EXHIBIT 4.2
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
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RIGHTS AGREEMENT WITH RESPECT TO COMMON STOCK
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This agreement ("Rights Agreement"), dated as of January 2, 2002,
between DOVER DOWNS GAMING & ENTERTAINMENT, INC., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey limited liability
company (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions hereinafter set
forth, the Board of Directors on January ____, 2002 (the "Record Date"),
authorized and declared the issuance of one right (a "Right") for each share of
Common Stock (as hereinafter defined) of the Company that shall become
outstanding (whether originally issued or delivered from the Company's treasury)
between the Record Date and the Distribution Date (as defined herein), each
Right representing the right to purchase one share (subject to adjustment) of
Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Definitions. Unless otherwise defined herein, terms used
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herein which are defined in the Rights Agreement shall have the meanings given
them in the Rights Agreement.
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 10% or more
of the outstanding Subject Stock (as hereinafter defined); provided,
however, that an Acquiring Person shall not include an Exempt Person
(as such term is hereinafter defined). Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as a result of an
acquisition of shares of Subject Stock by the Company which, by
reducing the
number of such shares then outstanding, increases the proportionate
number of shares beneficially owned by such Person to 10% or more of
the outstanding Subject Stock; provided that if a Person (other than
an Exempt Person) becomes the Beneficial Owner of 10% or more of the
outstanding Subject Stock by reason of share purchases by the Company
and, after such share purchases by the Company, becomes the Beneficial
Owner of any additional shares of Subject Stock, such Person shall be
deemed to be an "Acquiring Person." The word "outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
issued and outstanding which such Person would be deemed to own
beneficially hereunder.
(b) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(c) "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 Rights Agreement.
(d) 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;
(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
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understanding, whether or not in writing, or upon the exercise of
conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", (x)
securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange or (y) securities which such Person has a right to
acquire on the exercise of Rights at any time prior to the
occurrence of a Section 11(a)(ii) Event or a Section 13 Event or
(z) securities issuable upon exercise of Rights from and after
the occurrence of a Section 11(a)(ii) Event or a Section 13
Event, provided such Rights were acquired by such Person or any
of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22
hereof ("Original Rights") or pursuant to Section 11(i) with
respect to an adjustment to Original Rights; or (B) the right to
vote pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", any securities if the agreement, arrangement
or understanding to vote such security (1) arises solely from a
revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and (2)
is not also then reportable by such Person 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 with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding, whether or not in writing, for the
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purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company. Notwithstanding
anything in this paragraph (d) to the contrary, a Person engaged
in the business of underwriting securities shall not be deemed
the "Beneficial Owner" of, or to "beneficially own", any
securities acquired in good faith in a firm commitment
underwriting until the expiration of sixty days after the date of
such acquisition.
(e) "Board of Directors" shall mean the Board of Directors of
the Company or any duly authorized committee thereof.
(f) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the States of New
York and Delaware are authorized or obligated by law or executive
order to close.
(g) "Class A Common Stock" shall mean the Company's class A
common stock, par value $.10 per share, entitled to ten votes per
share. Class A Common Stock is presently convertible into Common
Stock on a share for share basis. Common Stock and Class A Common
Stock have presently equal rights with respect to any distribution in
complete or partial liquidation and with respect to consideration
which may be received in a merger or consolidation of the Company.
(h) "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.
(i) "Common Stock" shall mean the Company's common stock, par
value $.10 per share, entitled to one vote per share. When used with
reference to any Person other than the Company which shall be
organized in corporate form, "common stock" shall
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mean the capital stock or other equity security with the greatest per
share voting power of such Person. When used with reference to any
Person other than the Company which shall not be organized in
corporate form, "common stock" shall mean units of beneficial interest
which shall represent the right to participate in profits, losses,
deductions and credits of such Person and which shall be entitled to
exercise the greatest voting power per unit of such Person.
(j) "common stock equivalents" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(k) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(l) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(m) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(n) "equivalent common stock" shall have the meaning set forth
in Section 11(b) hereof.
(o) "Exchange Act" shall have the meaning set forth in Section
1(c) hereof.
(p) "Exempt Person" shall mean the Company, any Subsidiary of
the Company, any employee benefit plan or employee stock plan,
including, but not limited to, a Stock Option Plan, of the Company or
of any Subsidiary of the Company, any Person holding Common Stock for
or pursuant to the terms of any such plan, or any Person that is a
Beneficial Owner of 10% or more of the Subject Stock on the date
hereof or will be immediately after the spin-off of the Company from
Dover Downs Entertainment, Inc.
