Note 9 - Preferred Stock

12 Months Ended

Jan. 01, 2017

Notes to Financial Statements

Preferred Stock [Text Block]

NOTE

9

–

PREFERRED STOCK

The Company is authorized to designate and issue up to

5,000,000

shares of

$1.00

par value preferred stock in

one

or more series and to determine the rights and preferences of each series, to the extent permitted by the Articles of Incorporation, and to fix the terms of such preferred stock without any vote or action by the shareholders. The issuance of any series of preferred stock

may

have an adverse effect on the rights of holders of common stock and could decrease the amount of earnings and assets available for distribution to holders of common stock. In addition, any issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of the Company. As of

January

1,

2017

and

January

3,

2016,

there were

no

shares of preferred stock issued.

Preferred Share Purchase Rights 

The Company has previously issued

one

purchase right (a “Right”) in respect of each outstanding share of Common Stock pursuant to a Rights Agreement it entered into in

March

2008.

Each Right entitles the registered holder of the Common Stock to purchase from the Company

one

one

-hundredth of a share (a “Unit”) of Series B Participating Cumulative Preferred Stock (the “Series B Preferred Stock”).

The Rights

may

have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that acquires (without the consent of the Company’s Board of Directors)

15%

or more of the outstanding shares of Common Stock or if other specified events occur without the Rights having been redeemed or in the event of an exchange of the Rights for Common Stock as permitted under the Shareholder Rights Plan.

The dividend and liquidation rights of the Series B Preferred Stock are designed so that the value of

one

Unit of Series B Preferred Stock issuable upon exercise of each Right will approximate the same economic value as

one

share of Common Stock, including voting rights. The exercise price per Right is

$90,

subject to adjustment. Shares of Series B Preferred Stock will entitle the holder to a minimum preferential dividend of

$1.00

per share, but will entitle the holder to an aggregate dividend payment of

100

times the dividend declared on each share of Common Stock. In the event of liquidation, each share of Series B Preferred Stock will be entitled to a minimum preferential liquidation payment of

$1.00,

plus accrued and unpaid dividends and distributions thereon, but will be entitled to an aggregate payment of

100

times the payment made per share of Common Stock. In the event of any merger, consolidation or other transaction in which Common Stock is exchanged for or changed into other stock or securities, cash or other property, each share of Series B Preferred Stock will be entitled to receive

100

times the amount received per share of Common Stock. Series B Preferred Stock is not convertible into Common Stock.

Each share of Series B Preferred Stock will be entitled to

100

votes on all matters submitted to a vote of the shareholders of the Company, and shares of Series B Preferred Stock will generally vote together as

one

class with the Common Stock and any other voting capital stock of the Company on all matters submitted to a vote of the Company’s shareholders.

Further, whenever dividends on the Series B Preferred Stock are in arrears in an amount equal to

six

quarterly payments, the Series B Preferred Stock, together with any other shares of preferred stock then entitled to elect directors, shall have the right, as a single class, to elect

one

director until the default has been cured.

Prior to entering into the

March

2008

Rights Agreement, the Company maintained a substantially similar Rights Agreement that was entered into in

1998.