RED LION HOTELS CORPORATION and AMERICAN STOCK TRANSFER & TRUST COMPANY LLC Rights Agent PREFERRED SHARES RIGHTS AGREEMENT Dated as of January 26, 2009
Exhibit 4.2
RED LION HOTELS CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY LLC
Rights Agent
Dated as of January 26, 2009
TABLE OF CONTENTS
| Page | ||||||
1.
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Certain Definitions | 1 | ||||
2.
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Appointment of Rights Agent | 5 | ||||
3.
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Issuance of Rights Certificates | 5 | ||||
4.
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Form of Rights Certificates | 7 | ||||
5.
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Countersignature and Registration | 8 | ||||
6.
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Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates | 8 | ||||
7.
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Exercise of Rights; Purchase Price; Expiration Date of Rights | 9 | ||||
8.
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Cancellation and Destruction of Rights Certificates | 11 | ||||
9.
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Reservation and Availability of Preferred Shares | 11 | ||||
10.
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Preferred Shares Record Date | 12 | ||||
11.
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Adjustment of Purchase Price, Number of Shares or Number of Rights | 13 | ||||
12.
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Certificate of Adjusted Purchase Price or Number of Shares | 20 | ||||
13.
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Consolidation, Merger or Sale or Transfer of Assets or Earning Power | 20 | ||||
14.
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Fractional Rights and Fractional Shares | 23 | ||||
15.
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Rights of Action | 23 | ||||
16.
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Agreement of Rights Holders | 24 | ||||
17.
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Rights Certificate Holder Not Deemed a Xxxxxxxxxxx | 00 | ||||
00.
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Concerning the Rights Agent | 24 | ||||
19.
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Merger or Consolidation or Change of Name of Rights Agent | 25 | ||||
20.
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Duties of Rights Agent | 25 | ||||
21.
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Change of Rights Agent | 27 | ||||
22.
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Issuance of New Rights Certificates | 28 | ||||
23.
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Redemption | 28 | ||||
24.
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Exchange | 29 | ||||
25.
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Notice of Certain Events | 31 | ||||
26.
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Notices | 31 | ||||
27.
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Supplements and Amendments | 32 | ||||
28.
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Successors | 32 | ||||
29.
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Determinations and Actions by the Board of Directors, etc. | 32 | ||||
30.
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Benefits of this Agreement | 33 | ||||
31.
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Severability | 33 | ||||
32.
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Governing Law | 33 | ||||
33.
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Counterparts | 33 | ||||
34.
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Descriptive Headings | 33 | ||||
EXHIBITS
Exhibit A
|
Form of Amendment to Articles of Incorporation | |
Exhibit B
|
Form of Rights Certificate | |
Exhibit C
|
Summary of Rights |
RED LION HOTELS CORPORATION
This Preferred Shares Rights Agreement, dated as of January 26, 2009 (this
“Agreement”), is made between Red Lion Hotels Corporation, a Washington corporation (the
“Company”), and American Stock Transfer & Trust Company LLC (the “Rights Agent”).
RECITALS
On January 21, 2009 (the “Rights Dividend Declaration Date”), the Board of Directors
of the Company authorized and declared a dividend of one Preferred Share purchase right (a
“Right”) for each Common Share (as hereinafter defined) of the Company outstanding as of
the Close of Business (as hereinafter defined) on February 2, 2009 (the “Record Date”),
each Right representing the right to purchase one one-tenth of a share of Series A Participating
Preferred Stock (as such number may be adjusted pursuant to the provisions of this Agreement),
having the rights, preferences and privileges set forth in the form of Certificate of Designations
attached to this Agreement as Exhibit A, upon the terms and subject to the conditions
herein set forth, and further authorized and directed the issuance of one Right (as such number may
be adjusted pursuant to the provisions of this Agreement) with respect to each Common Share that
shall become outstanding between the Record Date and the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined), and in certain circumstances after the
Distribution Date.
AGREEMENT
The parties agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following terms have the
meanings indicated:
(a) “Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% or more of the
Common Shares then outstanding, but shall not include the Company, any Subsidiary of the Company or
any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall be deemed to be an Acquiring Person either (i) as the result of an acquisition of
Common Shares by the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more of the Common
Shares of the Company then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 20% or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares of the Company, (other than pursuant to
a dividend or distribution paid or made by the Company on the outstanding Common Shares in Common
Shares or pursuant to a split or subdivision of the outstanding Common Shares), then such Person
shall be deemed to be an
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Acquiring Person unless upon becoming the Beneficial Owner of such additional Common Shares of
the Company such Person does not beneficially own20% or more of the Common Shares of the Company
then outstanding. Notwithstanding the foregoing, (i) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an “Acquiring Person” as defined
pursuant to the foregoing provisions of this Section 1(a) has become such inadvertently (including,
without limitation, because (A) such Person was unaware that it beneficially owned a percentage of
the Common Shares that would otherwise cause such Person to be an “Acquiring Person,” as defined
pursuant to the foregoing provisions of this Section 1(a) or (B) such Person was aware of the
extent of the Common Shares it beneficially owned but had no actual knowledge of the consequences
of such beneficial ownership under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person divested or divests as promptly as
practicable a sufficient number of Common Shares to that such Person would no longer be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be or to have become an “Acquiring Person” for any purposes of
this Agreement; and (ii) if, as of the date hereof, any Person is the Beneficial Owner of 20% or
more of the Common Shares outstanding, such Person shall not be or become an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this Section 1(a), unless and until such time as
such Person shall become the Beneficial Owner of additional Common Shares (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common Shares in Common
Shares or pursuant to a split or subdivision of the outstanding Common Shares), unless, upon
becoming the Beneficial Owner of such additional Common Shares, such Person is not then the
Beneficial Owner of 20% or more of the Common Shares then outstanding.
(b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms 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 of this Agreement.
(c) A Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“beneficially own” any securities:
(i) which such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Rule 13d-3 thereunder
(or any comparable or successor law or regulation);
(ii) which such Person or any of such Person’s Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding, whether or not in writing (other than customary
agreements with and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however, that
a Person shall not be deemed pursuant to this Section l(c)(ii)(A) to be the Beneficial Owner of, or
to beneficially own, (1) securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange or (2) securities which a Person or any of such
Person’s Affiliates or Associates may be deemed to
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have the right to acquire pursuant to any merger or other acquisition agreement between the
Company and such Person (or one or more of its Affiliates or Associates) if such agreement has been
approved by the Board of Directors prior to a Triggering Event; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this
Section l(c)(ii)(B) if the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section l(c)(ii)(B)) or disposing of any securities of the
Company; provided, however, that in no case shall an officer or director of the
Company be deemed (x) the Beneficial Owner of any securities beneficially owned by another officer
or director of the Company solely by reason of actions undertaken by such persons in their capacity
as officers or directors of the Company or (y) the Beneficial Owner of securities held of record by
the trustee of any employee benefit plan of the Company or any Subsidiary of the Company for the
benefit of any employee of the Company or any Subsidiary of the Company, other than the officer or
director, by reason of any influence that such officer or director may have over the voting of the
securities held in the plan.