(q) "Exempt Transaction" shall mean a share exchange,
consolidation, merger or other transaction in respect of which the
Board of Directors has waived the application
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of either Section 13 or Section 11(a)(ii), whichever is applicable,
pursuant to the provisions of Section 23(c).
(r) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(t) "invalidation time" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(u) "NASDAQ" shall have the meaning set forth in Section 11(d)
hereof.
(v) "NYSE" shall have the meaning set forth in Section 9(b)
hereof.
(w) "Permitted Tender Offer" shall mean an all cash tender offer
for all outstanding shares of Subject Stock of the Company on the same
terms (i) which is made pursuant to schedule 14D-1 filed with the
Securities and Exchange Commission, (ii) pursuant to which no
purchases of Subject Stock are made for at least 60 days from the date
the offer is first published, sent or given within the meaning of Rule
14d-2(a) under the Exchange Act and (iii) which is accepted by the
holders of not less than the number of shares of Subject Stock that,
when aggregated with the number of shares of Subject Stock owned by
the Person making the offer (and its Affiliates or Associates) equals
or exceeds 75% of the then outstanding shares of Subject Stock.
(x) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(y) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(z) "Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(aa) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
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(bb) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(cc) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) (A), (B) or (C) hereof, provided however that a
Section 11(a)(ii) Event shall not include an Exempt Transaction.
(dd) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(ee) "Section 13 Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof, provided however that a
Section 13 Event shall not include an Exempt Transaction.
(ff) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(gg) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that the
Acquiring Person has become such or such earlier date as a majority of
the Board of Directors shall become aware of the existence of an
Acquiring Person.
(hh) "Subject Stock" shall mean both the Company's Common Stock
and Class A Common Stock. Equity percentages relative to the Subject
Stock shall refer to the combined equity of Common Stock and Class A
Common Stock.
(ii) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having
ordinary voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by such Person and any
corporation or other entity that is otherwise controlled by such
Person.
(jj) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
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(kk) [intentionally left blank]
(ll) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(mm) "Triggering Event" shall mean any event described in
Section 11(a)(ii)(A), (B), or (C) or Section 13 hereof.
Any determination required by the definitions contained or referred to in this
Section 1 shall be made by the Board of Directors in good faith, and any such
determination, upon written notice to the Rights Agent and the holders of the
Rights, shall be binding on the Rights Agent and the holders of the Rights.
Section 2. Appointment of Rights Agent. The Company hereby appoints
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the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may change Rights Agents at its discretion upon prior written notice
to the existing Rights Agent and in accordance with Section 21 hereof. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and
in no event shall be liable for, the acts or omissions of any such co-Rights
Agent.
Section 3. Issuance of Right Certificates.
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(a) Until the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day after the Stock Acquisition Date or
(ii) such date as the Board of Directors may fix following the commencement by
any Person (other than an Exempt Person) of, or the first public announcement of
the intent of any Person (other than an Exempt Person) to commence, a tender or
exchange offer upon the successful consummation of which such Person, together
with its Affiliates and Associates, would be the Beneficial Owner of 10% or more
of the outstanding Subject Stock (irrespective of whether any shares are
actually purchased pursuant to any such offer), provided that such date fixed by
the Board of Directors shall not be later than the nineteenth Business Day after
the date of such commencement or public announcement (the date specified in
clauses (i) and (ii) being subject to
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extension by the Board of Directors pursuant to Section 25 hereof), (x) the
Rights will be evidenced (subject to the provisions of Section 3(c) hereof) by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock and not by separate Right Certificates, and (y) each Right will
be transferable only in connection with the transfer of a share (subject to
adjustment as hereinafter provided) of Common Stock; provided that if the
Distribution Date would be prior to the Record Date, the Record Date shall be
the Distribution Date; and provided, further, that if a tender or exchange offer
referred to in clause (ii) above is cancelled or withdrawn prior to the
Distribution Date, such offer shall be deemed, for purposes of this Rights
Agreement, never to have been made. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign and the Company will send or cause to be sent (and the Rights Agent
will, if requested and provided with all necessary information, send) by first-
class, postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Distribution Date, as shown by the records of the
Company, at the address of such holder shown on such records, a Right
certificate, in substantially the form of Exhibit A hereto ("Right
Certificate"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Right Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Right Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates. The Company shall promptly notify the Rights
Agent in writing upon the occurrence of the Distribution Date and, if such
notification is given orally, the Company shall confirm same in writing on or
prior to the Business Day next following. Until such notice is received by the
Rights Agent, the Rights Agent may presume conclusively for all purposes that
the Distribution Date has not occurred.
