Exhibit 4.1
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JO-ANN STORES, INC.
AND
NATIONAL CITY BANK, NATIONAL ASSOCIATION, AS RIGHTS AGENT
SECOND AMENDED AND RESTATED
RIGHTS AGREEMENT
DATED AS OF
NOVEMBER 4, 2003
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions....................................................................... 1
Section 2. Appointment of Rights Agent............................................................... 5
Section 3. Issue of Right Certificates............................................................... 5
Section 4. Form of Right Certificates................................................................ 6
Section 5. Countersignature and Registration......................................................... 6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.............................................. 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights; Null and Void Rights....... 8
Section 8. Cancellation and Destruction of Right Certificates........................................ 9
Section 9. Reservation and Availability of Common Shares............................................. 9
Section 10. Common Share Certificate Date............................................................. 10
Section 11. Adjustment of Purchase Price, Exercise Price, Number and Type of Shares or
Number of Rights.......................................................................... 11
Section 12. Certificates of Adjusted Purchase Price, Exercise Price or Number of Shares............... 15
Section 13. Fractional Rights and Fractional Shares................................................... 16
Section 14. Rights of Action.......................................................................... 17
Section 15. Agreement of Right Holders................................................................ 17
Section 16. Right Certificate Holder Not Deemed a Shareholder......................................... 17
Section 17. Concerning the Rights Agent............................................................... 18
Section 18. Merger or Consolidation or Change of Name of Rights Agent................................. 18
Section 19. Duties of Rights Agent.................................................................... 19
Section 20. Change of Rights Agent.................................................................... 21
Section 21. Issuance of New Right Certificates........................................................ 21
Section 22. Redemption................................................................................ 21
Section 23. Notice of Certain Events.................................................................. 22
Section 24. Notices................................................................................... 22
Section 25. Supplements and Amendments................................................................ 23
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Section 26. Successors................................................................................ 23
Section 27. Determination and Actions by the Board of Directors, etc.................................. 23
Section 28. Benefits of this Agreement................................................................ 24
Section 29. Severability.............................................................................. 24
Section 30. Governing Law............................................................................. 24
Section 31. Counterparts.............................................................................. 24
Section 32. Descriptive Headings...................................................................... 24
Section 33. Effective Date of Agreement............................................................... 24
Index of Defined Terms................................................................................. 26
EXHIBIT A - FORM OF RIGHT CERTIFICATE................................................................ A-1
EXHIBIT B - SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES.............................................. B-1
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SECOND AMENDED AND RESTATED
RIGHTS AGREEMENT
This SECOND AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of
November 4, 2003 (this "Agreement"), is made and entered into by and between
Jo-Ann Stores, Inc., an Ohio corporation (the "Company"), and National City
Bank, National Association, as Rights Agent (the "Rights Agent"). This Agreement
amends and restates the Amended and Restated Rights Agreement, dated as of
October 31, 2000 (the "Prior Agreement"), between the Company and the Rights
Agent.
Under the Prior Agreement, one right (a "Right") was
distributed with respect to each Class A Common Share and each Class B Common
Share (as those terms are hereinafter defined), and the Board of Directors of
the Company authorized the issuance of one Right in respect of each Class A
Common Share and each Class B Common Share issued prior to the earlier of the
Shares Acquisition Date or the Expiration Date (as such terms are hereinafter
defined), including in each case shares that are treasury shares and
subsequently become outstanding. Under the Prior Agreement, each Right
represented the right to purchase one Class A Common Share.
On the effective date of this Agreement, (i) each Class A
Common Share, which had one vote per share, is being reclassified into 1.15
Class B Common Shares and (ii) each Class B Common Share, which had no voting
rights except as required by law, is being amended to have one vote per share
and is being redesignated as a "Common Share" (the "Reclassification").
Accordingly, this Agreement provides that, upon completion of the
Reclassification, each of the Rights outstanding in respect of the Class A
Common Shares will become 1.15 Rights, and each of the Rights outstanding in
respect of the Class B Common Shares will remain outstanding and one Right. As a
result, one Right will be outstanding in respect of each Common Share
outstanding immediately after completion of the Reclassification. No fractional
Rights will be issued in the reclassification. In addition, one Right will be
issued in respect of each Common Share issued after the completion of the
Reclassification and prior to the earlier of the Shares Acquisition Date or the
Expiration Date, including Common Shares that are treasury shares and
subsequently become outstanding. Each Right will represent the right to purchase
one Common Share. The Purchase Price (as defined below) will be changed from
$60.00 to $52.17, and the Exercise Price (as defined below) will be changed from
$.50 to $.43.
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" means any Person (as such term is
hereinafter defined) that, together with all Affiliates and Associates (as such
terms are hereinafter defined) of the Person, is the Beneficial Owner (as such
term is hereinafter defined) of a number of Common Shares that equals or exceeds
15% of the number of Common Shares then outstanding, but will not include the
Company, any subsidiary of the Company, any employee benefit plan or
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employee stock ownership plan of the Company or of any subsidiary of the Company
or any person organized, appointed or established by the Company or any
subsidiary of the Company for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person will become an
"Acquiring Person" as the result of an acquisition of Common Shares by the
Company that, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by the Person to 15% or more
of the Common Shares then outstanding; except that, if a Person becomes the
Beneficial Owner of 15% or more of the Common Shares then outstanding by reason
of share purchases by the Company and, after such share purchases by the
Company, becomes the Beneficial Owner of any additional Common Shares, then the
Person will be deemed to be an "Acquiring Person". In addition, if the Board of
Directors of the Company determines in good faith that a Person that would
otherwise be an "Acquiring Person" has become the Beneficial Owner of 15% or
more of the Common Shares inadvertently, and the Person divests as promptly as
practicable a sufficient number of Common Shares so that the Person would no
longer be an "Acquiring Person", then the Person will not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" have the meanings given
to them in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date
hereof.
(c) "Associated Acquiring Person" means (i) 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 Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to any Person who holds an equity interest in such Acquiring
Person or with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding that has, as a primary purpose or effect, the
avoidance of Section 7(e).
