
or any Affiliate or Associate of an Acquiring Person or any other
Person in which such Acquiring Person, Affiliate or Associate has an
interest, or any other Person acting directly or indirectly on behalf
of or in concert with any such Acquiring Person, Affiliate or
Associate.
(x) "NASDAQ" shall have the meaning set forth in Section 4(a)
of this Agreement.
(y) "Original Rights" shall have the meaning set forth in
Section 1(f)(i) of this Agreement.
(z) "Permitted Offer" shall mean an acquisition of shares of
Common Stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Common Stock that meets all of the following
requirements:
(i) the consideration of the offer is cash or
publicly traded securities and, in the case of a cash offer,
is fully-financed;
(ii) such offer remains open for at least 60 calendar
days from the date it commenced (within the meaning of Rule
14d-2(a), as in effect on the date hereof, under the Exchange
Act);
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(iii) on or prior to the date such offer is commenced
(within the meaning of Rule 14d-2(a), as in effect on the date
hereof, under the Exchange Act), the Person on whose behalf
such offer is being made has, and has provided to the Company,
firm written commitments from responsible financial
institutions, which have been accepted by such Person (or one
of its Affiliates), to provide, subject only to customary
terms and conditions, funds for such offer which, when added
to the amount of cash and cash equivalents which such Person
then has available and has irrevocably committed in writing to
the Company to utilize for purposes of such offer, will be
sufficient to pay for all shares of Common Stock then
outstanding and all related expenses;
(iv) shares representing at least a majority of the
Common Stock then outstanding as of the day immediately prior
to the date of commencement of such offer (within the meaning
of Rule 14d-2(a), as in effect on the date hereof, under the
Exchange Act), but excluding therefrom any shares of Common
Stock beneficially owned by the Person on whose behalf such
offer is being made and such Person's Affiliates and
Associates, beneficially owned by such Person immediately
prior to such offer) are tendered and purchased pursuant to
such offer;
(v) prior to or on the date that such offer is
commenced (within the meaning of Rule 14d-2(a), as currently
in effect, under the Exchange Act), the Person on whose behalf
such offer is being made makes an irrevocable written
commitment to the Company (A) to consummate a transaction or
transactions promptly upon the completion of such offer in
which the consideration in such transaction or transactions is
fully-financed cash or publicly-traded securities and whereby
all shares of Common Stock not purchased in such offer will be
acquired at the same price per share of Common Stock paid in
such offer, provided that the Board of Directors shall have
granted any approvals required to enable such Person to
consummate such transaction or transactions following
consummation of such offer without obtaining the vote of any
other stockholder, (B) that such Person will not make any
amendment to the original offer which reduces the per share
price offered (other than a reduction to reflect any dividend
declared by the Company after the commencement of such offer
or any material change in the capital structure of the Company
initiated by the Company after the commencement of such offer,
whether by way of recapitalization, reorganization, repurchase
or otherwise), changes the form of consideration offered,
reduces the number of shares being sought or which is in any
other respect materially adverse to the holders of Common
Stock (other than the Person on whose behalf such Offer is
being made and such Person's Affiliates and Associates); and
(vi) such offer is at a price and on other terms
determined by at least a majority of the members of the Board
of Directors, after receiving an opinion from one or more
nationally recognized investment banking firms selected by the
Board of Directors that the price offered is fair, from a
financial point of view, to be (A) fair (taking into account
all factors which the Board of Directors may deem relevant,
including, without limitation, the Company's long-term
prospects and
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prices which could reasonably be achieved if the Company or
its assets were sold on an orderly basis designed to realize
maximum value) to stockholders (other than the Person or any
Affiliate or Associate hereof on whose behalf the offer is
being made) and (B) otherwise in the best interests of the
Company and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose behalf the offer is
being made) taking into account all factors that the Board of
Directors may deem relevant; provided, however, that (1) such
determination is made by the Board of Directors prior to the
purchase of shares under such tender offer or exchange offer,
and (2) a majority of the members of the Board of Directors
are independent (within the meaning of Rule 4200 of the NASDAQ
Stock Market rules (or any successor rule) and under
applicable Delaware case law) and disinterested (each such
member is neither an Acquiring Person or a Person on whose
behalf the tender offer for Common Stock is being made, nor an
Affiliate, Associate, nominee or representative of an
Acquiring Person or a Person on whose behalf the tender offer
for Common Stock is being made).
(aa) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust or other entity, and
shall include any successor (by merger or otherwise) thereof or
thereto.
(bb) "Preferred Stock" shall mean shares of Series B Junior
Participating Preferred Stock, par value $.01 per share, of the Company
(or in the event of a subdivision, combination or reclassification with
respect to such shares of Preferred Stock, the shares of Preferred
Stock resulting from such subdivision, combination or
reclassification), and, to the extent that there is not a sufficient
number of shares of Series B Junior Participating Preferred Stock
authorized to permit the full exercise of the Rights, any other series
of preferred stock of the Company designated for such purpose
containing terms substantially similar to the terms of the Series B
Junior Participating Preferred Stock.
(cc) "Principal Party" shall have the meaning set forth in
Section 13(b) of this Agreement.
(dd) "Purchase Price" shall have the meaning set forth in
Section 4(a) of this Agreement.
(ee) "Record Date" shall have the meaning set forth in the
first "WHEREAS" clause at the beginning of this Agreement.
(ff) "Redemption Date" shall have the meaning set forth in
Section 7(a) of this Agreement.
(gg) "Redemption Price" shall have the meaning set forth in
Section 23 of this Agreement.
(hh) "Rights" shall have the meaning set forth in the first
"WHEREAS" clause at the beginning of this Agreement.
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(ii) "Rights Agent" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(jj) "Rights Certificates" shall have the meaning set forth in
Section 3(a) of this Agreement.
(kk) "Rights Dividend Declaration Date" shall have the meaning
set forth in the first "WHEREAS" clause at the beginning of this
Agreement.
(ll) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii) of this Agreement.
(mm) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) of this Agreement.
(nn) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) of this Agreement.
(oo) "Spread" shall have the meaning set forth in Section
11(a)(iii) of this Agreement.
(pp) "Stock Acquisition Date" shall mean the earlier of the
date of (i) the public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such or (ii) the public disclosure of facts by the
Company or an Acquiring Person indicating that an Acquiring Person has
become an Acquiring Person, which date may occur prior to the Record
Date; provided, however, that if such Person is determined not to have
become an Acquiring Person pursuant to Section 1(a)(C) hereof, then no
Stock Acquisition Date shall be deemed to have occurred.
(qq) "Subsidiary" shall mean, with reference to any Person,
any corporation or other Person of which an amount of voting securities
sufficient to elect at least a majority of the directors or others
having similar authority over such corporation or other Person is
beneficially owned, directly or indirectly, by such first-named Person,
or otherwise controlled by such first-named Person.
(rr) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) of this Agreement.
(ss) "Summary of Rights" shall have the meaning set forth in
Section 3(b) of this Agreement.
(tt) "Trading Day" shall have the meaning set forth in Section
11(d)(i) of this Agreement.
(uu) "Transaction" shall mean any merger, consolidation or
sale of assets or earning power described in Section 13(a) hereof or
any acquisition of Common Stock
8
which, without regard to any required approval of the Company, would
result in a Person becoming an Acquiring Person.
(vv) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(ww) "Vote" shall mean, with respect to any entity, the
ability to cast a vote at a stockholders', members' or comparable
meeting of such entity with respect to the election of directors,
managers or other members of such entity's governing body, or the
ability to cast a general partnership or comparable vote.
(xx) "Voting Power" shall mean, with respect to any entity as
at any date, the aggregate number of Votes outstanding as at such date
in respect of such entity.
(yy) "Voting Securities" shall mean the Common Stock and any
other securities of the Company the holders of which are ordinarily, in
the absence of contingencies, entitled to Vote, even though the right
to such Vote has been suspended by the happening of such a contingency.
(zz) "Voting Stock" shall mean (i) the Common Stock of the
Company and (ii) any other shares of capital stock of the Company
entitled to vote generally in the election of directors. For purposes
of this Agreement, Voting Stock shall include securities of the type
referred to in clauses (i) and (ii) above that trade on a "when issued"
basis on a national securities exchange or on the NASDAQ. For purposes
of this Agreement, a stated percentage of the Voting Stock shall mean a
number of shares of the Voting Stock as shall equal in voting power
that stated percentage of the total voting power of the then
outstanding shares of Voting Stock in the election of a majority of the
Board of Directors or in respect of any merger, consolidation, sale of
all or substantially all of the Company's assets, liquidation,
dissolution or winding up.