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(b) [intentionally left blank]
(c) With respect to certificates for Common Stock outstanding as of
the Record Date, until the Distribution Date (or, if earlier, the Expiration
Date), the Rights will be evidenced by such certificates for Common Stock
registered in the names of the holders thereof together with a copy of the
Summary of Rights. Until the Distribution Date (or, if earlier, the Expiration
Date), the surrender for transfer of any certificate for Common Stock
outstanding on the Record Date, with or without a copy of the Summary of Rights,
shall also constitute the surrender for transfer of the Rights associated with
the Common Stock represented thereby.
(d) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date and, in certain circumstances provided
in Section 22 hereof, may be issued in respect of shares of Common Stock that
become outstanding after the Distribution Date. Certificates issued for Common
Stock (including, without limitation, certificates issued upon original
issuance, disposition from the Company's treasury or transfer or exchange of
Common Stock) after the Record Date but prior to the earlier of the Distribution
Date, the Expiration Date or the Final Expiration Date (or, in certain
circumstances as provided in Section 22 hereof, after the Distribution Date)
shall have impressed on, printed on, written on or otherwise affixed to them the
following (or a substantially similar) legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between the
Corporation and Mellon Investor Services LLC, as Rights Agent, dated
as of January 2, 2002 (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive office of the 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. The Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge within five
days after receipt by it of a written request therefor. Under certain
circumstances as provided in the Rights Agreement, Rights issued to or
beneficially owned by Acquiring Persons or their Associates or
Affiliates (as such terms are defined in the Rights Agreement) or any
subsequent holder of such Rights may become null and void as provided
in Section 11(a)(ii) of the Rights Agreement.
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With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby.
Section 4. Form of Right Certificates.
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(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof), when, as and if
issued, shall be substantially in the form set forth in Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate (but which do
not affect the rights, duties or responsibilities of the Rights Agent) and as
are not inconsistent with the provisions of this Rights Agreement, or as may be
required to comply with any 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 Sections 11 and 22 hereof, the Right Certificates evidencing the
Rights, whenever issued, shall be dated as of the Record Date, and on their face
Right Certificates shall entitle the holders thereof to purchase one share of
Common Stock, or other securities or property as provided herein, as the same
may from time to time be adjusted as provided herein, at the price per share set
forth therein, as the same may from time to time be adjusted as provided herein
(the "Purchase Price").
(b) Notwithstanding any other provision of this Rights Agreement, any
Right Certificate that represents Rights that are beneficially owned by (i) an
Acquiring Person or any Affiliate or Associate thereof, (ii) a transferee of an
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the Acquiring Person became such or (iii) a transferee of an Acquiring
Person who becomes a transferee prior to or concurrently with the Acquiring
Person's becoming such pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of its equity
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securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
(whether or not for consideration) which the Board of Directors has determined
is part of a plan, arrangement or understanding which has the purpose or effect
of avoiding the provisions of Section 11(a)(ii) hereof, and subsequent
transferees of such Persons (or of any transferee of such Rights), and any Right
Certificate issued pursuant to Section 6 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall have impressed on, printed on, written on or otherwise affixed
to it (if the Company has knowledge that such Person is an Acquiring Person or
an Associate or Affiliate thereof or transferee of such Persons or a nominee of
any of the foregoing) the following legend:
The beneficial owner of the Rights represented by this Right
Certificate is an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement)
or a subsequent holder of such Right Certificates beneficially owned
by such Persons. Accordingly, under certain circumstances as provided
in the Rights Agreement, this Right Certificate and the Rights
represented hereby may become null and void as provided in Section
11(a)(ii) of the Rights Agreement.
Section 5. Countersignature and Registration.