(d) A Person will be deemed to be the "Beneficial Owner"
of and will be deemed to "beneficially own" any securities:
(i) that the Person, or any of the Person's
Affiliates or Associates, beneficially owns, directly or indirectly;
(ii) that the Person or any of the Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; except that, a Person will not be deemed to be the
"Beneficial Owner" of or to "beneficially own" (1) securities tendered
pursuant to a tender offer made by the Person or any of the Person's
Affiliates
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or Associates until such tendered securities are accepted for purchase,
or (2) securities issuable upon exercise of these Rights;
(iii) that the Person or any of the Person's
Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of, pursuant to any agreement, arrangement or understanding
(whether or not in writing); except that, a Person will not be deemed
to be the Beneficial Owner of or to "beneficially own" any security
under this subparagraph (iii) if the agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (B) is not then reportable by
the Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iv) that are beneficially owned, directly or
indirectly, by any other Person with which the Person or any of the
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
subparagraph (iii) of this paragraph (c)) or disposing of any
securities of the Company.
Notwithstanding the foregoing, (x) a Person will not be deemed
to be the Beneficial Owner of, or to "beneficially own," any security if
beneficial ownership arises solely as a result of the Person's status as a
"clearing agency," as defined in Section 3(a)(23) of the Exchange Act, (y) a
Person engaged in business as an underwriter of securities will not be deemed to
be the Beneficial Owner of, or to "beneficially own," any securities acquired
through the Person's participation in good faith in an underwriting syndicate
pursuant to an agreement to which the Company is a party until expiration of 40
calendar days after the date on which the securities are acquired, and (z) for
purposes of determining the amount of Common Shares beneficially owned by any of
the Family Members, (A) the Common Shares beneficially owned by any one or more
of the Family Members will not be deemed to be beneficially owned by any other
Family member, whether individually or as part of a group, and (B) the Common
Shares beneficially owned by any one or more of the Family Members that, after
the date of this Agreement, are transferred (whether the transfer is voluntarily
or by operation of law and whether the transfer is of a direct or indirect
interest in the shares) to any other Family Member will not be deemed to be
beneficially owned by the other Family Member.
(e) "Business Day" means any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Ohio are
authorized or obligated by law or executive order to close.
(f) "Class A Common Shares" means the Class A Common
Shares, without par value, of the Company that were outstanding immediately
prior to the Reclassification.
(g) "Class B Common Shares" means the Class B Common
Shares, without par value, of the Company that were outstanding immediately
prior to the Reclassification.
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(h) "Close of business" on any given date means 5:00
P.M., Cleveland time, on such date; except that, if such date is not a Business
Day, it will mean 5:00 P.M., Cleveland time, on the next succeeding Business
Day.
(i) "Common Shares" means the Common Shares, without par
value, of the Company that are outstanding immediately after the
Reclassification.
(j) "Current market price" is defined in Section 11(d).
(k) "Exchange Act" is defined in Section 10.
(l) "Exercise Price" means the exercise price per share
set forth in Section 11(a)(ii).
(m) "Expiration Date" is defined in Section 7(a).
(n) "Family Members" mean Betty Rosskamm, Alma Zimmerman,
Steve Reich, Margrit Reich, their descendants, their spouses, and the spouses of
their descendants, the executors, administrators, and custodians of any of the
foregoing, and any trust for the benefit of any of the foregoing.
(o) "Issuance" includes the issuance of authorized but
unissued shares and the transfer of treasury shares. In the event the Common
Shares are subdivided into a greater number of shares, the excess of the number
of shares into which the Common Shares are subdivided over the number of shares
prior to the subdivision will be deemed to be "issued."
(p) "NASDAQ" is defined in Section 11(d).
(q) "Person" means any individual, firm, corporation or
other entity.
(r) "Prior Agreement" is defined in the recitals to this
Agreement.
(s) "Purchase Price" means the purchase price per share
set forth in Section 7(b).
(t) "Reclassification" is defined in the recitals to this
Agreement.
(u) "Redemption Price" is defined in Section 22(a).
(v) "SEC" means the Securities and Exchange Commission.
(w) "Securities Act" is defined in Section 9(c).
(x) "Shares Acquisition Date" means the first date of
public announcement by the Company or an Acquiring Person (by press release,
filing made with the SEC or otherwise) that an Acquiring Person has become such.
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(y) "Subsidiary" means any corporation or other entity of
which a majority of the voting power of the voting equity securities or other
equity interests is owned, directly or indirectly, by the Company.
(z) "Triggering Event" is defined in Section 11(a)(ii).
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. Any actions that may be taken by the Rights
Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent.
Section 3. Issue of Right Certificates.
(a) Until the Shares Acquisition Date, (i) the Rights
will be evidenced (subject to the provisions of Section 3(b)) by the
certificates for the Common Shares registered in the names of the holders of the
Common Shares (which certificates for the Common Shares will also be deemed to
be Right Certificates) and not by separate Right Certificates, and (ii) the
right to receive Right Certificates will be transferable only in connection with
the transfer of the Common Shares. As soon as practicable after receipt of
written notice from the Company that the Shares Acquisition Date has occurred,
the Rights Agent will send, by first-class, insured, postage prepaid mail, at
the expense of the Company, to each record holder of the Common Shares as of the
close of business on the Shares Acquisition Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit A hereto, evidencing one Right for each Common Share held of
record as of the close of business on the Shares Acquisition Date. As of the
close of business on the Shares Acquisition Date, the Rights will be evidenced
solely by such Right Certificates.
(b) Rights will be issued in respect of all Common Shares
issued (including but not limited to Common Shares that are treasury shares and
subsequently become outstanding) or surrendered for transfer or exchange after
the completion of the Reclassification, but prior to the earlier of the Shares
Acquisition Date or the Expiration Date. Certificates representing such Common
Shares will have impressed on, printed on, written on or otherwise affixed to
them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a rights agreement between Jo-Ann
Stores, Inc., and a rights agent, as such rights agreement may be
amended from time to time, a copy of which is on file at the principal
executive offices of Jo-Ann Stores, Inc. Under certain circumstances,
as set forth in the rights agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. Jo-Ann Stores, Inc., 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, Rights that are or were
beneficially owned by Acquiring Persons or their Affiliates or
Associates
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(as such terms are defined in the rights agreement) and any subsequent
holder of such Rights may become null and void.