(d) “Board of Directors” shall mean the Board of Directors of the Company then in
office.
(e) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in New York are authorized or obligated by law or executive order to close.
(f) “Close of Business” on any given date shall mean 5:00 P.M., New York time, on such
date; provided, however, that if such date is not a Business Day it shall mean 5:00
P.M., New York time, on the next succeeding Business Day.
(g) “Common Shares” when used with reference to the Company shall mean the shares of
Common Stock of the Company, $0.01 par value. “Common Shares” when used with reference to
any Person other than the Company shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first-mentioned Person.
(h) “Distribution Date” shall mean the earlier of (i) the Close of Business on the
tenth day (or such later date as may be determined by action of a majority of the Board of Directors) after the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition
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Date occurs before the Record Date, the Close of Business on the Record Date) or (ii)
the Close of Business on the tenth day (or such later date as may be determined by action of a
majority of the Board of Directors) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act,
if, assuming the successful consummation thereof, such Person would be the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding.
(i) “Equivalent Shares” shall mean Preferred Shares and any other class or series of
capital stock of the Company that is entitled to participate in dividends and other distributions,
including distributions upon the liquidation, dissolution or winding up of the Company, on a
proportional basis with the Common Shares. In calculating the number of any class or series of
Equivalent Shares for purposes of Section 11 of this Agreement, the number of shares, or fractions
of a share, of such class or series of capital stock that is entitled to the same dividend or
distribution as a whole Common Share shall be deemed to be one share.
(j) “Expiration Date” shall mean the earliest of (i) the Close of Business on the
Final Expiration Date, (ii) the Redemption Date, (iii) the time at which the Board of Directors
orders the exchange of the Rights as provided in Section 24 of this Agreement or (iv) the
consummation of a transaction contemplated by Section 13(d) of this Agreement.
(k) “Final Expiration Date” shall mean February 1, 2011.
(l) “Person” shall mean any individual, firm, corporation or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(m) “Preferred Shares” shall mean shares of Series A Participating Preferred Stock of
the Company.
(n) “Purchase Price” shall have the meaning set forth in Section 4(a) of this
Agreement.
(o) “Record Date” shall have the meaning set forth in the recitals at the beginning of
this Agreement.
(p) “Redemption Date” shall mean the time at which the Board of Directors of the
Company orders redemption of the Rights as provided in Section 23 of this Agreement.
(q) “Redemption Price” shall have the meaning set forth in Section 23(a) of this
Agreement.
(r) “Right” shall have the meaning set forth in the recitals at the beginning of this
Agreement.
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(s) “Rights Dividend Declaration Date” shall have the meaning set forth in the
recitals at the beginning of this Agreement.
(t) “Section 13 Event” shall mean any event described in clause (i), (ii) or (iii) of
Section 13(a) of this Agreement.
(u) “Shares Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such; provided that, if such person is determined not to have become an
Acquiring Person pursuant to Section l(a)(ii) of this Agreement, then no Shares Acquisition Date
shall be deemed to have occurred.
(v) “Subsidiary” of any Person shall mean any corporation or other entity of which an
amount of voting securities sufficient to elect a majority of the directors or Persons having
similar authority of such corporation or other entity is beneficially owned, directly or
indirectly, by such Person, or any corporation or other entity otherwise controlled by such Person.
(w) “Total Exercise Price” shall have the meaning set forth in Section 4(a) of this
Agreement.
(x) “Trading Day” shall have the meaning set forth in Section 11(d) of this Agreement.
(y) A “Triggering Event” shall be deemed to have occurred upon any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares for or pursuant to the terms of any
such plan), together with all Affiliates and Associates of such Person, becoming an Acquiring
Person.
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 of this Agreement, 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.
3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject to the provisions
of Sections 3(b) and 3(c) of this Agreement) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates and (ii) the right to receive Rights
Certificates will be transferable only in connection with the transfer of Common Shares. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for transfer of such
certificates for Common Shares shall also constitute the surrender for transfer of the Rights
associated with the Common Shares represented thereby. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and
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the Company will send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate in substantially the form of Exhibit B to this Agreement (a
“Rights Certificate”), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of Rights per Common
Share has been made pursuant to Section 11(a)(i), Section 11(i) or Section 11(p) of this Agreement,
then at the time of distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) of this Agreement) so that
Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates and may be transferred by the transfer of the Rights Certificates as
permitted hereby, separately and apart from any transfer of one or more Common Shares, and the
holders of such Rights Certificates as listed in the records of the Company or any transfer agent
or registrar for the Rights shall be the record holders thereof.
(b) On the Record Date or as soon as practicable thereafter, the Company will send (or cause
to be sent) a copy of a Summary of Rights in substantially the form of Exhibit C to this
Agreement (the “Summary of Rights”), by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the Record Date, at the address of such
holder shown on the records of the Company.
(c) Unless the Board of Directors, by resolution adopted at or before the time of the issuance
(including pursuant to the exercise of rights under the Company’s benefit plans) of any Common
Shares, specifies to the contrary, Rights shall be issued in respect of all Common Shares that are
issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration
Date or, in certain circumstances provided in Section 22 of this Agreement, after the Distribution
Date. Certificates representing such Common Shares shall also be deemed to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain rights as
set forth in a Preferred Shares Rights Agreement between Red Lion Hotels
Corporation. and American Stock Transfer & Trust Company LLC as the Rights Agent,
dated as of January 26, 2009 (the “Rights Agreement”), the terms of which
are hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of Red Lion Hotels Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this certificate. Red
Lion Hotels Corporation will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder, may
become null and void.