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(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificates may be signed on
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behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights Agent
of notice and all other relevant information, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates, the date of each of the Right Certificates, and the certificate
numbers for each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions hereof, at any time after the close of
business on the Distribution Date and at or prior to the close of business on
the Expiration Date, any Right Certificate or Right Certificates may be (i)
transferred or (ii) split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of shares of Common Stock as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer any Right Certificate shall make such request in
writing delivered to the Rights Agent, and surrender the Right Certificate at
the office of the Rights Agent designated for such purpose, with the form of
assignment on the reverse side thereof duly endorsed (or enclose with such Right
Certificate a written instrument of transfer in form satisfactory to the Company
and the Rights Agent), duly executed by the registered holder thereof or his
attorney duly authorized in writing, and with such signature duly guaranteed.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate or Right Certificates until the registered holder shall have
promptly completed and signed the certificate contained in the form of
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assignment on the reverse side of such Right Certificate or Right Certificates
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 or the Rights Agent shall reasonably request. Any
registered holder desiring to split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate to be split up, combined or exchanged
at the office of the Rights Agent designated for such purpose. Thereupon the
Rights Agent, subject to the provisions hereof, shall countersign (by manual
signature) and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment from the holders of Right Certificates 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 such Right Certificates. The
Rights Agent shall have no duty or obligation to take any action under any
Section of this Rights Agreement which requires the payment by a Rights holder
of applicable taxes and governmental charges unless and until the Rights Agent
is satisfied that all such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation or
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, if requested by the Company, 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 Right
Certificate if mutilated, the Company will execute and deliver a new Right
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
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Rights.
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(a) Except as otherwise provided herein, the Rights shall become
exercisable at the close of business on the Distribution Date, and may be
exercised in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificates, with the form of election to purchase on
the
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reverse side thereof duly executed (with such signature duly guaranteed), to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price, subject to adjustment as
hereinafter provided, with respect to the number of shares of Common Stock
(except as otherwise provided herein) as to which such surrendered Rights are
then being exercised, at or prior to the close of business on the date (the
"Expiration Date") which is the earlier of (i) January 1, 2012 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof.
(b) The Purchase Price shall initially be $200 for each share of
Common Stock issued pursuant to the exercise of a Right. The Purchase Price
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof. The Purchase Price shall be payable in lawful money of the United
States of America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 7(d) hereof, upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase and certification duly executed, accompanied by payment of the
aggregate Purchase Price for the shares to be purchased and an amount equal to
any applicable tax or charge, by cash, certified or official bank check or draft
payable to the order of the Company, the Rights Agent shall, subject to Section
20(j) hereof, thereupon promptly (i) provide itself or requisition from any
transfer agent of the Common Stock certificates for the number of shares of
Common Stock so elected to be purchased and the Company will comply and hereby
irrevocably authorizes and directs such transfer agent to comply with all such
requests, (ii) requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14(b) hereof,
and (iii) promptly after receipt of such Common Stock certificates cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and, when appropriate, after receipt, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate; provided,
however, that in the case of a purchase of
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securities, other than Common Stock of the Company, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iii). 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) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
necessary to comply with this Rights Agreement.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Rights 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) properly completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
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All Right 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
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any Right Certificate purchased or
acquired by
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the Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Common Stock.
------------------------------------------------------
(a) The Company covenants and agrees that at all times it will cause
to be reserved and kept available, out of and to the extent of its authorized
and unissued shares of Common Stock not reserved for another purpose or shares
held in its treasury, the number of shares of Common Stock (and, following the
occurrence of a Triggering Event, other securities) that, as provided in this
Rights Agreement, including Section 11(a)(ii) hereof, will be sufficient to
permit the exercise in full of all outstanding Rights; provided, however, that
the Company shall not be required to reserve and keep available shares of Common
Stock or other securities sufficient to permit the exercise in full of all
outstanding Rights pursuant to the adjustments set forth in Section 11(a)(ii),
Section 11(a)(iii) or Section 13 hereof unless the Rights become exercisable
pursuant to such adjustments, and then only to the extent the Rights become
exercisable pursuant to such adjustments.
(b) The Company shall (i) use its best efforts to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Common Stock (and following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be listed
on the New York Stock Exchange (the "NYSE") upon official notice of issuance
upon such exercise and (ii) if then necessary to permit the offer and issuance
of such shares of Common Stock (and, following the occurrence of a Triggering
Event, other securities), register and qualify such shares of Common Stock (and,
following the occurrence of a Triggering Event, other securities) under the
Securities Act and any applicable state securities or "blue sky" laws (to the
extent exemptions therefrom are not available), cause such registration
statement and qualifications to become effective as soon as possible after such
filing and keep such registration and qualifications effective until the earlier
of the date as of which the Rights are no longer
17
exercisable for such securities or the Expiration Date of the Rights. The
Company may temporarily suspend, for a period of time not to exceed ninety days,
the exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon 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. The Company
shall promptly provide the Rights Agent with copies of such announcements.