Until the Shares Acquisition Date, the Rights associated with
the Common Shares represented by such certificates will be evidenced by such
certificates alone, and the surrender for transfer of any of such certificates
will also constitute the surrender for transfer of the Rights associated with
the Common Shares represented by such certificate.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof) will be
substantially the same as Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed or of any association on which the Rights may from time to time
be authorized for quotation, or to conform to usage. Subject to the provisions
of Section 21, the Right Certificates, whenever issued, will entitle the holders
thereof to purchase such number of Common Shares (or, following a Triggering
Event, Common Shares, other securities, cash or other assets, as the case may
be) as will be set forth therein at the Purchase Price (or, upon the occurrence
of a Triggering Event, at the Exercise Price), but the number of such shares,
the Purchase Price and the Exercise Price will be subject to adjustment as
provided herein.
(b) Notwithstanding any other provision of this
Agreement, any Right Certificate issued pursuant to Section 3 or Section 21 that
represents Rights beneficially owned by an Acquiring Person or an Associated
Acquiring Person, any Right Certificate issued at any time to any nominee of an
Acquiring Person or an Associated Acquiring Person, and any Right Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement
or adjustment of any Right Certificate referred to in this sentence, will
contain the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Associated Acquiring Person (as such terms are defined in the rights
agreement between Jo-Ann Stores, Inc., and a transfer agent, as amended
to date). Accordingly, this Right Certificate and the Rights
represented hereby may become null and void in the circumstances
specified in Section 7(e) of the rights agreement.
Section 5. Countersignature and Registration. The Right
Certificates will be executed on behalf of the Company by its Chairman of the
Board, President or any Vice President, either manually or by facsimile
signature, and will be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right Certificates
will be countersigned manually or by facsimile by the Rights Agent and will not
be valid for any purpose unless so countersigned. In case any officer of the
Company who has signed any of the Right Certificates ceases to hold such office
of the Company before
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countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless be countersigned by the Rights Agent,
issued and delivered with the same force and effect as though the person who
signed such Right Certificates had not ceased to hold such office of the
Company; and any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right Certificate, is a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any the Person did not hold such
office.
Following the Shares Acquisition Date, the Rights Agent will
keep or cause to be kept, at one of its offices in Cleveland, Ohio, books for
registration and transfer of the Right Certificates. Such books will show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 4(b), Section
7(e) and Section 13, at any time after the close of business on the Shares
Acquisition Date, and at or prior to the close of business on the Expiration
Date, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common Shares (or,
following a Triggering Event, a like number or amount of Common Shares, other
securities, cash or other assets, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder (or former holder in
the case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates will
make such request in writing delivered to the Rights Agent, and will surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent in Cleveland,
Ohio for such purpose. Neither the Rights Agent nor the Company will be
obligated to take any action with respect to the transfer of any such
surrendered Right Certificate until the registered holder has completed and
signed the certificate contained in the form of assignment on the reverse side
of such Right Certificate and has provided such additional evidence of the
identity of the Beneficial Owner or former Beneficial Owner, or Affiliates or
Associates thereof, as the Company may reasonably request. Thereupon the Rights
Agent will, subject to Section 4(b), Section 7(e) and Section 13, countersign
and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of the loss, theft or
destruction of a Right Certificate, of indemnity or security reasonably
satisfactory to them and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and, in case of the mutilation of a
Right Certificate, upon surrender to the Rights Agent and cancellation of the
mutilated Right Certificate, the Company will make
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and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights; Null and Void Rights. Subject to Section 7(e), the registered holder
of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the Shares
Acquisition Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at its principal office in Cleveland, Ohio, together with payment of the
aggregate Purchase Price with respect to the total number of Common Shares (or
the aggregate Exercise Price with respect to the total number of Common Shares
or other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercised, at or prior to the close of business on
October 31, 2010 (the "Expiration Date").
(b) Each Right will, as of the date of this Amended and
Restated Rights Agreement, represent the right to purchase one Common Share,
subject to adjustment as provided in Section 11. The Purchase Price for each
Common Share pursuant to the exercise of a Right will, as of the date of this
Amended and Restated Rights Agreement, be $52.17, subject to further adjustment
from time to time as provided in Section 11, and will be payable in lawful money
of the United States of America in accordance with Section 7(c).
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment of the Purchase Price for the Common
Shares (or the Exercise Price for the Common Shares, other securities, cash or
assets, as the case may be) to be purchased and an amount equal to any
applicable transfer tax in cash, or by certified check or bank draft payable to
the order of the Company, the Rights Agent will, subject to Section 19(k),
promptly (i) requisition from any transfer agent of the Common Shares
certificates for the total number of Common Shares to be purchased, and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requisitions, (ii) if the Company has elected to deposit the total number of
Common Shares issuable upon exercise of the Rights with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of Common Shares as are to be purchased (in which case certificates for
the Common Shares represented by such receipts will be deposited by the transfer
agent with the depositary agent), and the Company will direct the depositary
agent to comply with all such requisitions, (iii) when applicable, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 13, (iv) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and (v) when applicable,
after receipt promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate. In the event that the Company is obligated to
issue securities, pay cash or distribute assets pursuant to Section 11(a)(iii)
or Section 13, the Company will make all arrangements necessary so that such
securities, cash, and assets are available for issuance, payment, or
distribution by the Rights Agent, as and when appropriate.
(d) In case the registered holder of any Right
Certificate exercises less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights
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remaining unexercised will be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 13.
(e) Notwithstanding anything in this Agreement to the
contrary, any Rights that are or were at any time beneficially owned by an
Acquiring Person or an Associated Acquiring Person, will become null and void
upon the occurrence of a Triggering Event and no holder of such Rights will have
any right with respect to such Rights under any provision of this Agreement from
and after the occurrence of the Triggering Event. The Company will use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but will have no liability to any holder of
Right Certificates or other Person as a result of its failure properly to make
any determinations with respect to an Acquiring Person, an Associated Acquiring
Person or their transferees or nominees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company will be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder has (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company may reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange will, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form
or, if surrendered to the Rights Agent, will be cancelled by it, and no Right
Certificates will be issued in lieu thereof except as expressly permitted by the
provisions of this Agreement. The Company will deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent will cancel and retire, any
Right Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent will deliver all cancelled Right Certificates
to the Company or will, at the written request of the Company, destroy such
cancelled Right Certificates and, in such case, will deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
(a) The Company will cause to be reserved and kept
available out of its authorized and unissued Common Shares or any authorized and
issued Common Shares held in its treasury, the number of Common Shares that will
be sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company will, as soon as practicable following a
Triggering Event, cause all Common Shares (or other securities, as the case may
be) reserved for issuance upon exercise of the Rights to be, upon official
notice of issuance, listed on the stock exchange or market on which the Common
Shares are then listed for trading.