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With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed canceled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares which are no longer outstanding.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase Common Shares and of
assignment to be printed on the reverse thereof) shall be substantially in the form of Exhibit
B to this Agreement and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 of this Agreement, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date (or in the case of Rights issued with
respect to Common Shares issued by the Company after the Record Date, as of the date of issuance of
such Common Shares), shall show the date of countersignature by the Rights Agent, and on their face
shall entitle the holders thereof to purchase such number of one-tenths of a Preferred Share as
shall be set forth therein at the price set forth therein (such exercise price per one one-tenth of
a Preferred Share being hereinafter referred to as the “Purchase Price” and the aggregate
exercise price of all Preferred Shares issuable upon exercise of one Right being hereinafter
referred to as the “Total Exercise Price”), but the number and type of securities
purchasable upon the exercise of each Right and the Purchase Price shall be subject to adjustment
as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 of this Agreement
that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer 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 avoidance of Section 7(e) of this
Agreement, and any Rights Certificate issued pursuant to Section 6 or Section 11 of this Agreement
upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain (to the extent feasible) the following legend:
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The Rights represented by this Rights Certificate are or were beneficially owned by
a Person who was or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may become null and void
in the circumstances specified in Section 7(e) of the Rights Agreement.
In the event that the Rights become exercisable, the Rights Agent and the Company will agree upon a
procedure for determining which Rights will be so legended.
5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President or any Vice President, either manually or by
facsimile signature, and by the Secretary or an Assistant Secretary of the Company, either manually
or by facsimile signature, and shall have affixed thereto the Company’s seal (if any) or a
facsimile thereof. The Rights Certificates shall be manually countersigned by an authorized
signatory of the Rights Agent and shall not be valid for any purpose unless countersigned. In case
any officer of the Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any such person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for such purposes, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 14 and 24 of this Agreement, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Rights Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one-tenths of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the Rights Agent, and shall
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surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such Rights Certificate
and shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Sections 7(e), 14 and 24 of this Agreement,
countersign and deliver to the person entitled thereto a Rights Certificate or Rights 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 Rights 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 Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make and deliver a new Rights Certificate of like tenor
to the Rights Agent for delivery to the registered holder in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Sections 7(e), 23(b) or 24 of this Agreement, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein)
in whole or in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase on the reverse side thereof duly executed, to
the Rights Agent at the office of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one-tenth of a Preferred Share as to which the Rights are
exercised, at or prior to the Expiration Date.
(b) The Purchase Price for each one-tenth of a Preferred Share issuable pursuant to the
exercise of a Right shall initially be $15.00 shall be subject to adjustment from time to time as
provided in Sections 11 and 13 of this Agreement and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase duly executed, accompanied by payment of the Purchase Price for the number of
one-tenths of a Preferred Share (or other securities or property, as the case may be) to be
purchased and an amount equal to any applicable transfer tax required to be paid by the
holder of such Rights Certificate in accordance with Section 9 of this Agreement in cash, or
by certified check or cashier’s check payable to the order of the Company, the Rights Agent shall,
subject to Section 20(k) of this Agreement, thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer
agent for the Preferred Shares) a certificate or certificates for the number of one-tenths of a
Preferred
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Share to be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests or (B) if the Company shall have elected to deposit the total number
of one-tenths of a Preferred Share issuable upon exercise of the Rights hereunder with a depository
agent, requisition from the depository agent of depository receipts representing such number of
one-tenths of a Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer agent with the
depository agent) and the Company hereby directs the depository agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 of this Agreement, (iii) after receipt
of such certificates or depository receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Rights Certificate. The payment of the Purchase
Price (as such amount may be reduced (including to zero) pursuant to Section 11(a)(iii) of this
Agreement) may be made in cash or by certified check or cashier’s check payable to the order of the
Company. In the event that the Company is obligated to issue other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) of this Agreement, the Company will
make all arrangements necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or to his or her duly authorized assigns, subject to the provisions of Section 14 of
this Agreement.
(e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event or a Section 13 Event, any Rights beneficially owned by (i) an
Acquiring Person or an 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 (a “Post Transferee”), (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of
Directors has determined is part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e) (a “Prior Transferee”) or (iv) any
subsequent transferee receiving transferred Rights from a Post Transferee or a Prior Transferee,
either directly or through one or more intermediate transferees, shall become null and void without
any further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions
of this Section 7(e) and Section 4(b) of this Agreement are complied with, but shall have no
liability to any holder of Rights Certificates or to any other Person as a result of its
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failure to
make any determinations with respect to an Acquiring Person or any of such Acquiring Person’s
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the form of election to purchase
set forth on the reverse side of the Rights Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its best efforts to cause to be reserved
and kept available out of and to the extent of its authorized and unissued shares of preferred
stock not reserved for another purpose (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Shares and/or other securities), the number of
Preferred Shares (and, following the occurrence of the Triggering Event, Common Shares and/or other
securities) that will be sufficient to permit the exercise in full of all outstanding Rights.
(b) If the Company shall hereafter list any of its Preferred Shares on a national securities
exchange, then so long as the Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) issuable and deliverable upon exercise of the Rights
may be listed on a national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable (but only to the
extent that it is reasonably likely that the Rights will be exercised), all shares reserved
for such issuance to be listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Triggering Event in which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in accordance with
Sections 11(a)(ii) or 11(a)(iii) of this Agreement, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
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Securities Act of 1933,
as amended (the “Securities Act”), with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration statement to become effective
as soon as practicable after such filing and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable for such securities and
(B) the date of expiration of the Rights. The Company may temporarily suspend, for a period not to
exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating, and notify the Rights Agent, that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement and notification to the Rights Agent
at such time as the suspension is no longer in effect. The Company will also take such action as
may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the
various states in connection with the exercisability of the Rights. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction, unless
the requisite qualification in such jurisdiction shall have been obtained, or an exemption
therefrom shall be available, and until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such Preferred Shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any Preferred Shares upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Rights Certificates to a person other than, or the
issuance or delivery of certificates or depository receipts for the Preferred Shares in a name
other than that of, the registered holder of the Rights Certificate evidencing Rights surrendered
for exercise or to issue or to deliver any certificates or depository receipts for Preferred Shares
upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of surrender) or until it has been established
to the Company’s satisfaction that no such tax is due.