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. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any such co-Rights Agent.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Close of business on the
tenth Business Day after the Stock Acquisition Date (or, if the tenth
Business Day after the Stock Acquisition Date occurs before the Record
Date, the close of business on the Record Date), or (ii) the Close of
business on the tenth Business Day (or such later date as the Board of
Directors shall determine) after the date of the earlier of
commencement by any Person (other than an Exempted Person) of, or the
first public announcement of the intention of any Person (other than an
Exempted Person) to commence, a tender or exchange offer (other than a
Permitted Offer) the consummation of which would result in any Person
becoming an Acquiring Person (including any such date which is on or
after the date of this Agreement
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and prior to the issuance of the Rights) (the earlier of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(b) of this
Agreement) by the certificates for the Common Stock registered in the
names of the record holders of the Common Stock (which certificates for
Common Stock shall be deemed also to be certificates for Rights) and
not by separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of Common
Stock (including a transfer to the Company); provided, however, that if
a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of
such tender or exchange offer. The Board of Directors may defer the
date set forth in clause (ii) of the preceding sentence (with prompt
written notice thereof to the Rights Agent) to a specified later date
or to an unspecified later date, each to be determined by action of the
Board of Directors. As soon as practicable after the Distribution Date,
the Company shall prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested and provided with all necessary
information, send) by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the
registry books for the Common Stock of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the
"Rights Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock
has been made pursuant to Section 11(q) hereof, at the time of
distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates and may be
transferred by the transfer of the Rights Certificate as permitted
hereby, separately and apart from any transfer of one or more shares of
Common Stock.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the
form attached hereto as Exhibit C (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the record holders of the Common
Stock shall also be the record holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date, the
transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) The Company shall promptly notify the Rights Agent in
writing upon the occurrence of the Distribution Date and, if such
notification is given orally, the Company shall confirm same in writing
on or prior to the Business Day next following. Until such notice is
received by the Rights Agent, the Rights Agent may presume conclusively
for all purposes that the Distribution Date has not occurred.
10
(d) Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date, and, in certain circumstances
provided in Section 22 of this Agreement, after the Distribution Date.
Certificates representing such shares of Common Stock shall also be
deemed to be certificates for Rights and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
Rawlings Sporting Goods Company, Inc. (the "Company") and
Mellon Investor Services LLC (the "Rights Agent"), dated as of
November 27, 2002, as it may be amended from time to time (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without
charge, promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or Beneficially Owned or held by, any Person
who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement), whether currently Beneficially Owned or held by or
on behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing legend,
until the earlier of the Distribution Date or the Expiration Date, the
Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and record
holders of Common Stock shall also be the record holders of the
associated Rights, and the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with the Common
Stock represented by such certificates. In the event the Company
purchases or acquires any Common Stock after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Stock
shall be deemed canceled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Stock which
are no longer outstanding. Notwithstanding this paragraph (d), the
omission of a legend shall not affect the enforceability of any part of
this Rights Agreement or the rights of any holder of the Rights.
(e) In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (i) shall, with respect to shares of
Common Stock so issued or sold (x) pursuant to the exercise of stock
options or under any employee plan or arrangement or (y) upon the
exercise, conversion or exchange of other securities issued by the
Company prior to the Distribution Date and (ii) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided that no
11
such Rights Certificate shall be issued if, and to the extent that, (i)
the Company shall be advised by counsel that such issuance would create
a significant risk of material adverse tax consequences to the Company
or the Person to whom such Rights Certificate would be issued or (ii)
appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate (but which do not affect the rights, duties or immunities
of the Rights Agent) and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law
or with any rule or regulation made pursuant thereto, or with any rule
or regulation of any stock exchange or the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") on which
or with whom the Rights may from time to time be listed or quoted, or
to conform to usage or otherwise. Subject to the provisions of Section
11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall entitle the record holders thereof to purchase such
number of one one-thousandths of a share of Preferred Stock as shall be
set forth therein at the price set forth therein (such exercise price
per one one-thousandth of a share, the "Purchase Price"), but the
amount and the type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom such 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 avoidance of
Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent the Rights Agent has notice
thereof and to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate
12
and the Rights represented hereby may become, or may have
already become, null and void in the circumstances specified
in Section 7(e) of such Agreement.
The provisions of Section 7(e) of this Agreement shall be
operative whether or not the foregoing legend is contained in any such
Rights Certificate.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by an
authorized signatory of the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed
any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by an authorized signatory of the Rights Agent and issued
and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be
such officer of the Company. Any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date and receipt by the Rights
Agent of notice to that effect and all other relevant information
referred to in Section 3(a), the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration
and transfer of the Rights Certificates issued hereunder. Such books
shall show the names and addresses of the respective record holders of
the Rights Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates and the date of each of the Rights
Certificates. The Company and Rights Agent may deem and treat the
person in whose name any Rights Certificate (or prior to the
Distribution Date, the associated Common Stock Certificate) is recorded
on the books for the registration and transfer of Rights (or, the
Common Stock) as the absolute owner thereof, for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e),
Section 7(f), Section 11, Section 14, Section 23 and Section 24 hereof,
at any time after the Close of business on the Distribution Date, and
at or prior to the Close of business on the Expiration Date, any Rights
Certificate or Certificates (other than Rights Certificates
13
representing Rights that have become null and void pursuant to Section
7(e) or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the record holder to purchase a
like number of one one-thousandths of a share of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities, cash or
other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder (or former holder in
the case of a transfer) to purchase. Any record holder desiring to
transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing in a form acceptable
and delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be split up, combined or exchanged at
the office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate or Rights Certificates until the record holder shall have
(i) properly completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate or Rights
Certificates, (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof, or of the Rights evidenced thereby, as the Company
or the Rights Agent shall reasonably request, and (iii) paid a sum
sufficient to cover any tax or charge that may be imposed in connection
with any transfer, split up, combination or exchange of Rights
Certificates as required by Section 9(e) hereof. Thereupon, the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 7(f),
Section 11, Section 14, Section 23 and Section 24 hereof, countersign
and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company
or the Rights Agent may require payment by the record holder of a
Rights Certificate of a sum sufficient to cover any applicable tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates, and
the Company and the Rights Agent shall have no duty or obligation under
this Section unless and until it is satisfied that all such taxes
and/or governmental charges have been paid.
(b) Subject to the provisions of Section 4(b), Section 7(e),
Section 7(f), Section 11, Section 14, Section 23 and Section 24 hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security to the Rights Agent and the Company satisfactory
to the Rights Agent and the Company and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights
Certificate, if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the record holder in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e), Section 7(f) and Section 14
hereof, the record holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability
14
set forth in Section 9(c), Section 11(a)(ii), Section 11(a)(iii),
Section 23(a) and Section 24(b) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the office
of the Rights Agent designated for such purpose, along with a signature
guarantee and such other and further documentation as the Rights Agent
may reasonably request, together with payment of the aggregate Purchase
Price with respect to the total number of one one-thousandths of a
share of Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable,
at or prior to the earlier of (i) the Close of business on December 9,
2012 (the "Final Expiration Date"), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the "Redemption Date"),
(iii) the time at which such Rights are exchanged as provided in
Section 24 hereof, or (iv) the consummation of a transaction
contemplated by Section 13(d) hereof (the earliest of (i), (ii), (iii)
and (iv) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially
be $30, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed and properly completed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price
per one one-thousandth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased
as set forth below and an amount equal to any tax or charge required to
be paid by the holder of such Rights Certificate in accordance with
Section 9 hereof, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) (A) requisition from any transfer agent
of the shares of Preferred Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing
such number of one one-thousandths of a share of Preferred Stock as are
to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash, if any, to be paid in
lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the record holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt
thereof, deliver such cash, if any, to or upon the order of the record
holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced pursuant to Section 11(a)(iii) hereof)
shall be made in cash or by certified bank check or bank draft payable
15
to the order of the Company, in each case in lawful money of the United
States of America. In the event that the Company is obligated to issue
other securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution
by the Rights Agent, if and when necessary to comply with this
Agreement. The Company reserves the right to require, prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.
(d) In case the record holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
exercisable and unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the record holder of such Rights
Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from 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 has
determined is part of a plan, arrangement or understanding which has
the purpose or effect the avoidance of this Section 7(e), shall become
null and void without any further action, and any record holder of such
Rights shall have no rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but neither the
Rights Agent nor the Company shall have any liability to any record
holder of Rights Certificates or any other Person as a result of the
Company's failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees
hereunder. The Company or the Rights Agent may require (or cause any
transfer agent of the Company to require) any Person who submits a
Rights Certificate (or a certificate representing shares of Common
Stock that evidences, or but for the provisions of this Section 7(e)
would evidence, Rights) for transfer on the registry books or to
exercise the Rights represented thereby to establish to the
satisfaction of the Company in its sole discretion that such Rights
have not become null and void pursuant to the provisions of this
Section 7(e).