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(c) The Company will, as soon as practicable following
the first occurrence of a Triggering Event, (i) prepare and file a registration
statement under the Securities Act of 1933 (the "Securities Act") with respect
to the Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) use its reasonable best efforts to cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) use its reasonable best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the date of the expiration of the
Rights. The Company will also take such actions as may be appropriate under the
blue sky laws of the various states in connection with the issuance of the
Rights and the securities purchasable upon exercise of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days,
the exercisability of the Rights in order to prepare and file such registration
statement. Upon any such suspension, the Company will issue a public
announcement and notice to the Rights Agent stating that the exercisability of
the Rights has been temporarily suspended, and the Company will issue a public
announcement and notice to the Rights Agent at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights will not be exercisable in any jurisdiction in which any
requisite registration or qualification will not have been obtained.
(d) The Company will take all such action as may be
necessary to ensure that all Common Shares (or other securities, as the case may
be) delivered upon exercise of Rights will, at the time of delivery of the
certificates therefor (subject to payment of the Purchase Price or the Exercise
Price, as the case may be), be duly and validly authorized and issued, fully
paid and nonassessable, freely tradeable, free and clear of any liens,
encumbrances or other adverse claims and not subject to any call or first
refusal right.
(e) The Company will pay when due and payable all federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any Common Shares (or other
securities, as the case may be) upon the exercise of Rights. The Company will
not, however, be required to (a) pay any transfer tax that may be payable in
respect of any transfer involved in the transfer or delivery of Right
Certificates or the issuance or delivery of certificates for the Common Shares
(or other securities, as the case may be) in a name other than that of the
registered holder of the Right Certificate evidencing the Rights surrendered for
exercise or (b) issue or deliver any certificates for a number of Common Shares
(or other securities, as the case may be) upon the exercise of any Rights until
any such tax has been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. Common Share Certificate Date. Each person in
whose name any certificate for Common Shares (or other securities, as the case
may be) is issued upon the exercise of Rights will for all purposes be deemed to
have become the holder of record of such Common Shares (or other securities, as
the case may be) represented thereby on, and such certificate will be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (or the Exercise Price, as the
case may be) and any applicable transfer taxes was made; except that, if the
date of such surrender and payment is a date upon which the Common Share (or
other security, as the case may be) transfer books of the Company are closed,
the Person will be deemed to have become the record holder
10
thereof on, and such certificate will be dated, the next succeeding Business Day
on which the Common Shares (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 holder of a Right Certificate will not be entitled to any rights of
a shareholder of the Company with respect to shares for which the Rights are
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and will
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Exercise Price,
Number and Type of Shares or Number of Rights. The Purchase Price and the
Exercise Price, the number of Common 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 at any time after
the date of this Agreement (A) declares a dividend on the Common Shares
payable in Common Shares, (B) subdivides the outstanding Common Shares,
(C) combines the outstanding Common Shares into a smaller number of
shares, or (D) issues any shares of its capital stock in a
reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e), the Purchase
Price and the Exercise 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 Common
Shares or shares of capital stock, as the case may be, issuable on such
date, will be proportionately adjusted so that the holder of any Right
exercised after such time will be entitled to receive the aggregate
number and kind of Common Shares or shares of 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 Common Share transfer books of the
Company were open, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs that would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) will be in
addition to, and will be made prior to any adjustment required pursuant
to Section 11(a)(ii).
(ii) In the event any Person becomes an Acquiring
Person (a "Triggering Event"), each holder of a Right (except as
provided in Section 7(e)) will thereafter have the right to receive,
upon exercise of the Right in accordance with the terms of this
Agreement, one Common Share for an Exercise Price of $.43 per share;
the number of such Common Shares and the Exercise Price will be subject
to adjustment as provided in this Section 11.
(iii) In the event that there are not enough
Common Shares authorized but unissued or held as treasury shares to
permit the exercise in full of the Rights in accordance with paragraph
(ii) above, the Company will take all such actions as may be necessary
to authorize a sufficient number of additional Common Shares to permit
the
11
exercise in full of the Rights and will refrain from paying dividends
or making any other distributions on the Common Shares until such
additional Common Shares have been authorized and made available to the
holders of the Rights for issuance upon exercise of their Rights.
(b) In case the Company fixes a record date for the
issuance of rights or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares at a price per Common Share (or having a
conversion price per share, if a security convertible into Common Shares) less
than the current market price (as defined in Section 11(d)) per Common Share on
such record date, the Purchase Price and the Exercise Price to be in effect
after such record date will be determined by multiplying the Purchase Price and
the Exercise Price in effect immediately prior to such record date by a
fraction, of which the numerator is the number of Common Shares outstanding on
such record date plus the number of Common Shares which the aggregate offering
price of the total number of Common Shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and of which the
denominator is the number of Common Shares outstanding on such record date plus
the number of additional Common Shares 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 is paid in a
consideration part or all of which is in a form other than cash, the value of
such consideration will be as determined in good faith by the Board of Directors
of the Company, whose determination will be described in a statement filed with
the Rights Agent. Common Shares owned by or held for the account of the Company
will not be deemed outstanding for the purpose of any such computation. Such
adjustment will 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
and the Exercise Price will be adjusted to be the Purchase Price and the
Exercise Price that would then be in effect if such record date had not been
fixed.
(c) In case the Company fixes a record date for the
making of a distribution to all holders of Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular periodic cash dividend or a dividend payable in
Common Shares, but including any dividend payable in stock other than Common
Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price and the Exercise Price to be in effect after
such record date will be determined by multiplying the Purchase Price or the
Exercise Price, as the case may be, in effect immediately prior to such record
date by a fraction, of which the numerator is the current market price (as
defined in Section 11(d)) per Common Share on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination will be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one Common
Share and of which the denominator is the current market price of one Common
Share. Such adjustments will be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price and the Exercise Price will be
12
adjusted to be the Purchase Price and the Exercise Price that would then be in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current market price" or "value" per share of the Common Shares on any date of
determination will be the average of the daily closing prices per share of such
Common Shares for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; except that, in the event that the
"current market price" or "value" per share of the Common Shares is determined
during the period following the announcement by the issuer of such Common Shares
of (A) a dividend or distribution on such Common Shares payable in such Common
Shares or securities convertible into such Common Shares or (B) any subdivision,
combination or reclassification of such Common Shares and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price" or
"value" will be appropriately adjusted to take into account ex-dividend trading.