10. Preferred Shares Record Date. Each person in whose name any certificate for a
number of one-tenths of a Preferred Share is
issued upon the exercise of Rights shall for all purposes be deemed to have become the holder
of record of Preferred Shares represented thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price multiplied by the number of one-tenths of a Preferred Share with respect to which
the Rights have been exercised (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the Preferred
Shares transfer books of the Company are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Shares
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transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any
rights of a holder of Preferred Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase
Price, the number and kind of shares or other property covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Common Shares payable in Common Shares, (B) subdivide the outstanding
Common Shares, (C) combine the outstanding Common Shares (by reverse stock split or otherwise)
into a smaller number of Common Shares, or (D) issue 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), then, in
each such event, except as otherwise provided in this Section 11(a) and Section 7(e) of this
Agreement: (1) each of the Rights outstanding at the time of the record date for such dividend or
the effective date of such subdivision, combination or reclassification shall be proportionately
adjusted to that number of Rights (calculated to the nearest one hundredth (1/100) of a Right)
equal to a fraction (the “Exchange Ratio”), the numerator of which shall be the total
number of Common Shares or shares of capital stock issued in such dividend, subdivision,
combination or reclassification of the Common Shares outstanding immediately following such
dividend, subdivision, combination or reclassification and the denominator of which shall be the
total number of Common Shares outstanding immediately prior to such time, and the number of Rights
that shall thereafter be issued with respect to each Common Share or share of such other capital
stock that shall become outstanding thereafter prior to the Distribution Date shall be equal to the
total number of outstanding Rights immediately after such event (as adjusted pursuant to this
clause (1)) divided by the total number of outstanding Common Shares or shares of such other
capital stock immediately after such event (subject to further adjustment pursuant to the
provisions of this Agreement); (2) the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or reclassification shall
be adjusted so that the Purchase Price thereafter shall equal the result obtained by dividing the
Purchase Price in effect immediately prior to such time by the Exchange Ratio; provided,
however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of such Right; and (3) the number of Preferred
Shares or shares of such other capital stock issuable upon the exercise of each Right shall remain
unchanged immediately after such event, but, in the event of a reclassification, the kind of shares
issuable upon the exercise of each Right immediately after such reclassification shall be adjusted
to be the kind of shares of such other capital stock issued in such reclassification, rather than
Preferred Shares. If an event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) of this Agreement, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) of this Agreement.
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(ii) Subject to Section 24 of this Agreement, in the event a Triggering Event shall have
occurred, then promptly following such Triggering Event, proper provision shall be made so that
each holder of a Right, except as provided in Section 7(e) of this Agreement, shall thereafter have
the right to receive for each Right, upon exercise thereof in accordance with the terms of this
Agreement and payment of the then-current Total Exercise Price, in lieu of a number of one-tenths
of a Preferred Share, such number of Common Shares of the Company as shall equal the result
obtained by multiplying the then-current Purchase Price by the then number of one-tenths of a
Preferred Share for which a Right was exercisable (or would have been exercisable if the
Distribution Date had occurred) immediately prior to the first occurrence of a Triggering Event,
and dividing that product by 50% of the current per share market price (determined pursuant to
Section 11(d) of this Agreement) for Common Shares on the date of occurrence of the Triggering
Event (such number of shares being hereinafter referred to as the “Adjustment Shares”).
(iii) In lieu of issuing Common Shares in accordance with Section 11(a)(ii) of this Agreement,
the Company may, if the Board of Directors determines that such action is necessary or appropriate
and not contrary to the interest of holders of Rights (and, in the event that the number of Common
Shares which are authorized by the Company’s Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to
permit the exercise in full of the Rights, or if any necessary regulatory approval for such
issuance has not been obtained by the Company, the Company shall): (A) determine the excess of (1)
the value of the Common Shares issuable upon the exercise of a Right (the “Current Value”)
over (2) the Purchase Price (such excess, the “Spread”) and (B) with respect to each Right,
make adequate provision to substitute for such Common Shares, upon exercise of the Rights, (1)
cash, (2) a reduction in the Purchase Price, (3) other equity securities of the Company (including,
without limitation, shares or units of shares of any series of Preferred Stock which the Board of
Directors has deemed to have the same value as Common Shares (such shares or units of shares of
Preferred Stock are herein called “common stock equivalents”)), except to the extent that
the Company has not obtained any necessary stockholder or regulatory approval for such issuance,
(4) debt securities of the Company, except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors; provided,
however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Triggering Event and (y) the date on which the Company’s
right of redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available), except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance, and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the
Board of Directors shall determine in good faith that it is likely that sufficient additional
Common Shares could be authorized for issuance upon exercise in full of the Rights or that any
necessary regulatory approval for such issuance will be obtained, the thirty (30) day period set
-14-
forth above may be extended to the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares or take action to obtain such regulatory approval (such
period, as it may be extended, the “Substitution Period”). To the extent that the Company
determines that some action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) of this Agreement, that
such action shall apply uniformly to all outstanding Rights and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to seek any authorization of
additional shares, to take any action to obtain any required regulatory approval and/or to decide
the appropriate form of distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in effect. For purposes of
this Section 11(a)(iii), the value of the Common Shares shall be the current per share market price
(as determined pursuant to Section 11(d) of this Agreement) of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any “common stock equivalent” shall be deemed to
have the same value as the Common Shares on such date.
(b) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the issuance of rights, options or warrants to all holders of Common Shares or of any class or
series of Equivalent Shares entitling such holders (for a period expiring within forty-five (45)
calendar days after such record date) to subscribe for or purchase Common Shares or Equivalent
Shares or securities convertible into Common Shares or Equivalent Shares at a price per share (or
having a conversion price per share, if a security convertible into Common Shares or Equivalent
Shares) less than the then current per share market price of the Common Shares or Equivalent Shares
(as defined in Section 11(d)) on such record date, then, in each such case, the Purchase Price to
be in effect after such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which shall be the number of
Common Shares and Equivalent Shares (if any) outstanding on such record date, plus the number of
Common Shares or Equivalent Shares, as the case may be, which the aggregate offering price of the
total number of Common Shares or Equivalent Shares, as the case may be, so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the number of Common
Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of additional Common Shares or Equivalent
Shares, as the case may be, to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such subscription
price may be paid in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. Common Shares and Equivalent Shares owned by or
held for the account of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record date had not been
fixed.
