Exhibit 4.1
THIRD AMENDMENT TO SHAREHOLDER RIGHTS AGREEMENT
This Third Amendment to the Shareholder Rights Agreement (this
"Amendment") entered into as of this 7th day of July, 1999, by and between
Designs, Inc., a Delaware corporation (the "Company"), and BankBoston, N.A.
(formerly known as The First National Bank of Boston, N.A.), a national
banking association, as Rights Agent (the "Rights Agent").
WHEREAS, the Company entered into a Shareholder Rights Agreement
with the Rights Agent, dated as of May 1, 1995 and amended by a First
Amendment to Shareholder Rights Agreement, dated as of October 6, 1997, and
a Second Amendment to Shareholder Rights Agreement, dated as of May 19,
1999 (as so amended, the "Rights Agreement"); and
WHEREAS, the parties desire to further amend the Rights Agreement
in accordance with Section 27 of the Rights Agreement in the manner
described herein.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Rights Agent hereby agree as
follows:
1. Subsection (a) of Section 1 of the Rights Agreement is hereby amended
by deleting the sentence immediately following the first paragraph of
such subsection (a) and inserting in place thereof the following
sentence:
Notwithstanding the foregoing, in connection with its proposed
acquisition of the Company, as contemplated by the letter dated
April 28, 1999 (the "Bid Letter"), from Jewelcor Management,
Inc. ("Jewelcor") to the Company, (i) Stanley I. Berger and
Jewelcor through its officers may act in concert to take actions
through August 1, 1999 reasonably necessary or appropriate to
seek consent from Levi Strauss & Co. to the assignment,
sublicense or transfer of the Company's rights and obligations
under the Amended and Restated Trademark License Agreement made
as of October 31, 1998, by and between Levi Strauss & Co. and
the Company, to Jewelcor or its Affiliates, and (ii) from and
after the latest to occur of (1) Jewelcor's submission to Levi
Strauss & Co. of a formal request for the consent referred to in
clause (i) of this sentence and the Company's receipt of notice
from Levi Strauss & Co. that Jewelcor has substantially complied
with all information requests of Levi Strauss & Co. in
connection therewith, (2) the Company's receipt from Jewelcor of
its written request for any material information concerning the
Company that Jewelcor believes it has not already received, and
(3) the Company's receipt from Jewelcor of a mark-up of the
draft acquisition agreement previously delivered to Jewelcor,
Jewelcor through its officers may communicate with the five
Persons (other than Jewelcor or any of its Affiliates or
Associates) who, as of the most recent practicable date prior to
the satisfaction of the conditions contained in clauses (1), (2)
and (3) above, have the largest percentage Beneficial Ownership
interest in the Common Stock solely for the purpose of
ascertaining their interest in participating as an equity
investor in Jewelcor's proposed acquisition of the Company as
contemplated by the Bid Letter (provided, however, that the
exception set forth in this clause (ii) shall not permit
Jewelcor or any of its Affiliates or Associates to enter into
any binding agreement or arrangement with any of such holders of
Common Stock in respect of the Company or their investment
therein unless prior thereto Jewelcor shall have given the
Company an opportunity to review the terms of such agreement or
arrangement and the Company shall have given its written consent
thereto, which consent shall not be unreasonably withheld, it
being understood that the Company will not consent to any such
agreement or arrangement between or among Jewelcor (or its
Affiliates or Associates) and any such holders of Common Stock
unless such agreements or arrangements are entered into
contemporaneously with an agreement between Jewelcor (or any
Affiliate thereof) and the Company providing for an acquisition
of the Company at not less than $3.65 per share of Common Stock
in cash); and none of Stanley I. Berger, Jewelcor, any officers
of Jewelcor, or any of such holders of Common Stock,
individually or collectively, will be deemed to be an Acquiring
Person as a result of the taking of any of the actions permitted
by clause (i) or clause (ii) above.
2. The first sentence of subsection (a) of Section 3 of the Rights
Agreement is hereby amended by deleting such sentence in its entirety
and substituting therefor the following sentence:
From the date hereof until the earlier of (i) the close of
business on the tenth Business Day after the Stock Acquisition
Date (unless the event resulting in the occurrence of the Stock
Acquisition Date is an acquisition of shares of Common Stock
pursuant to an all-cash tender offer for any and all outstanding
shares of Common Stock at a price of not less than $3.65 per
share, provided, that the Person making such tender offer shall
have irrevocably committed to effect a second-step merger
pursuant to which all outstanding shares of Common Stock not
purchased by such Person in the tender offer will be converted
into and exchanged for the same per share cash consideration paid
in the tender offer (any such tender offer, a "Qualifying
Offer")), (ii) the close of business on the tenth Business Day
(or such other Business Day, if any, as the Board of Directors
may determine in its sole discretion) after the date of the
commencement by any Person, other than an Exempt Person, of a
tender or exchange offer (other than a Qualifying Offer) if, upon
consummation thereof, such Person would be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding, or
(iii) the determination by the Board of Directors of the Company,
pursuant to the criteria set forth in Section 11(a)(ii)(B)
hereof, that a Person is an Adverse Person (including any such
date which is after the date of this Agreement and prior to the
issuance of the Rights) (the earliest of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by
the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of
Common Stock.
3. Clause (A) of subsection (a)(ii) of Section 11 of the Rights Agreement
is hereby amended by deleting such clause in its entirety and
substituting therefor the following new clause (A):
(A) any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person (unless the event
causing such Person to become an Acquiring Person is an
acquisition of shares of Common Stock made on or prior to
November 7, 1999 pursuant to a Qualifying Offer), or
4. Section 13 of the Rights Agreement is hereby amended by adding a new
subsection (d) thereto as follows:
(d) Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a
transaction described in clause (x) or (y) of Section 13(a) if
(i) such transaction is consummated with a Person or Persons, or
a wholly owned subsidiary of any such Person or Persons, who
acquired shares of Common Stock on or prior to November 7, 1999
pursuant to a Qualifying Offer (as such term is defined in
Section 3(a) hereof), (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock
whose shares were purchased pursuant to such Qualifying Offer and
(iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is
the same as the form of consideration paid pursuant to such
Qualifying Offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall
expire.
5. The term "Agreement" as used in the Rights Agreement shall be deemed
to refer to the Rights Agreement as amended hereby, and all other
references to the Rights Agreement shall be deemed to include this
Amendment.
6. This Amendment shall be effective as of the date first written above,
and except as set forth herein, the Rights Agreement shall remain in
full force and effect and otherwise shall be unaffected hereby.
7. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and attested under seal as of the date first written
above.
Attest: DESIGNS, INC.
/s/ Scott N. Semel /s/ Joel H. Reichman
------------------------- --------------------------
Name: Scott N. Semel Name: Joel H. Reichman
Title: General Counsel Title: President and Chief
Executive Officer
Attest: BANKBOSTON, N.A.
/s/ Patricia DeLuca /s/ Carol Mulvey-Eori
------------------------- ---------------------------
Name: Patricia DeLuca Name: Carol Mulvey-Eori
Title: Senior Account Title: Managing Director
Administrator