The closing price for each day will 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 (the "NYSE") or, if the
Common Shares are not listed or admitted to trading on the NYSE, as reported in
the NASDAQ Stock Market ("NASDAQ") or, if the Common Shares are not listed or
admitted to trading on the NYSE or NASDAQ, as reported in the principal
consolidated transaction reporting system on which the Common Shares are listed
or admitted to trading or, if the Common Shares are not listed or admitted to
trading on the NYSE or NASDAQ or reported by any consolidated transaction
reporting system, the average of the high bid and low asked prices in the
over-the-counter market as reported by the National Association of Securities
Dealers, Inc. or such other organization then reporting transactions in the
over-the-counter market or, if on any such date the Common Shares are not listed
or admitted to trading on the NYSE or NASDAQ or reported by any consolidated
transaction reporting system or other organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Common Shares selected by the Board of Directors of the Company. The term
"Trading Day" will mean a day on which the principal national securities
exchange or market on which Common Shares are listed or admitted to trading is
open for the transaction of business or, if the Common Shares are not listed or
admitted to trading on any national securities exchange or market, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in the
State of Ohio are not authorized or obligated by law or executive order to
close. If the Common Shares are not publicly held or not so listed or traded,
"current market price" or "value" per share will mean the value per share as
determined in good faith by an independent investment banking firm selected by
the Board of Directors, whose determination will be described in a statement
filed with the Rights Agent and will be conclusive for all purposes.
(e) No adjustment in the Purchase Price or the Exercise
Price will be required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that any adjustments
that by reason of this Section 11(e) are not required to be made will be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 will be made to the nearest cent or to the nearest
ten-
13
thousandth of a Common Share, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 will
be made no later than the earlier of (i) three years from the date of the
transaction that mandates such adjustment or (ii) the date of the expiration of
the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right exercised after such adjustment becomes
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than Common Shares, thereafter the number of, and the Purchase
Price and the Exercise Price for, such other shares will 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 Common Shares contained in
Section 11(a) through (m)) inclusive, and the provisions of Section 7, Section
9, Section 10 and Section 13 with respect to the Common Shares will 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 or the Exercise Price
hereunder will evidence the right to purchase, at the adjusted Purchase Price or
the adjusted Exercise Price, as the case may be, the number of Common Shares (or
other securities, as the case may be) purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company has exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price or the
Exercise Price as a result of the calculations made in Section 11(b) and Section
11(c), each Right outstanding immediately prior to the making of such adjustment
will thereafter evidence the right to purchase, at the adjusted Purchase Price
or the adjusted Exercise Price, as the case may be, that number of Common Shares
(calculated to the nearest ten-thousandth) obtained by (i) multiplying (x) the
number of Common Shares covered by a Right immediately prior to this adjustment
by (y) the Purchase Price or the Exercise Price, as the case may be, in effect
immediately prior to such adjustment and (ii) dividing the product so obtained
by the Purchase Price or the Exercise Price, as the case may be, in effect
immediately after such adjustment.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price or the Exercise Price to adjust the number of
Rights, in substitution for any adjustment in the number of Common Shares
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights will be exercisable for the number of
Common Shares 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 will become that number of Rights (calculated to the nearest
ten-thousandth), obtained by dividing the Purchase Price or the Exercise Price,
as the case may be, in effect immediately prior to such adjustment by the
Purchase Price or the Exercise Price, as the case may be, in effect immediately
after such adjustment. The Company will make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment to be made. This record date may be the date on which the Purchase
Price or the Exercise Price, as the case may be, is adjusted or any day
thereafter but, if Right Certificates have been issued, will be at least 10 days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company will, as promptly as practicable, cause to be distributed to
holders of Right Certificates on such record date Right
14
Certificates evidencing, subject to Section 13, the additional Rights to which
such holders will be entitled as a result of such adjustment or, at the option
of the Company, will cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
will be entitled after such adjustment. Right Certificates so to be distributed
will be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase Price or the
adjusted Exercise Price) and will be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Notwithstanding any adjustment or change in the
Purchase Price, the Exercise Price or the number of Common Shares issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price, the Exercise Price and the
number of Common Shares that were expressed in the initial Right Certificates.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price or the Exercise Price below the stated
capital, if any, of a Common Share issuable upon exercise of the Rights, the
Company will take any corporate action that may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Common Shares
at such adjusted Purchase Price and or at such adjusted Exercise Price, as the
case may be.
(l) In any case in which this Section 11(i) requires that
an adjustment in the Purchase Price or the Exercise Price be made effective as
of a record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right exercised after
such record date the number of Common Shares issuable upon such exercise over
and above the number of Common Shares issuable upon such exercise on the basis
of the Purchase Price or the Exercise Price in effect prior to such adjustment;
provided, however, that the Company will deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional Common Shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11(i) to the contrary
notwithstanding, the Company will be entitled to make such reduction in the
Purchase Price or the Exercise Price, in addition to those adjustments expressly
required by this Section 11(i), as and to the extent that it in its sole
discretion determines to be advisable in order that any consolidation or
subdivision of Common Shares, issuance wholly for cash of any Common Shares at
less than the current market price, issuance wholly for cash of securities that
by their terms are convertible into or exchangeable for Common Shares, stock
dividends or issuance of rights, options or warrants referred to in this Section
11(i), hereafter made by the Company to holders of its Common Shares will not be
taxable to such holders.
Section 12. Certificates of Adjusted Purchase Price, Exercise
Price or Number of Shares. Whenever an adjustment is made as provided in Section
11(i), the Company will (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts
15
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Common Shares a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, if prior
to the Shares Acquisition Date, to each holder of a certificate representing
Common Shares) in accordance with Section 24. The Rights Agent will be fully
protected in relying on any such certificate and on any adjustment therein
contained, will not be obligated or responsible for calculating any adjustment
and will not be deemed to have knowledge of such adjustment unless and until it
has received such certificate.
Section 13. Fractional Rights and Fractional Shares.
(a) The Company will not be required to issue fractions
of Rights or to distribute Right Certificates that evidence fractional Rights.