-15-
(c) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the making of a distribution to all holders of the Common Shares or of any class or series of
Equivalent Shares (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any, or a dividend payable
in Common Shares) or subscription rights, options or warrants (excluding those referred to in
Section 11(b)), then, in each such case, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price (as determined
pursuant to Section 11(d) of this Agreement) of a Common Share or an Equivalent Share on such
record date, less the fair market value (as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights Agent) of the portion
of the cash, assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to a Common Share or Equivalent Share, as the case may be, and the
denominator of which shall be such current market price (as determined pursuant to Section 11(d) of
this Agreement) of a Common Share or Equivalent Share on such record date. Such adjustments shall
be made successively whenever such a record date is fixed, and in the event that such distribution
is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been
in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii) of this Agreement, the “current per share market price” of any security
(a “Security” for the purpose of this Section 11(d)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) of this Agreement, the “current per share
market price” of any Security on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the ten (10) consecutive Trading Days immediately
prior to such date; provided, however, that in the event that the current per share
market price of the Security is determined during a period following the announcement by the issuer
of such Security of (i) a dividend or distribution on such Security payable in shares of such
Security or securities convertible into such shares or (ii) any subdivision, combination or
reclassification of such Security, and prior to the expiration of the requisite thirty (30) Trading
Day or ten (10)
Trading Day period, 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 per share market price shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on any national
securities exchange, the last sale price or, if such last sale price is not reported, the average
of the high bid and low asked prices in the over-the-counter market, as reported by the National
-16-
Association of Securities Dealers, Inc. Automated Quotations System (“Nasdaq”) or such
other system then in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Security selected by the Board of Directors. If on any such date no
market maker is making a market in the Common Shares, the fair value of such shares on such date as
determined in good faith by the Board of Directors shall be used. The term “Trading Day”
shall mean a day on which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business Day. If the Common
Shares are not publicly held or so listed or traded, “current per share market price” shall
mean the fair value per share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or
to the nearest hundredth of a Common Share or other share or one hundredth of a Preferred Share, as
the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of
the transaction which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Sections 11(a) or 13(a) of this
Agreement, the holder of any Right thereafter exercised shall become entitled to receive any shares
of capital stock other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and if required, the Purchase Price thereof, shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in Sections 11(a), (b), (c), (e), (h), (i),
(j), (k), (1) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one-tenths of a Preferred Share purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Section 11(b), each
Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of Preferred Shares (calculated to
the nearest one hundredth of a share) obtained by (i) multiplying (x) the number of Preferred
Shares covered by a Right immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and
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(ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) to adjust the number of Rights, in substitution
for any adjustment in the number of Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one-tenths of a Preferred Share for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one hundredth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least ten (10) days later than the date of
the public announcement. If Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 of this Agreement, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the number of Preferred
Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-tenth of
a Preferred Share and the number of one-tenths of a Preferred Share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the par or stated value, if any, of the number of one-tenths of a Preferred Share issuable upon
exercise of the Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally issue as fully paid and
nonassessable shares such number of one-tenths of a Preferred Share at such adjusted Purchase
Price.
(1) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of any Right exercised
-18-
after such
record date of the number of one-tenths of a Preferred Share and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the number of one-tenths of a
Preferred Share and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder’s right to receive such additional shares (fractional or
otherwise) upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, prior to the Distribution
Date, the Company shall be entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred or Common Shares, (ii) issuance wholly for cash of any Preferred or Common Shares at
less than the current market price, (iii) issuance wholly for cash of Preferred or Common Shares or
securities which by their terms are convertible into or exchangeable for Preferred or Common
Shares, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred or Common Shares shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, effect or permit to occur any Triggering Event or Section 13 Event, if (i) at the time or
immediately after such Triggering Event or Section 13 Event there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (ii) prior to,
simultaneously with or immediately after such Section 13 Event, the stockholders of the Person who
constitutes, or would constitute, the “Principal Party” for purposes of Section 13(b) of
this Agreement shall have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Sections 23, 24 or 27 of this Agreement, take (or permit to be taken) any action if at
the time such action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the event the Company shall
at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number of Preferred Shares,
or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11 and Section 7(e) of this Agreement: (1) each of the Rights outstanding
at the time of the record date for such dividend or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted to that number of Rights
(calculated to the nearest one hundredth (1/100) of a Right) equal to a fraction
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(the “Exchange Fraction”), the numerator of which shall be the total number of Preferred Shares or shares of
capital stock issued in such reclassification of the Preferred Shares outstanding immediately
following such time and the denominator of which shall be the total number of Preferred Shares
outstanding immediately prior to such time, and the number of Rights that shall thereafter be
issued with respect to each Common Share or share of other capital stock that shall be issued in a
reclassification of the Common Shares prior to the Distribution Date shall be equal to the total
number of outstanding Rights immediately after such event (as adjusted pursuant to this clause (1))
divided by the total number of outstanding Common Shares or shares of such other capital stock
immediately after such event (subject to further adjustment pursuant to the provisions of this
Agreement); (2) the Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be adjusted so that
the Purchase Price thereafter shall equal the result obtained by dividing the Purchase Price in
effect immediately prior to such time by the Exchange Fraction; provided, however,
that in no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon exercise of such
Right; and (3) the number of one-tenths of a Preferred Share or share of such other capital stock
issuable upon the exercise of each Right shall remain unchanged immediately after such event, but,
in the event of a reclassification, the kind of shares issuable upon the exercise of each Right
immediately after such reclassification shall be adjusted to be the kind of shares of such other
capital stock issued in such reclassification, rather than Preferred Shares.
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Sections 11 and 13 of this Agreement, the Company shall promptly
(a) prepare a certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof to each holder of
a Rights Certificate in accordance with Section 26 of this Agreement. Notwithstanding the
foregoing sentence, the failure of the Company to make such certification or give such notice shall
not affect the validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following the Shares Acquisition Date, directly or indirectly:
(i) the Company shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction the principal purpose of which is to change the state of
incorporation of the Company or that complies with Section 11(o) of this Agreement);
(ii) any Person (other than a Subsidiary of the Company in a transaction that complies with
Section 11(o) of this Agreement) shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation of such consolidation or
merger; or
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(iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or more of its wholly owned Subsidiaries
in one or more transactions, each of which complies with Section 11(o) of this Agreement),
then, and in each such case, proper provision shall be made so that
(A) each holder of a Right (except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid and nonassessable Common Shares of the
Principal Party (as hereinafter defined), free of any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one-tenths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Triggering
Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of
such one-tenths of a Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event by the Purchase Price in effect immediately prior to such
first occurrence) and (2) dividing that product (which, following the first occurrence of a Section
13 Event, shall be referred to as the “Total Exercise Price” for each Right and for all
purposes of this Agreement) by 50% of the current per share market price (determined pursuant to
Section 11(d) of this Agreement) of the Common Shares of such Principal Party on the date of
consummation of such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement;
(C) the term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 of this Agreement shall apply only to
such Principal Party following the first occurrence of a Section 13 Event;
(D) such Principal Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of its Common Shares) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares thereafter deliverable
upon the exercise of the Rights.