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a record holder upon the
occurrence of any purported exercise as set forth in this Section
16
7 unless such holder shall have (i) properly completed and duly
executed the certificate contained in the form of election to purchase
set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner), or
Affiliates or Associates thereof, or any transferee referred to in
clause (ii) or (iii) of Section 7(e) hereof, or of the Rights evidenced
thereby, in any such case, as the Company or the Rights Agent shall
reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
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 Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Rights Certificates in accordance with
applicable law and regulations, and in such case shall deliver a certificate of
destruction to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares
of Preferred Stock (and, following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock and/or
other securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement, including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with this Agreement.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights
may be listed on any national securities exchange or national automated
quotation system, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable (but only to the
extent that it is reasonably likely that the Rights will be exercised),
all shares reserved for such issuance to be listed on such exchange or
authorized to be quoted on such quotation system upon official notice
of issuance upon such exercise.
(c) If then required by applicable law, the Company shall use
its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11(a)(ii) Event
on which the consideration to be delivered by the Company upon exercise
of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to
17
become effective as soon as practicable after such filing, and (iii)
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, (B) the Expiration Date or (C) the
date the Company receives an opinion of counsel to the effect that the
maintenance of such registration statement in effect is no longer
necessary. If then required by applicable law, the Company will also
take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed one hundred
twenty (120) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to
become effective or to comply with such blue sky laws. Upon any such
suspension, the Company shall make a public announcement, and shall
give simultaneous written notice to the Rights Agent, stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement, and simultaneous written notice to the Rights
Agent, at such time as the suspension is no longer in effect. In
addition, if the Company shall determine that a registration statement
is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as
a registration statement has been declared effective, and shall provide
the Rights Agent with written notice of such suspension.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-thousandths
of a share of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities, as the case may
be) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares, Common Stock, or other securities, as
the case may be (subject to payment of the Purchase Price), be duly and
validly authorized and issued, and fully paid and nonassessable
including, without limitation, effecting such changes to the accounts
of the Company as may be necessary to accomplish the foregoing
purposes.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all taxes and governmental charges which
may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock or other
securities, as the case may be) upon the exercise of the Rights. The
Company shall not, however, be required to pay any tax or charge which
may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for a number of one one-thousandths
of a share of Preferred Stock (or Common Stock and/or other securities,
as the case may be) in respect of a name other than that of, the record
holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
one-thousandths of a share of Preferred Stock (or, following the
occurrence of a Triggering Event, Common Stock or other securities, as
the case may be) in a name other
18
than that of the record holder upon the exercise of any Rights until
such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's or the
Rights Agent's satisfaction that no such tax or charge is due.
SECTION 10. SECURITIES RECORD DATE. Each person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable taxes or charges) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the record
holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right 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 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, 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 Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the record holder of any Right
exercised after such time shall be entitled to receive, upon payment of
the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior to such date and at
a time when the Preferred Stock transfer books of the Company were
open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof,
19
the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 hereof, in the event any
Person, alone or together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date, become an
Acquiring Person (such an event being referred to herein as a "Section
11(a)(ii) Event"), then, promptly following the occurrence of such
Section 11(a)(ii) Event, proper provision shall be made by the Company
so that each holder of a Right (except as provided below and in Section
7(e) hereof) shall, for a period of sixty (60) days after the later of
any such Section 11(a)(ii) Event and the effective date of an
appropriate registration statement pursuant to Section 9 hereof, have
the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu
of fractional interests in shares of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event at issue, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement)
by 50% of the Current Market Price (determined pursuant to Section
11(d) hereof) per share of Common Stock on the date of such first
occurrence (such number of shares being referred to as the "Adjustment
Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii); and provided, further, that such sixty (60) day
period shall not be deemed to run (A) during any period in which the
exercise of the Rights or the fulfillment by the Company or the Rights
Agent of its or their obligations under this Agreement shall be
enjoined or otherwise prohibited in full or in part by any court or
other governmental agency or body, or (B) as to any other period during
which exercise of the Rights is permitted to be suspended under this
Agreement, including, without limitation, Section 11(a)(iii), the time
period with respect to which such authority has been exercised. The
Company shall give the Rights Agent written notice of the identity of
any such Acquiring Person, Associate or Affiliate, or the nominee of
any of the foregoing, and the Rights Agent may rely on such notice in
carrying out its duties under this Agreement and shall be deemed not to
have any knowledge of the identity of any such Acquiring Person,
Associate or Affiliate, or the nominee of any of the foregoing unless
and until it shall have received such notice.
(iii) Subject to such limitations existing as of the
date hereof as are necessary to prevent a default under any agreement
to which the Company is a party, in the event that the number of shares
of Common Stock which are authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company, acting by
resolution of its Board of Directors shall (A) determine the excess of
(x) the value of the Adjustment Shares issuable upon the exercise of a
Right determined as set forth below (the "Current Value"), over (y) the
Purchase Price (such
20
excess, the "Spread"), and (B) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision to substitute for the
Adjustment Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares or units of shares of preferred
stock, such as the Preferred Stock, which the Board of Directors has
deemed to have essentially the same value or economic rights as shares
of Common Stock (such shares of preferred stock or other equity
securities being referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value
(less the amount of any reduction in the Purchase Price), where such
aggregate value has been determined by the Board of Directors based
upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors; provided, however, that if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the date
on which the Company's right of redemption pursuant to Section 23(a)
expires (such date being referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to deliver, upon
the surrender for exercise of a Right and without requiring payment of
the Purchase Price (other than an amount equal to the par value of the
shares of Common Stock to be issued), shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors determines in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth
above may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended,
is herein called the "Substitution Period"). To the extent that action
is to be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (1) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding
Rights, and (2) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek such stockholder
approval for such authorization of additional shares and/or to decide
the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall make a public announcement and shall give
simultaneous written notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement, and simultaneous written notice to the Rights
Agent, at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the Current Value of each
Adjustment Share shall be the Current Market Price per share of the
Common Stock on the Section 11(a)(ii) Trigger Date, and the per share
or per unit value of any Common Stock Equivalent shall be deemed to
equal the Current Market Price per share of the Common Stock on such
date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all record holders of
Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record
date) Preferred Stock (or shares having the same rights, privileges and
preferences as the
21
shares of Preferred Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent preferred stock at a
price per share of Preferred Stock or per share of equivalent preferred
stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock) less
than the Current Market Price per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock and equivalent
preferred stock outstanding on such record date, plus the number of
shares of Preferred Stock and equivalent preferred stock which the
aggregate offering price of the total number of shares of Preferred
Stock and/or equivalent preferred stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to
be offered) would purchase at such Current Market Price, and the
denominator of which shall be the number of shares of Preferred Stock
and equivalent preferred stock outstanding on such record date, plus
the number of additional shares of Preferred Stock and/or equivalent
preferred stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash,
the value of such consideration shall be as determined in good faith by
the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Shares of Preferred Stock
and equivalent preferred stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for a
distribution to all record holders of Preferred Stock (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, cash (other than a regular quarterly cash
dividend out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Preferred Stock, but including
any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the Current Market Price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date,
less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator
of which shall be such Current Market Price per share of Preferred
Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such
22
distribution is not so made, the Purchase Price shall be adjusted to be
the Purchase Price which would have been in effect if such record date
had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the thirty (30) consecutive Trading Days immediately
prior to but not including such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the Current Market Price
per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the ten
(10) consecutive Trading Days immediately following but not including
such date; provided, however, that in the event that the Current Market
Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and the ex-dividend or
ex-distribution date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification shall not
have occurred prior to the commencement of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, then,
and in each such case, the Current Market Price shall be properly
adjusted to reflect the current market per share equivalent. The
closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last sale price, regular way, or, if
such last sale price is not reported, the average of the high bid and
low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board of
Directors. If on any such date no market maker is making a market in
the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors shall be used. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, Current Market Price per
share shall mean the fair value per share as determined in good faith
by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
23
(ii) For the purpose of any computation hereunder,
the Current Market Price per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock
in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the Current Market Price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
1000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement) multiplied by
the Current Market Price per share of the Common Stock. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
traded, Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board
of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
For all purposes of this Agreement, the Current Market Price of one
one-thousandth of a share of Preferred Stock shall be equal to the
Current Market Price of one share of Preferred Stock divided by 1000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest hundred-thousandth of a
share of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three (3) years from the date
of the transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
other than Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c),
(e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-thousandths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
24
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one- millionth) obtained by
(i) multiplying (x) the number of one one-thousandths of a share
covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of one one-thousandths of a share
of Preferred Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of one one-thousandths of a share
of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights (calculated
to the nearest one-millionth) 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 and shall give
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 Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such
holders in substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after
such adjustment. Rights Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number by one one-thousandths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-thousandths of a share and the number of one
one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.