In lieu of such fractional Rights, the Company will pay to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right, except that, no consideration will be
paid for the fractional Rights that, but for this Section 13(a), would have been
issued as a result of the Reclassification. For the purposes of this Section
13(a), the current market value of a whole Right will be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for each
day will 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 (the "NYSE") or, if the Rights are not listed or admitted to
trading on the NYSE, as reported in NASDAQ or, if the Rights are not listed or
admitted to trading on the NYSE or NASDAQ, as reported in the principal
consolidated transaction reporting system on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
the NYSE or NASDAQ or reported by any consolidated transaction reporting system,
the average of the high bid and low asked prices in the over-the-counter market
as reported by the National Association of Securities Dealers, Inc. or such
other organization then reporting transactions in the over-the-counter market
or, if on any such date the Rights are not listed or admitted to trading on the
NYSE or NASDAQ or reported by any consolidated transaction reporting system or
other organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights selected by the
Board of Directors of the Company.
(b) The Company will not be required to issue fractions
of Common Shares upon exercise of the Rights or to distribute certificates that
evidence fractional shares. In lieu of fractional Common Shares, the Company may
pay to the registered holders of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Common Share. For purposes of
this Section 13(b), the current market value of one Common Share will be the
closing price of a Common Share (as determined pursuant to Section 11(d)) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
16
Section 14. Rights of Action. All rights of action in respect
of this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Shares Acquisition Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Shares Acquisition Date, of any Common Share), without the consent
of the Rights Agent or of the holder of any other Right Certificate (or, prior
to the Shares Acquisition Date, of the Common Shares), may, in the holder's own
behalf and for the holder's own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, the holder's right to exercise the Rights evidenced by such Right
Certificate. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
Section 15. Agreement of Right Holders. Every holder of a
Right by accepting such Right consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Shares Acquisition Date, the Rights will
be transferable only in connection with the transfer of the Common Shares;
(b) after the Shares Acquisition Date, the Right
Certificates are transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent in Cleveland, Ohio, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed; and
(c) subject to Section 6, Section 7(e) and Section 7(f),
the Company and the Rights Agent may deem and treat the Person in whose name the
Right Certificate (or, prior to the Shares Acquisition Date, the associated
Common Share certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Share certificate made by
anyone other than the Company or the Rights Agent) for all purposes, and neither
the Company nor the Rights Agent will be affected by any notice to the contrary.
Section 16. Right Certificate Holder Not Deemed a Shareholder.
No holder, as such, of a Right Certificate will be entitled to vote, receive
dividends or be deemed for any purpose to be the holder of the number of Common
Shares that may at any time be issuable on the exercise of the Rights
represented thereby, nor will anything contained herein or in any Right
Certificate give to any holder, as such, of a Right Certificate any of the
rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
23), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Right Certificate have been exercised in
accordance with the provisions of this Agreement.
17
Section 17. Concerning the Rights Agent.
(a) The Company will 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, to reimburse it for or pay its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent as a
result of anything done or omitted to be done by the Rights Agent in connection
with the acceptance and administration of this Agreement, including without
limitation the costs and expenses of defending against any claim of liability in
connection therewith. The costs and expenses of enforcing this right of
indemnification will also be paid by the Company. The indemnification provided
for hereunder will survive the expiration of the Rights and the termination of
this Agreement.
(b) The Rights Agent may conclusively rely upon and will
be protected and will incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate for Common
Shares or other securities, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other document believed by it in good faith to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper person or persons.
(c) Notwithstanding anything in this Agreement to the
contrary, in no event will the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 18. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent will be a party, or any corporation,
succeeding to the shareholder services business of the Rights Agent or any
successor Rights Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto, provided that such corporation is for
appointment as a successor Rights Agent under the provisions of Section 20. In
case at the time such successor Rights Agent succeeds to the agency created by
this Agreement any of the Right Certificates has been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor so countersigned; in case at that time any of the Right Certificates
have not been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases, such Right
Certificates will have the full force provided in the Right Certificates and in
this Agreement.
18
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Right Certificates has been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; in case at that time
any of the Right Certificates have not been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases, such Right Certificates will have the full force
provided in the Right Certificates and in this Agreement.
Section 19. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, and no implied duties or obligations will be
read into this Agreement against the Rights Agent, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, will be
bound:
(a) Before the Rights Agent acts or refrains from acting,
the Rights Agent may consult with legal counsel (who may be legal counsel for
the Company), and the opinion of such counsel will be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
is specifically prescribed in this Agreement) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the
Board, the President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or omitted in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify such statements or recitals, but all such statements and recitals are and
will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof and as provided in Section 17); nor will it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor will it be responsible for any adjustment
required under the provisions of Section 11 or the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Common Shares to be issued pursuant
to this Agreement or any Right
19
Certificate or as to whether any Common Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, any Vice President, the
Treasurer or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it will not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein will preclude the Rights Agent
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
or by or through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorney or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement will require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there will be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) The Rights Agent will not be required to take notice
or be deemed to have notice of any fact, event or determination (including,
without limitation, any dates or events defined in this Agreement or the
designation of any Person as an Acquiring Person, Associated Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the Rights Agent
is specifically notified in writing by the Company of such fact, event or
determination.
(l) If, with respect to any Right 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 or 2
thereof, the Rights Agent will not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
20
Section 20. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days notice in writing mailed by registered or certified mail
to the Company and to each transfer agent of the Common Shares; if the
resignation occurs after a Triggering Event, notice in writing will, at the
expense of the Company, also be sent by first class mail to the holders of the
Right Certificates. The Rights Agent or any successor Rights Agent that the
Company may appoint may, prior to a Triggering Event, be removed by the Company
and be discharged from its duties under this Agreement upon 30 days notice in
writing mailed by registered or certified mail to the Rights Agent and to each
transfer agent of the Common Shares. If the Rights Agent resigns or is removed
by the Company or otherwise becomes incapable of acting, the Company will
appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 days after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who will, with such notice, submit his
Right Certificate for inspection by the Company) or after it has given notice of
such removal, then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a successor Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, will be a corporation organized and doing business under the law of the
United States or of any other state of the United States, in good standing, that
is authorized under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority or that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent will 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 will 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 will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares. Failure to give any notice provided for in this Section 20 or
any defect therein, however, will 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 21. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price or the Exercise Price per
share and the number, kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement.
Section 22. Redemption.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of the Shares Acquisition Date or the
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $0.005 per Right, appropriately further adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (the "Redemption Price").