(b) “Principal Party” shall mean, in the case of any transaction described in clause
(i), (ii) or (iii) of Section 13(a), the Person referred to therein or such Person’s successor,
including, if applicable, the Company, if it is the surviving corporation), provided,
however, that in any such case, (i) if such Person is a direct or indirect Subsidiary of
another Person, “Principal Party” shall refer to such other Person and (ii) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, “Principal Party”
shall refer to whichever of such Persons is the issuer of the Common Shares having the greatest aggregate value, and provided,
further, that
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for purposes of transactions described in clause (iii) of this Section 13(b),
“Principal Party” shall refer to that Person receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or transactions.
(c) If, for any reason, the Rights cannot be exercised for Common Shares of such Principal
Party as provided in Section 13(a), then each holder of Rights shall have the right to exchange its
Rights for cash from such Principal Party in an amount equal to the number of Common Shares that it
would otherwise be entitled to purchase times 50% of the current per share market price, as
determined pursuant to Section 11(d) of this Agreement, of such Common Shares of such Principal
Party. If, for any reason, the foregoing formulation cannot be applied to determine the cash
amount into which the Rights are exchangeable, then the Board of Directors, based upon the advice
of one or more nationally recognized investment banking firms, and based upon the total value of
the Company, shall determine such amount reasonably and with good faith to the holders of Rights.
Any such determination shall be final and binding on the Rights Agent.
(d) The Company shall not consummate any Section 13 Event unless the Principal Party shall
have a sufficient number of authorized Common Shares that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that such Principal Party shall, upon consummation of such
Section 13 Event, assume this Agreement in accordance with Sections 13(a) and (b) of this
Agreement, that all rights of first refusal or preemptive rights in respect of the issuance of
Common Shares of such Principal Party upon exercise of outstanding Rights have been waived, that
there are no rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights and that such transaction
shall not result in a default by such Principal Party under this Agreement, and further providing
that, as soon as practicable after the date of such Section 13 Event, such Principal Party will:
(i) prepare and file a registration statement under the Securities Act with respect to the
Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as soon as practicable after
such filing and use its 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 Expiration
Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on a national securities exchange or to meet the
eligibility requirements for quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical financial statements for such Principal
Party which comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
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In the event that at any time after the occurrence of a Triggering Event some or all of the
Rights shall not have been exercised at the time of a transaction described in this Section 13, the
Rights which have not theretofore been exercised shall thereafter be exercisable in the manner
described in Section 13(a) (without taking into account any prior adjustment required by Section
11(a)(ii)).
(e) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to distribute Rights
Certificates that evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable, as determined pursuant to
the second sentence of Section 11(d) of this Agreement.
(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-tenth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions that are integral multiples of one-tenth of a Preferred Share). In lieu of fractional
Preferred Shares that are not integral multiples of one one-tenth of a Preferred Share, the Company
shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the current market value of a
Common Share. For purposes of this Section 14(b), the current market value of a Common Share shall
be the closing price of a Common Share (as determined pursuant to the second sentence of Section
11(d) of this Agreement) 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 or her right to
receive any fractional Rights or any fractional shares upon exercise of a Right.
15. Rights of Action. All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18 of this Agreement, are vested in
the respective registered holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of the Common Shares); and any registered holder of any Rights Certificate
(or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his or her own behalf and for his or her own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his or her right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any
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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.
16. Agreement of Rights Holders. Every holder of a Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office or offices of the Rights Agent designated
for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed; and
(c) subject to Sections 6(a) and 7(f) of this Agreement, the Company and the Rights Agent may
deem and treat the person in whose name the Rights Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary.
17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or
in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 of this Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions of this Agreement.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense,
incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
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(b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration of this Agreement in
reliance upon any Rights Certificate or certificate for the Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20 of
this Agreement.
19. 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 shall be a party, or any corporation
succeeding to the stockholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the parties to this Agreement; provided,
however, that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 of this Agreement. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the Rights Certificates and in
this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and at such time any of
the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion or advice of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion or advice.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without
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limitation, the identity of
any Acquiring Person and the determination of “current per share market price”) be proved
or established by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer,
the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery of this Agreement (except the due execution of this
Agreement by the Rights Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13, 23
or 24, or the ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to Section 12 describing such
change or adjustment); nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Preferred 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 Chief
Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set
forth in
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writing any action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys 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 shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon thirty (30) days’ notice in writing
mailed to the Company and to each transfer agent of the Preferred Shares and the Common Shares by
registered or certified mail, and to the holders of the Rights Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Shares
by registered or certified mail, and to the holders of the Rights Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such removal or after it has
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been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his or her
Rights Certificate for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall
either (a) be a corporation organized and doing business under the laws of the United States or of
any state of the United States, in good standing, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50 million or (b) an affiliate of such a corporation. After
appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Preferred Shares and the Common Shares, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give any notice provided
for in this Section 21, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued and this sentence shall be
null and void ab initio if, and to the extent that, such issuance or this sentence would
create a significant risk of or result in material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued or would create a significant risk of or
result in such options’ or employee plans’ or arrangements’ failing to qualify for otherwise
available special tax treatment and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.
23. Redemption.
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(a) The Company may, at its option and with the approval of the Board of Directors, at any
time prior to the Close of Business on the Final Expiration Date, redeem all but not less than all
the then outstanding Rights at a redemption price of $0.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after the date of this
Agreement (such redemption price being herein referred to as the “Redemption Price”) and
the Company may, at its option, pay the Redemption Price either in Common Shares (based on the
current per share market price thereof (as determined pursuant to Section 11(d) of this Agreement)
at the time of redemption) or cash. Such redemption by the Company may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its sole discretion may
establish.
(b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights, evidence of which shall have been filed with the Rights Agent, and without any further
action and without any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption, provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of such redemption.
Within ten (10) days after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption 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 Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 of this Agreement, and other than in connection with the purchase
of Common Shares prior to the Distribution Date.
24. Exchange.
(a) Subject to applicable laws, rules and regulations, and subject to subsection (c) below,
the Company may, at its option, by majority vote of the Board of Directors, at any time after the
occurrence of a Triggering Event, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the provisions of Section
7(e) of this Agreement) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring
after the date of this Agreement (such exchange ratio being hereinafter referred to as the
“Ratio of Exchange”). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Shares then outstanding.