25
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
number of one one-thousandths of a share of Preferred Stock, or the par
value, if any, of any shares of any other capital stock issuable upon
exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and non-assessable
such number of one one-thousandths of a share of Preferred Stock (or
such other shares) at such adjusted Purchase Price. If upon any
exercise of the Rights, a holder is to receive a combination of Common
Stock and Common Stock Equivalents, a portion of the consideration paid
upon such exercise, equal to at least the then par value of a share of
Common Stock, shall be allocated as the payment for each share of
Common Stock so received.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer (with prompt
written notice thereof to the Rights Agent), until the occurrence of
such event, the issuance to the record holder of any Right exercised
after such record date the number of one one-thousandths of a share of
Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of one
one-thousandths of a share of Preferred Stock, and other capital stock
or securities of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment the Board of Directors shall determine to be advisable
in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock
at less than the Current Market Price thereof, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their
terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends, or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such holders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not
been redeemed pursuant to Section 23 hereof or exchanged pursuant to
Section 24 hereof, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(p) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(p) hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which
complies with Section 11(p) hereof), if (x) at the time of or
26
immediately after such consolidation, merger or sale there are any
certificate of incorporation or bylaw provisions or any rights,
warrants or other instruments or securities outstanding or agreements
in effect or other actions taken which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such
other person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(n).
(p) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23,
Section 24 or Section 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(q) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare or pay any dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide or split the
outstanding shares of Common Stock into a greater number of shares, or
(iii) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then, and in each such event, the
number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number
of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which
shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made or any event affecting the Rights or their
exercisability (including without limitation an event which causes the Rights to
become null and void) occurs as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment or describing such event, and a brief, reasonably detailed statement
of the facts, computations and methodology accounting for such adjustment, (b)
promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each record holder of a Rights Certificate (or, if
prior to the Distribution Date, to each record holder of a certificate
representing shares of Common Stock) in accordance with Section 26 hereof. The
27
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment or statement therein contained and shall have no duty or
liability with respect to, and shall not be deemed to have knowledge of, any
adjustment or any such event unless and until it shall have received such
certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date
(which for purposes of this Section 13(a) only shall also include the
date of the first public announcement (including, without limitation, a
report filed pursuant to Section 13(d) under the Exchange Act) that 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 Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan), together
with any of such Person's Affiliates and Associates, has become the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding pursuant to a Permitted Offer), directly or indirectly, (x)
the Company shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(p) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(p) hereof) shall consolidate with, or
merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company in one
or more transactions each of which complies with Section 11(p) hereof),
then, upon the first occurrence of such event (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made
so that: (i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price, in accordance with the
terms of this Agreement, such number of validly authorized and issued,
fully paid, non-assessable and freely tradeable shares of Common Stock
of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event
by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the
28
"Purchase Price" for each Right and for all purposes of this Agreement)
by (2) 50% of the Current Market Price (determined pursuant to Section
11(d)(i) hereof) per share of the Common Stock of such Principal Party
on the date of consummation, provided that the Purchase Price and the
number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in Section
11(f) of this Agreement to reflect any events occurring in respect of
such Principal Party after the date of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a
Section 13 Event; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number
of shares of its Common Stock) in connection with the consummation of
any such transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be,
in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a)(ii)
hereof shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a): (A)
the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such
merger or consolidation, or if there is more than one such
issuer, the issuer of the shares of Common Stock which has the
greatest aggregate market value of shares outstanding, or (B)
if no securities are so issued, (1) the Person that is the
other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person
the shares of Common Stock of which has the greatest aggregate
market value of shares outstanding or (2) if the Person that
is the other party to the merger does not survive the merger,
the Person that does survive the merger (including the Company
if it survives) or (3) the Person resulting from the
consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as is the
issuer of the shares of Common Stock having the greatest
aggregate market value of shares outstanding;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
29
"Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value of shares outstanding; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and
the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock or out of its authorized
and issued shares held in its treasury, the number of shares of its
Common Stock that will be sufficient to permit the exercise in full of
all outstanding Rights under this Section 13 and unless prior thereto
the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that the
requirements set forth in paragraphs (a) and (b) of this Section 13
shall be promptly performed in accordance with their terms and further
providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the
Expiration Date and similarly comply with applicable state
securities laws; (ii) use its best efforts, if the shares of
Common Stock of the Principal Party shall be listed or
admitted to trading on a national securities exchange or
NASDAQ to list or admit to trading (or continue the listing
of) the Rights and the securities purchasable upon exercise of
the Rights on such securities exchange or NASDAQ and, if the
shares of Common Stock of the Principal Party shall not be
listed or admitted to trading on a national securities
exchange or NASDAQ, to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by such
other system then in use;
(iii) deliver to record holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act; and
30
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of
the Principal Party subject to purchase upon exercise of
outstanding Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of
a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described
in Section 13(a). If, for any reason, the Rights cannot be exercised
for Common Stock of the Company or such Principal Party, then a holder
of Rights will have the right to exchange such Rights for cash from the
Company or such Principal Party in an amount equal to the number of
shares of such Common Stock such holder would otherwise be entitled to
purchase times 50% of the then Current Market Price, as determined
pursuant to Section 11(d)(i) hereof, of such stock of such Principal
Party or the Company. If, for any reason, including, without
limitation, such Principal Party is an individual, private partnership
or private company, the foregoing formulation cannot be applied to
determine the cash amount into which the Rights are exchangeable, then
the Board of Directors, based upon advice from one or more nationally
recognized investment banking firms, shall determine such amount
reasonably and with utmost good faith to the holders of Rights. Any
such determination shall be binding and final.
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described
in subparagraphs (x) and (y) of Section 13(a) if (i) such transaction
is consummated with a Person or Persons who acquired shares of Common
Stock pursuant to a Permitted Offer (or a wholly owned Subsidiary of
any such Person or Persons), (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of
Common Stock paid to all record holders of shares of Common Stock whose
shares were purchased pursuant to such Permitted Offer, and (iii) the
form of consideration being offered to the remaining record holders of
shares of Common Stock pursuant to such transaction is the same as the
form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
(e) The Company shall not enter into any transaction of the
kind referred to in this Section 13 if at the time of such transaction
there are any rights, warrants, instruments or securities outstanding
or any agreements 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.
Without limiting the generality of the preceding sentence, in case the
Principal Party which is to be a party to a transaction of the kind
referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate or articles of incorporation or bylaws
or other instrument governing its corporate affairs (or organizational
affairs if organized other than in corporate form), which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a
transaction of the kind referred to in this Section 13, Common Stock of
such Principal Party at less than the then Current Market Price per
share (determined pursuant to Section 11(d)(i)) or securities
exercisable for or convertible into Common Stock of such
31
Principal Party at less than such then Current Market Price per share
(other than to holders of Rights pursuant to this Section 13) or (ii)
providing for any special payment, tax or similar provisions in
connection with the issuance of Common Stock of such Principal Party
pursuant to the provisions of Section 13; then, in such event, the
Company shall not consummate any such transaction unless prior thereto
the provision in question of such Principal Party shall have been
canceled, waived or amended so as to avoid any of the effects referred
to in clauses (i) and (ii) of this paragraph, or the authorized
securities shall have been redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section
11(q) hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be
paid to the record holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any
day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last sale price or, if such last
sale price is not reported, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors. If on any such
date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the
Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than, except as provided in Section
7(c), fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in
integral multiples of one one-thousandth of a share of Preferred Stock
may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and
a depositary selected by it; provided, however, that such agreement
shall
32
provide that the holders of such depositary receipts shall have the
rights, privileges and preferences to which they are entitled as
beneficial owners of the shares of Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share of
Preferred Stock, the Company may pay to the record holders of Rights
Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market
value of one one-thousandth of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of one one-thousandth
of a share of Preferred Stock shall be one one-thousandth of the
closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common
Stock or distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock the Company
may pay to the record holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one share of Common Stock.
For purposes of this Section 14(c), the current market value of one
share of Common Stock shall be determined in a manner set forth in
Section 11(d)(i) hereof for the Trading Day immediately prior to the
date of such exercise.
(d) The record holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional Rights or
any fractional shares (other than, except as provided in Section 7(c),
fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock) upon exercise of a Right or to receive any
certificates which evidence such Rights or shares, except as permitted
by this Section 14.