21
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, 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 will be to receive the
Redemption Price. Within ten calendar days after the action of the Board of
Directors ordering the redemption of the Rights, the Company will give notice of
such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Shares Acquisition Date, on
the registry books of the transfer agent for the Common Shares. Any notice that
is mailed in the manner herein provided will be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any of the Rights at any time in any manner other than that specifically
set forth in this Section 22 or in connection with the repurchase of Common
Shares prior to the Shares Acquisition Date.
Section 23. Notice of Certain Events. In case the Company
proposes at any time following the Shares Acquisition Date to (a) pay any
dividend payable in stock of any class to the holders of Common Shares or make
any other distribution to the holders of Common Shares (other than dividends
payable in Common Shares and regular cash dividends), (b) offer to the holders
of Common Shares rights or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, (c) effect any reclassification of its Common
Shares, (d) effect any consolidation or merger into or with, or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, or (e) effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company will give to the
Rights Agent and to each holder of a Right, in accordance with Section 24, a
notice of such proposed action, which will 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 Common Shares, if any such date is
to be fixed, and such notice will be so given, in the case of any action
described in clause (a) or (b) above, at least twenty days prior to the record
date for determining holders of the Common Shares for purposes of such action
and, in the case of any such other action, at least twenty days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Common Shares, whichever will be the earlier.
In case of any Triggering Event, then the Company will as soon
as practicable thereafter give to the Rights Agent and to each holder of a
Right, in accordance with Section 24, a notice of the occurrence of such
Triggering Event, which will specify the event and the consequences of the event
to holders of Rights under Section 11(a)(ii).
Section 24. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company will be sufficiently given or made if
personally delivered or sent by first-class mail,
22
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
Jo-Ann Stores, Inc.
5555 Darrow Road
Hudson, Ohio 44236
Attention: President
Subject to the provisions of Section 20, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent will be sufficiently given or made if
personally delivered or sent by registered or certified mail and will be deemed
given upon receipt, addressed (until another address is filed in writing with
the Company) as follows:
National City Bank
1900 East 9th Street
Cleveland, Ohio 44114
Attention: Corporate Trust Administration
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to or on the holder of any Right
Certificate will be sufficiently given or made if personally delivered or sent
by first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 25. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to (i) cure any ambiguity, (ii) correct
or supplement any provision contain herein which may be defective or
inconsistent with any other provision herein, or (iii) prior to the Shares
Acquisition Date, change or supplement the provisions hereunder that the Company
may deem necessary or desirable and not adverse to the interests of the holders
of Common Shares. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 25, the Rights Agent will execute such
supplement or amendment unless the Rights Agent determines in good faith that
such supplement or amendment would adversely affect its interests under this
Agreement. Prior to the Shares Acquisition Date, the interests of the holders of
Rights will be deemed coincident with the interests of the holders of Common
Shares. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights Agent
under this agreement will be effective against the Rights Agent without the
execution of such supplement or amendment by the Rights Agent.
Section 26. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent will
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 27. Determination and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such
23
outstanding Common Shares of which any Person is the Beneficial Owner, will be
made in accordance with the provisions of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of Directors of the
Company will have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board, or the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend or supplement this
Agreement). All such actions, calculations, interpretations and determinations
(including, for the purpose of clause (ii) below, all omissions with respect to
the foregoing) that are done or made by the Board in good faith, will (i) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Right Certificates and all other parties, and (ii) not subject the Board to
any liability to any holder of any Right Certificate.
Section 28. Benefits of this Agreement. Nothing in this
Agreement will be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Shares Acquisition Date, the registered holders of the Common
Shares) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement will be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Shares Acquisition Date, the registered holders of the Common Shares).
Section 29. 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 will remain in
full force and effect and will in no way be affected, impaired or invalidated
Section 30. Governing Law. This Agreement and each Right
Certificate will be deemed to be a contract made under the laws of the State of
Ohio and for all purposes will be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and performed entirely
within such State.
Section 31. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts will for all purposes
be deemed to be an original, and all such counterparts will together constitute
but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions hereof.
Section 33. Effective Date of Agreement. This Agreement will
become effective upon completion of the Reclassification.
[signature page follows]
24
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
JO-ANN STORES, INC. ATTEST:
By:/s/ Valerie Gentile Sachs By: /s/ Robert D. Icsman
Name: Valerie Gentile Sachs Name: Robert D. Icsman
Title: Executive Vice President, Title: Senior Legal Counsel &
General Counsel & Secretary Assistant Secretary
NATIONAL CITY BANK, ATTEST:
NATIONAL ASSOCIATION
By: /s/ Sharon R. Boughter By: /s/ Victor W. LaTessa
Name: Sharon R. Boughter Name: Victor W. LaTessa
Title: Officer Title: Vice President
25
INDEX OF DEFINED TERMS
Page
----
Acquiring Person................................................................ 1
Affiliate....................................................................... 2
Agreement....................................................................... 1
Associate....................................................................... 2
Associated Acquiring Person..................................................... 2
Beneficial Owner................................................................ 2
beneficially own................................................................ 2
Business Day.................................................................... 3
Class A Common Shares........................................................... 3
Class B Common Shares........................................................... 3
Close of business............................................................... 4
Common Shares................................................................... 4
Company......................................................................... 1
current market price............................................................ 12
Exchange Act.................................................................... 2
Exercise Price.................................................................. 4
Expiration Date................................................................. 8
Family Members.................................................................. 4
Issuance........................................................................ 4
NASDAQ.......................................................................... 13
NYSE............................................................................ 13
Person.......................................................................... 4
Prior Agreement................................................................. 1
Purchase Price.................................................................. 4
Reclassification................................................................ 1
Redemption Price................................................................ 21
Right........................................................................... 1
Rights Agent.................................................................... 1
SEC............................................................................. 4
Securities Act.................................................................. 9
Shares Acquisition Date......................................................... 4
Subsidiary...................................................................... 4
Trading Day..................................................................... 13
Triggering Event................................................................ 11
26
EXHIBIT A
[FORM OF RIGHT CERTIFICATE]
Certificate No. R - ___________ Rights
NOT EXERCISABLE AFTER october 31, 2010 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $0.005 PER RIGHT ON THE TERMS SET FORTH IN
THE amended and restated RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN ASSOCIATED ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN Section 7(e) OF THE RIGHTS
AGREEMENT.]*
RIGHT CERTIFICATE
This certifies that _________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of a
rights agreement, as amended to date (the "Rights Agreement"), between Jo-Ann
Stores, Inc., an Ohio corporation (the "Company"), and ____________________, as
Rights Agent (the "Rights Agent"), to purchase from the Company at any time
after the Shares Acquisition Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., Cleveland time, on October 31, 2010, at the
principal office of the Rights Agent, or its successors as Rights Agent, in
__________, ___________, one Common Share of the Company (the "Common Share"),
at a purchase price of $52.17 per share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate, the number of Common Shares that may be purchased upon exercise
thereof and the Purchase Price per share set forth above are the numbers and
Purchase Price as of November 4, 2003, based on the Common Shares of the Company
as constituted at such date.