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(b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Ratio of Exchange. The Company shall give public notice of
any such exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) of this Agreement) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with
Section 24(a), the Company shall either take such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash in an amount equal
to the Current Value (as hereinafter defined), in lieu of issuing Common Shares in exchange
therefor, or (ii) issue debt or equity securities or a combination thereof, having a value equal to
the Current Value, in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors by majority vote of the Board of Directors, or (iii) deliver any
combination of cash, property, Common Shares and/or other securities having a value equal to the
Current Value in exchange for each Right. For purposes of this Section 24(c) only, the Current
Value shall mean the product of the current per share market price of Common Shares (determined
pursuant to Section 11(d) on the date of the occurrence of the event described above in
subparagraph (a)) multiplied by the number of Common Shares for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent that the Company determines
that some action need be taken pursuant to clauses (i), (ii) or (iii) of this Section 24(c), the
Board of Directors may temporarily suspend the exercisability of the Rights for a period of up to
sixty (60) days following the date on which the event described in Section 24(a) shall have
occurred, in order to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and to determine the
value thereof. In the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates that evidence fractional Common Shares. In lieu of such fractional Common Shares, there shall be paid to the registered holders of the Rights Certificates with
regard to which such fractional Common Shares would otherwise be issuable, an amount in cash
-30-
equal
to the same fraction of the current per share market value of a whole Common Share (as determined
pursuant to the second sentence of Section 11(d) of this Agreement).
(e) The Company may, at its option, by majority vote of the Board of Directors, at any time
before any Person has become an Acquiring Person, exchange all or part of the then outstanding
Rights for rights of substantially equivalent value, as determined reasonably and with good faith
by the Board of Directors, based upon the advice of one or more nationally recognized investment
banking firms.
(f) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection (e) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of rights in exchange therefor as has been
determined by the Board of Directors in accordance with subsection (e) above. The Company shall
give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such exchange. The Company
shall mail a notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the transfer agent for the Common Shares of the
Company. Any notice which is mailed in the manner herein provided shall be deemed given, whether
or not the holder receives the notice. Each such notice of exchange will state the method by which
the exchange of the Rights will be effected.
25. Notice of Certain Events.
(a) In case the Company shall propose to effect or permit to occur any Section 13 Event, the
Company shall give notice thereof to each holder of Rights in accordance with Section 26 of this
Agreement at least twenty (20) days prior to occurrence of such Section 13 Event.
(b) In case any Triggering Event or Section 13 Event shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 of this Agreement, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under Sections 11(a)(ii)
and 13 of this Agreement.
26. Notices. Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Red Lion Hotels Corporation.
000 X. Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxxxxxxx 00000
Attention: President
000 X. Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxxxxxxx 00000
Attention: President
Subject to the provisions of Section 21 of this Agreement, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights Certificate to
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or on
the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company LLC
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Trust Dept.
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Trust Dept.
Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
27. Supplements and Amendments. Prior to the Distribution Date, the Company may
supplement or amend this Agreement in any respect without the approval of any holders of Rights and
the Rights Agent shall, if the Company so directs, execute such supplement or amendment. From and
after the Distribution Date, the Company and the Rights Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Rights in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen any time period hereunder
or (iv) change or supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the holders of Rights
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, this Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at such time
as the Rights are not then redeemable or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate officer of the Company
that states that the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
28. Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
29. Determinations 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 outstanding Common Shares
of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of
Directors shall have the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board of Directors, or 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
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this Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not redeem the Rights or
to amend the Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights Certificates and all other
parties and (y) not subject the Board of Directors to any liability to the holders of the Rights.
30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the Common Shares).
31. Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors determines in its good faith judgment
that severing the invalid language from this Agreement would adversely affect the purpose or effect
of this Agreement, the right of redemption set forth in Section 23 of this Agreement shall be
reinstated and shall not expire until the close of business on the tenth day following the date of
such determination by the Board of Directors.
32. Governing Law. This Agreement and each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Washington and for
all purposes shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
33. Counterparts. This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
34. Descriptive Headings. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
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The parties have caused this Agreement to be duly executed as of the date first written above.
| RED LION HOTELS CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
| AMERICAN STOCK TRANSFER &
TRUST COMPANY LLC |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
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EXHIBIT A
FORM OF AMENDMENT TO ARTICLES OF INCORPORATION
(Copy
included as Exhibit 3.3 to Form 8-K dated January 21, 2009)
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Form of Right Certificate
| Certificate No. R- | Rights |
NOT EXERCISABLE AFTER FEBRUARY 1, 2011 OR SUCH LATER DATE AS DETERMINED BY THE COMPANY’S BOARD OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT.
Right Certificate
RED LION HOTELS CORPORATION
RED LION HOTELS CORPORATION
This certifies that , or registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Agreement, dated as of January 26, 2009 (the “Agreement”), between Red Lion
Hotels Corporation, a Washington corporation (the “Company”), and American Stock Transfer & Trust
Company LLC(the “Rights Agent”), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Agreement) and prior to 5:00 P.M., New York time, on February
1, 2011 (or such later date as determined by the Board of Directors of the Company (so long as such
determination is made prior to February 1, 2011)) at the principal office of the Rights Agent, or
at the office of its successor as Rights Agent, one tenth of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock, par value $.01 per share, of the Company (the
“Preferred Shares”), at a purchase price of $15.00 per one tenth of a Preferred Share (the
“Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and
the number of one tenths of a Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase Price as of
, , based on the Preferred Shares as constituted at such date. As provided in the
Agreement, the Purchase Price and the number of one tenths of a Preferred Share which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and conditions of the
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent,
the Company and the holders of the Right Certificates. Copies of the Agreement are on file at the
principal executive offices of the Company and the offices of the Rights Agent.
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 Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Agreement, the Rights evidenced by this Right Certificate (i)
may be redeemed by the Company at a redemption price of $.01 per Right or (ii) may be exchanged in
whole or in part for Preferred Shares or shares of the Company’s Common Stock, par value $.01 per
share.
No fractional Preferred Shares will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one tenth of a Preferred
Share, which may, at
B-1
the election of the Company, be evidenced by depositary receipts), but, in lieu thereof, a cash
payment will be made, as provided in the Agreement.
No holder of this Right Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything contained in the
Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders (except as
provided in the Agreement), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of , 2009.
| ATTEST: | RED LION HOTELS CORPORATION | |||||||||||||
| By | ||||||||||||||
| Name: | Name: | |||||||||||||
| Title: | Title: | |||||||||||||
| Countersigned: | ||||||||||||||
| [ ] | ||||||||||||||
| By | ||||
| Name: | ||||
| Title: | ||||
B-2
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns
and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint Attorney, to transfer the within Right Certificate on
the books of the within-named Company, with full power of substitution.