(e) Whenever a payment for fractional Rights or fractional
shares is to be made by the Rights Agent, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payments and the
prices and/or formulas utilized in calculating such payments, and (ii)
provide sufficient monies to the Rights Agent in the form of fully
collected funds to make such payments. The Rights Agent shall be fully
protected in relying upon such a certificate and shall have no duty
with respect to, and shall not be deemed to have knowledge of any
payment for fractional Rights or fractional shares under any Section of
this Agreement relating to the payment of fractional Rights or
fractional shares unless and until the Rights Agent shall have received
such a certificate and sufficient monies.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent, are vested in the
respective record holders of the Rights Certificates (and, prior to the
Distribution Date, the record holders of the Common Stock); and any record
holder of any Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), without the consent of the Rights Agent or of the record holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise
33
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the record holders of Rights, it is specifically
acknowledged that such holders of Rights would not have an adequate remedy at
law for any breach by the Company of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against
actual or threatened violations by the Company of the obligations hereunder of
any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the transfer books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates fully
executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered on the transfer
books of the Rights Agent as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be required to be affected by any notice to the contrary;
(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,
judgment, decree or ruling (whether interlocutory or final) issued by a
court or by a governmental, regulatory, self-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
obligations; provided, however, the Company must use its reasonable
efforts to have any such injunction, order, judgment, decree or ruling
lifted or otherwise overturned as soon as possible; and
(e) Rights that become Beneficially Owned by the Persons
specified in Section 7(e) hereof are automatically null and void
pursuant to that Section.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
34
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the preparation,
negotiation, execution, delivery, amendment and administration of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent including its
members, directors, officers, employees, shareholders and agents, for,
and to hold it harmless against, any loss, liability, damage, judgment,
fine, penalty, claim, demand, settlement, cost or expense (including,
without limitation, the reasonable fees and expenses of legal counsel)
incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent (each as determined by a final,
non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction), for any action taken, suffered or omitted by
the Rights Agent in connection with the acceptance, administration,
exercise and performance of its duties under this Agreement, including,
without limitation, the costs and expenses of defending against and
appealing any claim of liability arising therefrom, directly or
indirectly. The provisions of this Section 18 and Section 20 below
shall survive the exercise or expiration of the Rights, the termination
of this Agreement, or the resignation or removal of the Rights Agent.
The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
(b) The Rights Agent shall be authorized and protected and
shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its acceptance and
administration of this Agreement and the exercise and performance of
its duties hereunder, in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be
signed, executed, and where necessary, verified, guaranteed or
acknowledged, by the proper Person or Persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall
35
be a party, or any Person succeeding to the business of the Rights
Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
provided, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In
case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered; any such successor Rights
Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights 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 Rights
Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this
Agreement.
SECTION 20. RIGHTS AND DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes to perform the duties and obligations expressly imposed by this
Agreement, and no implied duties or obligations, upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company or an employee of the Rights Agent),
and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent and the Rights Agent
shall incur no liability for or in respect of any action taken,
suffered or omitted by it and in accordance with such advice or
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "Current Market Price") be
proved or established by the Company prior to taking, suffering or
omitting to take any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, 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 and complete authorization
and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by
it under the provisions of this Agreement in reliance upon such
certificate.
36
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own gross negligence, bad faith or
willful misconduct (each as determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent
jurisdiction). Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage. Any
liability of the Rights Agent under this Rights Agreement will be
limited to the amount of fees paid by the Company to the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), 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 liability or be under
any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after actual
notice of any such adjustment, upon which the Rights Agent may rely);
nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of
Common Stock or Preferred Stock to be issued pursuant to this Agreement
or any Rights Certificate or as to whether any shares of Common Stock,
Preferred Stock or other securities, will when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and
such instructions shall be full authorization and protection to the
Rights Agent and the Rights Agent shall not be liable for or in respect
of any action taken, suffered or omitted by it in accordance with
instructions of any such officer or for any delay in acting while
waiting for those
37
instructions. The Rights Agent shall be fully authorized and protected
in relying upon the most recent instructions received by any such
officer.
(h) The Rights Agent and any stockholder, affiliate, 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 the Rights Agent were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent or any such
stockholder, affiliate, director, officer or employee from acting in
any other capacity for the Company or for any other Person.
(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 (through its directors, officers or employees) 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 to the
Company or any other Person resulting from any such act, omission,
default, neglect or misconduct, absent gross negligence or bad faith
(each as determined by a final, non-appealable order, judgment, decree
or ruling of a court of competent jurisdiction) 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 it believes 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 Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer
without first consulting with the Company.
(l) The Rights Agent shall have no responsibility to the
Company, any holders of Rights or any holders of shares of Common Stock
for interest or earnings on any moneys held by the Rights Agent
pursuant to this Agreement.
(m) The Rights Agent shall not be required to take notice or
be deemed to have notice of any event or condition hereunder,
including, but not limited to, a Distribution Date, a Redemption Date,
any adjustment of the Purchase Price of the Common Stock, and
adjustment to the Purchase Price of the Preferred Stock, the existence
of an Acquiring Person or any other event or condition that may require
action by the Rights Agent, unless the Rights Agent shall be
specifically notified in writing of such event or condition by the
Company, and all notices or other instruments required by this
Agreement to be delivered to the Rights Agent must, in order to be
effective, be received by the Rights Agent as specified in Section 26
hereof, and in the absence of such notice
38
so delivered, the Rights Agent may conclusively assume no such event or
condition exists.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing, mailed to the Company and shall
provide notice thereof to each transfer agent of the Common Stock or Preferred
Stock known to the Rights Agent by registered or certified mail and to the
holders of the Rights Certificates in accordance with Section 26 hereof, or if
prior to the Distribution Date, to the holders of Rights through any filing made
by the Company pursuant to the Exchange Act. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
shall provide notice thereof to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates in accordance with Section 26 hereof, or, if prior to the
Distribution Date, to the holders of Rights through any filing made by the
Company pursuant to the Exchange Act. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (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 record
holder of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then the Company shall become the
Rights Agent until a successor Rights Agent has been appointed, and any record
holder of any Rights Certificate or the Rights Agent may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a Person organized and doing business under the laws of the United States or of
the State of Missouri or the State of New York (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of Missouri or the State of New York), in good
standing, and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a
Person described in clause (a). After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates in accordance with Section
26 hereof, or, if prior to the Distribution Date, give notice to the holders of
Rights through any filing made by the Company pursuant to the Exchange Act.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of
38
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificates shall be issued
and this sentence shall be null and void ab initio if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof
SECTION 23. REDEMPTION AND TERMINATION; THREE-YEAR INDEPENDENT DIRECTOR
EVALUATION.
(a) The Board of Directors, at its option, at any time prior
to the earlier of (i) the close of business on the tenth Business Day
following the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the close of business on
the tenth Business Day following the Record Date), or (ii) the time at
which the Rights expire pursuant to this Agreement, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01
per Right (such redemption price being hereinafter referred to as the
"Redemption Price"). Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after
the first occurrence of a Section 11(a)(ii) Event until such time as
the Company's right of redemption hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Market Price of the Common Stock at the
time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors. 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.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to Section 23(a) (or at
such later time as the Board of Directors may establish for the
effectiveness of such redemption), notice of which shall have been
provided to the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive
the Redemption Price for each Right so held. Promptly after the action
by the Board of Directors ordering the redemption of the Rights
becoming effective, the Company shall provide notice of such redemption
to the holders of the then outstanding Rights, with prompt written
notice thereof to the Rights Agent, each in accordance with Section 26
hereof (provided that the failure to provide, or any defect in, such
notice shall not affect the legality or validity of such redemption).
Any
40
notice which is provided in the manner herein provided shall be
deemed given, whether or not the record holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
(c) The Stockholder Rights Plan Committee of the Company's
Board of Directors shall review this Agreement in order to consider
whether the maintenance of this Rights Agreement continues to be in the
best interests of the Company and its stockholders. Such committee
shall conduct such review periodically when, as and in such manner as
the committee deems appropriate, after giving due regard to all
relevant circumstances; provided, however, that the committee shall
take such action at least every three years. Following each such
review, such committee will report its conclusions to the full Board of
Directors of the Company, including any recommendation in light thereof
as to whether this Agreement should be modified or the Rights should be
redeemed. Such committee shall be comprised only of directors of the
Company who shall have been determined by the Company's Board of
Directors to be independent and disinterested (who are neither an
Acquiring Person or a Person on whose behalf a tender offer or exchange
offer for Common Stock is being made nor an Affiliate, Associate,
nominee or representative of an Acquiring Person or a Person non whose
behalf a tender offer or exchange for Common Stock is being made). Such
committee shall be appointed by the Board of Directors of the Company
and is authorized to retain such legal counsel, financial advisors and
other advisors as the committee deems appropriate in order to assist
the committee in carrying out its foregoing responsibilities under this
Agreement.