Upon the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement), each Right will entitled the holder to
receive, upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed, one Common Share for an Exercise Price of
$.43 per share (the "Exercise Price").
If the Rights evidenced by this Right Certificate are or at
any time were beneficially owned by an Acquiring Person or an Associated
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights will become null and void and no holder hereof
- -----------------
* The portion of the legend in brackets will be inserted only if applicable.
A-1
will have any right with respect to such Rights from and after the occurrence of
such Triggering Event.
As provided in the Rights Agreement, the Purchase Price, the
Exercise Price and number and kind of Common Shares or other securities that may
be purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement; reference is made to the
Rights Agreement for a full description of the rights, limitations of rights,
obligations, duties and immunities of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights Agreement are on file at
the principal office of the Rights Agent in ________, ________. In addition, 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.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered entitled such holder to purchase. If this Right
Certificate is exercised in part, the holder will be entitled to receive upon
surrender hereof another Right Certificate or Right Certificates for the number
of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price of $0.005 per Right.
The Company will not issue any fractional Common Shares upon
the exercise of any Right or Rights evidenced hereby, but in lieu thereof may
make a cash payment, as provided in the Rights Agreement.
No holder of this Right Certificate will be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Common
Shares or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor will anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate have been exercised as provided in the Rights Agreement.
This Right Certificate will not be valid or obligatory for any
purpose until it has been countersigned by the Rights Agent.
A-2
WITNESS the signature (which may be by facsimile) of the
proper officers of the Company. Dated as of __________________, 20___.
JO-ANN STORES, INC. ATTEST:
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
Title:__________________________ Title:__________________________
Countersigned:
By:_____________________________
Name:___________________________
Title:__________________________
A-3
[FORM OF REVERSE SIDE OF RIGHT CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if the
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED _________________________________ hereby
sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________________________
as attorney, to transfer the Right Certificate on the books of Jo-Ann Stores,
Inc., with full power of substitution.
Dated: __________________, 20___
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right 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 Associated Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Associated Acquiring Person.
Dated: __________________, 20___
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration, enlargement or change.
A-4
FORM OF ELECTION TO PURCHASE COMMON SHARES
(To be executed if the holder desires to
exercise the Right Certificate in accordance with
Section 11(a)(ii) of the Rights Agreement)
To Jo-Ann Stores, Inc.:
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Right Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
(Please print name and address)
Please insert social security
or other identifying number:______________________________
If such number of Rights are not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:______________________________
Dated: __________________, 20___
Signature
(Signature must conform in all respects to name
of the holder as specified on the face of this
Right Certificate)
Signature Guaranteed:
A-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Associated Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Associated Acquiring Person.
Dated: ______________, 20___
Signature
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the fact of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
A-6
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
The Board of Directors of Jo-Ann Stores, Inc. (the "Company")
has authorized the issuance of one Right for each outstanding Common Share,
without par value, of the Company (the " Common Shares"). As of November 4,
2003, each Right entitles the registered holder to purchase from the Company one
Common Share at a price of $52.17 (the "Purchase Price"), subject to adjustment.
Following the Shares Acquisition Date (as hereinafter defined) and under the
conditions described below, each Right entitles the registered holder (other
than an Acquiring Person (as hereinafter defined) or Associated Acquiring
Person) to acquire one Common Share for an exercise price of $.43 per share (the
"Exercise Price"). The description and terms of the Rights are set forth in a
rights agreement (the "Rights Agreement") between the Company and a rights agent
(the "Rights Agent").
Until there is a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the Common
Shares then outstanding (the "Shares Acquisition Date"), the Rights will be
evidenced by the certificate for such Common Share.
The Rights Agreement provides that, until the Shares
Acquisition Date, the Rights will be transferred with and only with the
associated Common Shares. Until the Shares Acquisition Date (or the earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificate for Common Shares will also constitute the transfer of the Rights
associated with the Common Shares represented by the certificates. As soon as
practicable following the Shares Acquisition Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Shares Acquisition Date,
and thereafter such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Shares Acquisition
Date. The Rights will expire at the close of business on October 31, 2010 unless
earlier redeemed by the Company as described below.
Upon the occurrence of a Triggering Event (as defined in the
Rights Agreement), each holder of a Right, other than Rights that were or are
beneficially owned by an Acquiring Person or an Associated Acquiring Person
(which will thereafter be void), will have the right to receive, upon exercise
of the Right and payment of the Exercise Price, one Common Share of the Company.
The Purchase Price and the Exercise Price, and the number of
Common Shares or other securities issuable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution.
With certain exceptions, no adjustment in the Purchase Price
or the Exercise Price will be required until cumulative adjustments require an
adjustment of at least 1% in the Purchase Price or the Exercise Price. No
fractional shares will be issued and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Common Shares on the last trading
date prior to the date of exercise.
B-1
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
At any time prior to the Shares Acquisition Date, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $0.005 per Right (the "Redemption Price"). Immediately upon the action
of the Board of Directors of the Company electing to redeem the Rights, the
Company will make announcement thereof, and the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The provisions of the Rights Agreement may be amended by the
Board of Directors in order to cure any ambiguity, to correct any defect or
inconsistency or, prior to the Shares Acquisition Date, to make changes deemed
to be not adverse to the interests of the holders of the Rights.
A copy of the Rights Agreement has been, and any amendments
thereto will be, filed with the Securities and Exchange Commission as an exhibit
to the Company's registration of the Rights on Form 8-A. A copy of the Rights
Agreement is available from the Company free of charge to any holder of Common
Shares of the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, as it may be amended from time to time.
B-2