Dated:
| Signature | ||||
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution which is a participant in
the Securities Transfer Agents Medallion Program (“STAMP”), the New York Stock Exchange, Inc.
Medallion Signature Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”), pursuant to
Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended. Guarantees by a
notary public are not acceptable.
The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Agreement).
| Signature | ||||
B-3
Form of Reverse Side of Right Certificate — continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: RED LION HOTELS CORPORATION
The undersigned hereby irrevocably elects to exercise Rights represented by this Right
Certificate to purchase the Preferred Shares issuable upon the exercise of such Rights and requests
that certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
Please insert social security
or other identifying number
(Please print name and address)
Dated:
| Signature | ||||
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution which is a participant in
the Securities Transfer Agents Medallion Program (“STAMP”), the New York Stock Exchange, Inc.
Medallion Signature Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”), pursuant to
Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended. Guarantees by a
notary public are not acceptable.
The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Agreement).
| Signature | ||||
B-4
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Agreement) and such Assignment or
Election to Purchase will not be honored.
B-5
EXHIBIT C
SUMMARY OF RIGHTS
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
PREFERRED SHARES
Introduction
On January 21, 2009, the Board of Directors of our Company, Red Lion Hotels Corporation, a
Washington corporation, declared a dividend of one preferred share purchase right (a “Right”) for
each outstanding share of common stock, par value $.01 per share. The dividend is payable on
February 2, 2009 to the stockholders of record on February 2, 2009.
Our Board has adopted this Rights Agreement to protect stockholders from coercive or otherwise
unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any
person or group that acquires 20% or more of our outstanding common stock without the approval of
our Board. The Rights Agreement should not interfere with any merger or other business combination
approved by our Board.
For those interested in the specific terms of the Rights Agreement as made between our Company
and American Stock Transfer & Trust Company LLC, as the Rights Agent, on January 26, 2009, we
provide the following summary description. Please note, however, that this description is only a
summary, and is not complete, and should be read together with the entire Rights Agreement, which
has been filed with the Securities and Exchange Commission as an exhibit to a Current Report on
Form 8-K dated January 27, 2009. A copy of the agreement is available free of charge from our
Company.
The Rights. Our Board authorized the issuance of a Right with respect to each outstanding share of
common stock on February 2, 2009. The Rights will initially trade with, and will be inseparable
from, the common stock. The Rights are evidenced only by the balances indicated in the book-entry
account system of the transfer agent for our common stock or, in the case of certificated shares,
the certificates that represent such shares of common stock. New Rights will accompany any new
shares of common stock we issue after February 2, 2009 until the Distribution Date described below.
Exercise Price. Each Right will allow its holder to purchase from our Company one tenth of a share
of Series A Participating Preferred Stock (“Preferred Share”) for $15.00, once the Rights become
exercisable. This portion of a Preferred Share will give the stockholder approximately the same
dividend, voting, and liquidation rights as would one share of common stock. Prior to exercise, the
Right does not give its holder any dividend, voting, or liquidation rights.
Exercisability. The Rights will not be exercisable until
| • | 10 days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 20% or more of our outstanding common stock, or, if earlier, | |
| • | 10 days (or a later date determined by our Board before any person or group becomes an Acquiring Person) after a person or group begins a tender or exchange offer which, if completed, would result in that person or group becoming an Acquiring Person. |
We refer to the date when the Rights become exercisable as the “Distribution Date.” Until that
date, the balances in the book-entry accounting system of the transfer agent for our common stock
or, in the case of certificated shares, common stock certificates will also evidence the Rights,
and any transfer of shares of common stock or, in the case of certificated shares, certificates for
common stock will constitute a transfer of Rights. After that date, the Rights will separate from
the common stock and be evidenced solely by Rights certificates that we will mail to all eligible
holders of common stock. Any Rights held by an Acquiring Person or any Associate or Affiliate
thereof are void and may not be exercised.
Consequences of a Person or Group Becoming an Acquiring Person.
| • | Flip In. If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring Person or |
C-1
| any Associate or Affiliate thereof may, for $15.00, purchase shares of our common stock with a market value of $30.00, based on the market price of the common stock prior to such acquisition. | ||
| • | Flip Over. If our Company is later acquired in a merger or similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person or any Associate or Affiliate thereof may, for $15.00, purchase shares of the acquiring corporation with a market value of $30.00 based on the market price of the acquiring corporation’s stock, prior to such merger. |
Preferred Share Provisions.
Each one tenth of a Preferred Share, if issued:
| • | will not be redeemable. | |
| • | will entitle holders to quarterly dividend payments equal to the dividend paid on one share of common stock. | |
| • | will entitle holders upon liquidation either to receive $1 per one tenth of a share or an amount equal to the payment made on one share of common stock, whichever is greater. | |
| • | will have the same voting power as one share of common stock. | |
| • | if shares of our common stock are exchanged via merger, consolidation, or a similar transaction, will entitle holders to a per share payment equal to the payment made on one share of common stock. |
The value of one tenth interest in a Preferred Share should approximate the value of one share of
common stock.
Expiration. The Rights will expire on February 1, 2011, unless earlier redeemed or exchanged.
Redemption. Our Board may redeem the Rights for $.01 per Right at any time prior to the exercise of
a Right or the Final Expiration Date of the Plan. If our Board redeems any Rights, it must redeem
all of the Rights. Once the Rights are redeemed, the only right of the holders of Rights will be to
receive the redemption price of $.01 per Right. The redemption price will be adjusted if we have a
stock split or stock dividends of our common stock.
Exchange. After a person or group becomes an Acquiring Person, but before an Acquiring Person owns
50% or more of our outstanding common stock, our Board may extinguish the Rights by exchanging one
share of common stock or an equivalent security for each Right, other than Rights held by the
Acquiring Person.
Anti-Dilution Provisions. Our Board may adjust the purchase price of the Preferred Shares, the
number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that
may occur from a stock dividend, a stock split, a reclassification of the Preferred Shares or
common stock. No adjustments to the Exercise Price of less than 1% will be made.
Amendments. The terms of the Rights Agreement may be amended by our Board without the consent of
the holders of the Rights. The Board may not cause a person or group to become an Acquiring Person
by lowering this threshold below the percentage interest that such person or group already owns.
After a person or group becomes an Acquiring Person, our Board may not amend the agreement in a way
that adversely affects holders of the Rights.
C-2