SECTION 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time
after any Person becomes an Acquiring Person, exchange 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 7(e) hereof) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"), provided that the shares of Common Stock so
exchanged shall be of the same class or series which the holders of
such Rights would have been entitled to receive upon the exercise
thereof. Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person
(other than an Exempted Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of Voting
Securities of the Company then outstanding representing 50% or more of
the Voting Power of the Company.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of
the holders of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio, provided that the shares of Common
Stock so exchanged shall be of the same class or series which the
holder of such Rights would have been entitled to receive
41
upon the exercise thereof. The Company shall promptly make a public
announcement of any such exchange (with prompt written notice thereof
to the Rights Agent); provided, however, that the failure to make, or
any defect in, such public announcement shall not affect the legality
or validity of such exchange. Promptly after the action of the Board of
Directors ordering the exchange of the Rights becoming effective, the
Company shall provide notice of such exchange to the holders of the
then outstanding Rights in accordance with Section 25 hereof (provided
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange). Any notice which is mailed in
the manner provided in Section 26 hereof shall be deemed given, whether
or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be authorized and
unissued shares of the applicable class or series of Common Stock
and/or authorized and issued shares of the applicable class or series
of Common Stock held in its treasury sufficient to permit any exchange
of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional shares of the applicable class or series of Common Stock for
issuance upon exchange of the Rights. In the event the Company shall,
after good faith effort, be unable to take all such action as may be
necessary to authorize such additional shares of the applicable class
or series of Common Stock, the Company shall substitute, for each share
of such class or series of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of the applicable
series of Preferred Stock or fraction thereof (subject to Section 14(b)
hereof) such that the Current Market Price per share of the applicable
series of Preferred Stock multiplied by such number or fraction is
equal to the Current Market Price per share of such class or series of
Common Stock as of the date of issuance of such shares of such series
of Preferred Stock or fraction thereof.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the
Rights Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to the
same fraction of the Current Market Price per share of the applicable
class or series of Common Stock as of the Trading Day immediately prior
to the record date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to
42
offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision of outstanding shares
of Preferred Stock), or (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(p) hereof), 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 transaction or a series of
related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(p) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall
give to each holder of a Rights Certificate and to the Rights Agent, in
accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of
the shares of Preferred Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock whichever shall
be the earlier.
(b) In the event that a Section 11(a)(ii) Event shall occur,
then in any such case (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Rights
Certificate, in accordance with Section 26 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 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to Preferred
Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities of the Company.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights 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) or by facsimile transmission as follows:
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, MO 63026
Attention: Chief Executive Officer
Facsimile No: (636) 349-3598
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made upon
receipt by the Rights Agent, if sent by registered
43
or certified mail, postage prepaid, addressed (until another address is filed in
writing with the Company) or by facsimile transmission as follows:
Mellon Investor Services LLC
One Memorial Drive, Suite 900
St. Louis, MO 63102
Attention: Relationship Manager
Facsimile No: (314) 588-2211
With a copy to:
Mellon Investor Services LLC
85 Challenger Road
Ridgefield Park, New Jersey 07660-2108
Attention: General Counsel
Facsimile No: (201) 296-4004
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company as held and maintained
by the Rights Agent (or, if prior to the Distribution Date, on the registry
books of the Transfer Agent for the Common Stock of the Company).
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Subject to the provisions of
this Section 27, for so long as the Rights are then redeemable, the Company may
in its sole and absolute discretion, and the Rights Agent shall if the Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. At any time when the Rights are no longer
redeemable, but subject to the provisions of this Section 27, the Company may,
and the Rights Agent shall if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order to
(i) cure any ambiguity, (ii) correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided that no such supplement or amendment adversely
affects the interests of the holders of Rights as such (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person) and no such
amendment may cause the Rights again to become redeemable or cause the Agreement
again to become amendable other than in accordance with this sentence. Upon the
delivery of a certificate from an appropriate officer of the Company and, if
requested by the Right Agent, an opinion of counsel, which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment; provided,
however, that the Rights Agent may, but shall not be obligated to, enter into
any such supplement or amendment which affects the Rights Agent's own rights,
duties, obligations or immunities under this Agreement and the Rights Agent
shall not be bound by supplements or amendments not executed by it.
44
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as amended and in effect on the date hereof. The Board of
Directors, except as otherwise specifically provided for herein, shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights Certificates (and, prior to the Distribution Date, record holders of the
Common Stock) and all other parties, and (y) not subject the Board of Directors
to any liability to the holders of the Rights. The Rights Agent is entitled
always to assume the Company's Board of Directors acted in good faith and shall
be fully protected and incur no liability in reliance thereon.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the record holders of the Rights Certificates (and, prior to the Distribution
Date, record holders of the Common Stock) 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 record holders of the
Rights Certificates (and, prior to the Distribution Date, record holders of the
Common Stock).
SECTION 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
45
shall be reinstated and shall not expire until the close of business on the
tenth Business Day (or such longer period of time as permitted pursuant to
Section 27 of this Agreement) following the date of such determination by the
Board of Directors. Without limiting the foregoing, if any provision requiring
that a determination be made by less than the entire Board of Directors (or at a
time or with the concurrence of a group of directors consisting of less than the
entire Board of Directors) is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination shall then be
made by the Board of Directors in accordance with applicable law and the
Company's Certificate of Incorporation and Bylaws.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State; provided, however, that all
provisions regarding the rights, duties, obligations and immunities of the
Rights Agent shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed entirely
within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts 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.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
RAWLINGS SPORTING GOODS
COMPANY, INC.
By: /s/ Stephen M. O'Hara
-----------------------------------------------
Name: Stephen M. O'Hara
Title: Chairman of the Board and
Chief Executive Officer
MELLON INVESTOR SERVICES LLC,
as Rights Agent
By: /s/ Ruth A. Brunette
-----------------------------------------------
Name: Ruth A. Brunette
Title: Assistant Vice President
47
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
RAWLINGS SPORTING GOODS COMPANY, INC.
Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
We, Stephen M. O'Hara, President, and Howard B. Keene,
Secretary of Rawlings Sporting Goods Company, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Sections 103 and 151(g)
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, as amended, of the Corporation,
the Board of Directors on November 27, 2002, adopted the following resolution
creating a series of One Hundred Thousand (100,000) shares of Preferred Stock,
par value $.01 per share, designated as the Series B Junior Participating
Preferred Stock (hereinafter referred to as "Series B Preferred Stock"):
DESIGNATION OF PREFERRED STOCK
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, as amended (the "Certificate of Incorporation"), a
series of Preferred Stock, par value $.01 per share, of the Corporation be, and
it hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
and restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as the Series B Junior Participating Preferred
Stock (hereinafter referred to as "Series B Preferred Stock") and the
number of shares constituting such series shall be One Hundred Thousand
(100,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors, provided that no decrease shall
reduce the number of shares of Series B Preferred Stock to a number
less than the number of shares outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding rights to
purchase or convert into shares of Series B Preferred Stock.
Section 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 B Preferred Stock
with respect to dividends, the holders of shares of Series B
Preferred Stock, in
A-1
preference to the holders of Common Stock, par value $.01 per
share (the "Common Stock"), of the Corporation and of any
other class of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the shares of
Series B Preferred Stock, together with Common Stock ("Junior
Stock"), shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally
available for the purpose, dividends payable in cash in an
amount per share (rounded to the nearest cent), equal to the
product of the Series B Multiple (as defined below) times the
aggregate per share amount of all cash dividends, plus the
product of the Series B Multiple times the aggregate per share
amount (payable in cash, based upon the fair market value at
the time the non-cash dividend or other distribution is
declared as determined in good faith by the Board of
Directors) 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 (but not withdrawn)
on the Common Stock.
(B) As used herein, the Series B Multiple shall
initially be 1,000. In the event the Corporation shall (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 Series B Multiple
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(C) The Board of Directors of the Corporation shall
not declare a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock)
unless it shall concurrently therewith declare a dividend or
distribution on the Series B Preferred Stock. Payment of a
dividend or distribution determined on the Series B Preferred
Stock shall be in preference to payment of any dividend or
distribution on the Common Stock or any Junior Stock.
(D) The Board of Directors may fix a record date for
the determination of holders of shares of Series B Preferred
Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no
more than thirty (30) days prior to the date fixed for the
payment thereof.
A-2
Section 3. Voting Rights. Except as otherwise provided herein
or by law, the holders of shares of Series B Preferred Stock shall have
the following voting rights:
(A) Each share of Series B Preferred Stock shall
entitle the holder thereof to a number of votes equal to the
product of the Series B Multiple then in effect times the
number of votes that each share of Common Stock entitles its
holder to vote at such meeting of the stockholders of the
Corporation.
(B) The holders of shares of Series B Preferred Stock
and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) The holders of Series B Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on
the Series B Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends
and distributions on shares of Series B Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends (other than a
dividend payable in shares of Common Stock) on, make
any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of
Junior 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 B
Preferred Stock ("Parity Stock"), except dividends
paid ratably on the Series B Preferred Stock and all
such Parity Stock on which dividends are payable or
in arrears in proportion to the total amounts to
which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any Parity Stock,
A-3
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 Junior
Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock,
or any shares of Parity Stock, except in accordance
with a purchase offer made in writing or by
publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the
Board of Directors, after consideration of the
respective annual dividend rates and other relative
rights and preferences of the respective series and
classes, shall determine in good faith will result in
fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration 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.
Section 5. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled 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 the conditions and
restrictions on issuance set forth herein, in the Articles of
Incorporation, in any other Certificate of Designation establishing a
series of Preferred Stock or any similar stock or as otherwise required
by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
holders of the shares of the Series B Preferred Stock shall be
entitled to receive, in preference to the holders of Junior
Stock, the greater of (a) $1,000.00 per share, plus accrued
dividends to the date of distribution, whether or not earned
or declared, or (b) an amount per share equal to the product
of the Series B Multiple then in effect times the aggregate
amount to be distributed per share to holders of Common Stock.
A-4
(B) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
holders of Parity Stock shall not receive any distributions
except for distributions made ratably on the Series B
Preferred Stock and all other such Parity stock in proportion
to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, Etc. In 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 such case the shares of the Series B Preferred Stock shall
at the same time be similarly exchanged or changed in an amount per
share equal to the product of the Series B Multiple then in effect
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series B Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series B Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock, or any
similar stock that specifically provides that it shall rank prior to
the shares of Series B Preferred Stock, as to the payment of dividends
and the distribution of assets, unless the terms of any such series
shall provide otherwise. Nothing herein shall preclude the Board of
Directors from creating any series of Preferred Stock or any similar
stock ranking on a parity with or prior to the shares of Series B
Preferred Stock as to the payment of dividends or the distribution of
assets.
Section 10. Fractional Shares. Series B Preferred Stock may be
issued in fractions of a share which 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 B Preferred Stock.
Section 11. Amendment. The Certificate of Incorporation, as
amended, including this Certificate of Designation establishing the
shares of the Series B Preferred Stock, shall not be amended in any
manner which would materially alter or change the powers, preferences
or special rights of the Series B Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds or
more of the outstanding shares of Series B Preferred Stock voting
separately as a class.
A-5
IN WITNESS WHEREOF, this Certificate is executed on behalf of
the Corporation by its president and attested by it Secretary as of this 27th
day of November, 2002.
/s/ Stephen M. O'Hara
--------------------------------------
Stephen M. O'Hara
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ Howard B. Keene
- ------------------------------------------
Howard B. Keene
Secretary
STATE OF MISSOURI )
) ss.
COUNTY OF ST. LOUIS )
BE IT REMEMBERED, that before me, a notary public in and for the
aforesaid county and state, personally appeared Stephen M. O'Hara, Chairman of
the Board and Chief Executive Officer, and Howard B. Keene, Secretary, of
Rawlings Sporting Goods Company, Inc., a Delaware corporation, who are known to
me to be the same persons who executed the foregoing instrument, and duly
acknowledged the execution of the same as of this 27th day of November, 2002.
/s/ Mary R. Todd
-------------------------------------------
Notary Public
My commission expires:
June 21, 2005
- --------------------------------
A-6
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER DECEMBER 9, 2012 OR EARLIER IF REDEEMED BY THE COMPANY OR
THE OCCURRENCE OF A SECTION 11(a)(ii) EVENT (AS DEFINED IN THE RIGHTS
AGREEMENT). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR A SUBSEQUENT HOLDER OF SUCH RIGHTS. ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BECOME, OR MAY ALREADY HAVE
BECOME, NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT AND MAY NOT BE TRANSFERRED TO ANY PERSON.]*
RIGHTS CERTIFICATE
RAWLINGS SPORTING GOODS COMPANY, INC.
This certifies that _____________________________, or
registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of November 27,
2002, as amended (the "Rights Agreement"), between Rawlings Sporting Goods
Company, Inc., a Delaware corporation (the "Company"), and Mellon Investor
Services LLC, a New Jersey limited liability company, the Rights Agent (the
"Rights Agent"), to purchase from the Company at any time prior to 5:00 P.M.
(New York City time) on December 9, 2012 (the "Final Expiration Date") at the
office of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-thousandth of a fully paid, nonassessable share of Series
B Junior Participating Preferred Stock (the "Preferred Stock") of the Company,
at a purchase price of $30 per one one-thousandth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed and properly
completed. The number of Rights evidenced by this Rights Certificate
- --------------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
B-1
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of _______________, 2002, based on the Preferred Stock as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price, the number and kind of shares of Preferred Stock or other securities of
the Company or any other Person (as such term is defined in the Rights
Agreement) or other property, which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate, and the timing of permitted
exercise, are subject to modification and adjustment upon the happening of
certain events including a Triggering Event (as such term is defined in the
Rights Agreement).
Upon the occurrence of a Section 11(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of an Acquiring Person or of any such Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a share of Preferred
Stock or other securities of the Company or another Person or other property as
the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right at any time prior to the earlier of the close
of business on (i) the tenth business day following the Stock Acquisition Date,
and (ii) the Final Expiration Date. In addition, subject to the provisions of
the Rights Agreement, each Right evidenced by this Certificate may be exchanged
by the Company at its option for one share of Common Stock of the Company
(subject to adjustment for any stock split, stock dividend or similar
transaction) following the
B-2
Stock Acquisition Date and prior to the time an Acquiring person owns 50% or
more of the shares of Common Stock then outstanding.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
shares of Preferred Stock or of any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ____________ [20__]. RAWLINGS SPORTING GOODS
COMPANY, INC.
By:
-------------------------------------
Name:
Title:
ATTEST:
- ---------------------------------
Name:
Title:
Countersigned:
MELLON INVESTOR SERVICES LLC,
as Rights Agent
By:
-------------------------------
Name:
Title:
B-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _____________, ____
___________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, ____
___________________________________
Signature Guaranteed: Signature
B-4
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the Rights Certificate.)
To: RAWLINGS SPORTING GOODS COMPANY, INC.:
The undersigned hereby irrevocably elects to exercise _______
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security
or taxpayer identification number_______________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or taxpayer identification number_______________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ______________, ____
___________________________________
Signature
Signature Guaranteed:
B-6
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [
] are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _____________, ____
___________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-7
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On November 27, 2002, the Board of Directors of Rawlings
Sporting Goods Company, Inc. (the "Company") declared a dividend distribution of
one right (a "Right") for each outstanding share of the Company's common stock,
par value $.01 per share (the "Common Stock"), payable to stockholders of record
at the close of business on December 9, 2002 (the "Record Date") and with
respect to the Common Stock issued thereafter until the Distribution Date
(defined below) and, in certain circumstances, with respect to the Common Stock
issued after the Distribution Date. Except as set forth below, each Right, when
it becomes exercisable, entitles the registered holder to purchase from the
Company a unit consisting initially of one one-thousandth of a share (a "Unit")
of Series B Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Company, at a purchase price of $30 per Unit, subject
to adjustment (the "Purchase Price"). The description and terms of the Rights
are set forth in a Rights Agreement, dated as of November 27, 2002, between the
Company and Mellon Investor Services LLC, a New Jersey limited liability
company, as Rights Agent (the "Rights Agreement").
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate
certificates evidencing the Rights ("Rights Certificates") will be distributed.
The Rights will separate from the Common Stock and a Distribution Date will
occur upon the earlier of (i) ten business days following public announcement or
disclosure that a person has become an "Acquiring Person" (defined below) or of
facts indicating that such person has become an Acquiring Person, or (ii) ten
business days (or such later date as the Board shall determine) following the
commencement of, or an announcement of an intention to commence, a tender or
exchange offer that would result in a person or group becoming an "Acquiring
Person." Except as set forth below, an "Acquiring Person" is collectively a
person, together with all Affiliates (defined below) and Associates (defined
below) of such person who or which has acquired "Beneficial Ownership"
(generally as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of 15% or more of the outstanding shares of Common Stock except pursuant to a
Permitted Offer (defined below). The term "Acquiring Person" excludes (i) the
Company, (ii) any subsidiary of the Company, (iii) any employee benefit plan of
the Company or any subsidiary of the Company, (iv) any person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan, and (v) any person, together with such person's Affiliates and
Associates, who or which becomes a Beneficial Owner of 15% or more of the
outstanding shares of Common Stock as a result of acquiring such shares directly
from the Company.
An "Affiliate" of a Person (as such term is defined in the
Rights Agreement) is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified. An "Associate" of a Person shall mean (i) with respect to
a corporation (other than the Company or a majority-owned Subsidiary of the
Company), any officer or director thereof or of any Subsidiary (generally a
Person as to whom another Person has the right to elect a majority of the
directors or others with similar authority) thereof, or any Beneficial Owner of
10% or more of any class of equity security
C-1
thereof, (ii) with respect to an association, joint venture or other
unincorporated organization, any officer or director thereof or of a Subsidiary
thereof or any Beneficial Owner of 10% or more ownership interest therein, (iii)
with respect to a partnership, any general partner thereof or any limited
partner thereof who is, directly or indirectly, the Beneficial Owner of a 10% or
greater ownership interest therein, (iv) with respect to a limited liability
company, any officer, director or manager thereof or of a Subsidiary thereof or
any member thereof who is, directly or indirectly, the Beneficial Owner of a 10%
or greater ownership interest therein, (v) with respect to a business trust, any
officer or trustee thereof or of any Subsidiary thereof, (vi) with respect to
any other trust or an estate, any trustee, a beneficiary in the income from or
principal of such trust or estate, (vii) with respect to a natural person, any
relative or spouse of such person, or any a relative of such spouse, who has the
same home as such person, and (viii) any Affiliate of such Person.
No person shall become an "Acquiring Person" either: (i) as
the result of an acquisition of Common Stock by the Company which, by reducing
the number of such shares then outstanding, increases the proportionate number
of shares beneficially owned by such person, together with all Affiliates and
Associates of such person, unless such persons, after such share purchases by
the Company, becomes the Beneficial Owner of additional shares of Common Stock
constituting 1% or more of the then outstanding shares of Common Stock (other
than pursuant to a Permitted Offer); or (ii) 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 as
promptly as practicable a sufficient number of shares of Common Stock so that
such person would no longer be an Acquiring Person.
Until the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after the
Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (defined below) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of Preferred Stock will be
issued.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except in certain circumstances
specified in the Rights Agreement or as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
The Rights are not exercisable until after the Distribution
Date and until the Rights are no longer redeemable. The Rights will expire at
the close of business on December 9, 2012, unless extended or earlier redeemed
by the Company as described below.
In the event that, at any time following the Distribution
Date, a person becomes an Acquiring Person, except pursuant to a "Permitted
Offer", each holder of a Right will, for a
C-2
sixty (60) day period (subject to extension under certain circumstances)
thereafter, have the right to receive, upon exercise of the Right, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the Purchase Price of the Right. A
"Permitted Offer" is a tender offer or exchange offer for (i) all outstanding
shares of Common Stock which remains open for at least sixty (60) calendar days,
the consideration offered is cash that is fully financed or a publicly traded
security, (ii) that is accepted by the holders of at least a majority of the
then outstanding shares but excluding therefrom any shares beneficially owned by
the Person for whose benefit the tender offer or exchange offer is being made
and its Affiliates and Associates, (iii) that follows an irrevocable written
commitment to the Company by the Person for whose benefit the offer is made to
consummate a transaction promptly upon the completion of such offer in which the
consideration offered is cash that is fully financed or a publicly traded
security and whereby all shares of Common Stock not purchased in the offer shall
be acquired at the same price per share as paid in such offer and that such
Person will not make any amendment to the original offer which reduces the per
share price offered or which is in any other respect materially adverse to the
holders of Common Stock (other than the Person on whose behalf such offer is
being made and such Person's Affiliates and Associates), (iv) that is
determined, prior to the purchase of shares pursuant to the tender offer or
exchange offer, by the Company's Board of Directors that the price and other
terms of that tender offer or exchange offer are fair (taking into account all
factors which the Board of Directors may deem relevant, including the Company's
long-term prospects and prices which could reasonably be achieved if the Company
or its assets were sold on an orderly basis designed to realize maximum value )
to stockholders (other than the Person on whose behalf the tender offer is being
made and its Affiliates and Associates) and is otherwise in the best interests
of the Company and its stockholders (other than the person on whose behalf the
tender offer or exchange offer is being made and its Affiliates and Associates)
taking into account all factors the Board of Directors may deem relevant, (v)
the Company's Board of Directors has received an opinion from one or more
nationally recognized investment banking firm selected by the Company's Board of
Directors that the price offered is fair from a financial point of view, and
(vi) the Company's Board of Directors has taken the action contemplated by
clause (iv) by at least a majority of directors who are independent (within the
meaning of Rule 4200 of the NASDAQ Stock Market rules and under applicable
Delaware case law) and disinterested (i.e., the directors are neither the
Acquiring Person or a Person on whose behalf the tender offer is being made, nor
an Affiliate, Associate, nominee or representative of the Acquiring Person or a
Person on whose behalf the tender offer is being made). However, at the option
of the Board of Directors of the Company, during such time as an Acquiring
Person Beneficially Owns an amount of stock less than 50% of the outstanding
Common Stock, the Company may exchange, in whole or in part, each right of each
holder (other than the Acquiring Person or the Acquiring Person's Affiliate or
Associates or their subsequent holders) for one share of Common Stock.
Notwithstanding any of the foregoing, following the occurrence of the event set
forth in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, Beneficially Owned by any Acquiring
Person (or any Affiliate or Associate of an Acquiring Person) will be null and
void and nontransferable and any holder of any such Right (including any
purported transferee or subsequent holder) will be unable to exercise or
transfer any such right.
For example, at the initial Purchase Price of $30 per Right,
each Right not owned by an Acquiring Person or an Affiliate or Associate of the
Acquiring Person or any subsequent
C-3
holder, following an event set forth in the preceding paragraph would entitle
its holder to purchase $60 worth of Common Stock (or other consideration, as
noted above) for $30. Assuming that the Common Stock had a per share value of
$30 at such time, the holder of each valid Right would be entitled to purchase
six shares of Common Stock for $30.
In the event that, at any time following the date on which
there has been public announcement or disclosure that a person has become an
Acquiring Person or of facts indicating that such person has become an Acquiring
Person (the "Stock Acquisition Date") (which, for purposes of this paragraph
also includes the date on which there has been a public announcement that any
person has acquired 15% or more of the outstanding shares of Common Stock
pursuant to a Permitted Offer), (i) the Company merges or consolidates with
another corporation or association in a transaction in which the holders of all
of the outstanding shares of Common Stock immediately prior to the consummation
of the transaction are not the holders of all of the surviving corporation's
voting power, or (ii) more than 50% of the Company's assets or earning power is
sold or transferred, in either case with or to an Acquiring Person or any
Affiliate or Associate or any other person in which such Acquiring Person,
Affiliate or Associate has an interest or any person acting on behalf of or in
concert with such Acquiring Person, Affiliate or Associate, or, if in such
transaction all holders of Common Stock are not treated alike, any other person,
then each holder of a Right (except Rights which previously have been voided as
set forth above), shall thereafter have the right to receive upon exercise of
the Right, common stock of the acquiring company having a value equal to two
times the Purchase Price of the Right. The events set forth in this paragraph
and in the preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock
are granted certain rights or warrants to subscribe for or purchase Preferred
Stock at a price, or convertible into Preferred Stock with a conversion price,
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets or of subscription rights or warrants (other than those referred to
above). With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one Unit of Preferred Stock
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock. Shares of Preferred Stock purchasable upon exercise of
the Rights will not be redeemable. Preferred Stock will only be entitled to
receive dividends when concurrently declared with the Common Stock and then at a
rate equal to 1,000 times the amount per share to be received by holders of
Common Stock. In the event of liquidation, the holders of shares of Preferred
Stock will be entitled to receive the greater of (i) $1,000 per share, plus
accrued dividends to the date of distribution; or (ii) an amount per share equal
to the product of 1,000 times the aggregate amount to be distributed per share
to holders of Common Stock. Each share of Preferred Stock will have 1,000 votes,
voting together with the shares of Common Stock. These rights are protected by
customary antidilution provisions.
C-4
At any time until ten business days following the Stock
Acquisition Date (or such later date as the Board of Directors may determine),
the Company may redeem the Rights in whole, but not in part, at a price (the
"Redemption Price") of $.01 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors) by resolution of the
Board of Directors. Immediately upon such action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
The Rights Agreement includes a "TIDE" (Three-year Independent
Director Evaluation) provision. Under the TIDE provision, the Board of
Directors' Stockholder Rights Plan Committee composed of independent (as defined
above) and disinterested (as defined above) directors will review the Rights
Plan periodically (at least every three years) in order to consider whether the
maintenance of the Rights Agreement continues to be in the best interests of the
Company and its stockholders. This committee will communicate its conclusions to
the full Board of Directors after each review, including any recommendation as
to whether the Rights Plan should be modified or the Rights should be redeemed.
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. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income upon the Distribution
Date.
Any of the provisions of the Rights Agreement may be amended
by resolution of the Company's Board of Directors for so long as the Rights are
redeemable, except that the Redemption Price cannot be changed. After the Rights
cease to be redeemable, the provisions of the Rights Agreement, may be amended
from time to time by resolution of the Company's Board of Directors in order to
cure any ambiguity, to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person or its
Affiliates or Associates), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment may cause the Rights
again to become redeemable or to be amendable more broadly than contemplated by
this sentence.
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
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