Notwithstanding any provision of this Rights Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(c) The Company covenants and agrees that it will take all such
actions as may be necessary to insure that all shares of Common Stock (and
following the occurrence of a Triggering Event, other securities) delivered upon
exercise of Rights shall, to the extent applicable, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares in accordance with applicable law.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges which may be payable
in respect of the issuance or delivery of the Right Certificates or of any
shares of Common Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any tax
or charge which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than the registered holder of the Right
Certificate, or the issuance or delivery of certificates for Common Stock (or
other securities, as the case may be) upon exercise of Rights in a name other
than that of, the registered holder of the Right Certificate, and the Company
shall not be required to issue or deliver a Right Certificate or certificate for
Common Stock (or other securities, as the case may be) to a Person other than
such registered holder until any such tax or charge shall have been paid (any
such tax or charge being payable by the holder
18
of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax or charge is due.
Section 10. Common Stock Record Date. Each Person in whose name any
------------------------
certificate for shares of Common Stock (or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Stock (or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes and
charges) was made.
Section 11. Adjustments to Number and Kind of Shares, Number of
---------------------------------------------------
Rights or Purchase Price.
-------------------------
The number and kind of shares subject to purchase upon the exercise of
each Right, the number of Rights outstanding and the Purchase Price 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 Record
Date (A) declare or pay any dividend on Common Stock payable in shares of Common
Stock, (B) subdivide or split the outstanding shares of Common Stock into a
greater number of shares, (C) combine or consolidate the outstanding shares of
Common Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock or (D) issue any shares of its capital stock
in a reclassification of the Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect immediately prior to the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of Common
Stock or capital stock, as the case may be, issuable upon exercise of a Right on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive,
19
upon payment of an amount equal to (x) the Purchase Price in effect immediately
prior to the record date or effective date of such dividend, subdivision,
combination or reclassification multiplied by (y) the number of shares of Common
Stock or capital stock, as the case may be, as to which a Right was exercisable
immediately prior to such date, the aggregate number and kind of shares of
Common Stock or capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date, the holder thereof would have owned
upon such exercise and been entitled to receive, or would be deemed to have
owned, by virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, 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).
(ii) In the event, at any time after the date of this Rights
Agreement,
(A) any Acquiring Person, directly or indirectly, other
than pursuant to any transaction set forth in Section 13(a)
hereof, (1) shall merge with and into the Company or any of its
Subsidiaries or otherwise combine with the Company or any of its
Subsidiaries and the Company or such Subsidiary shall be the
continuing or surviving corporation of such merger or combination
and the Common Stock of the Company shall remain outstanding and
no shares thereof shall be changed into or exchanged for stock or
other securities of the Company or of any other Person or cash or
any other property, or (2) shall, in one or more transactions,
other than in connection with the exercise of a Right or Rights
and other than in connection with the exercise or conversion of
securities exercisable for or convertible into securities of the
Company or of any Subsidiary of the Company (which securities were
outstanding prior to the time the Acquiring Person became such),
transfer any assets or property to the Company or any of its
Subsidiaries in exchange (in whole or in
20
part) for any shares of any class of capital stock of the Company
or any of its Subsidiaries or any securities exercisable for or
convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries, or otherwise obtain from the
Company or any of its Subsidiaries, with or without consideration,
any additional shares of any class of capital stock of the Company
or any of its Subsidiaries or any securities exercisable for or
convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries (other than as part of a pro
rata offer or distribution by the Company or such Subsidiary to
all holders of such shares), or (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire (other
than as a pro rata dividend) or dispose, in one transaction or a
series of transactions, to, from or with, as the case may be, the
Company or any of its Subsidiaries, assets (including securities)
on terms and conditions less favorable to the Company or such
Subsidiary than the Company or such Subsidiary would be able to
obtain in arm's-length negotiation with an unaffiliated third
party, or (4) shall receive any compensation from the Company or
any of its Subsidiaries for services other than compensation for
employment as a regular or part time employee, or fees for serving
as a director, at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (5) shall receive the benefit,
directly or indirectly (except proportionately as a shareholder),
of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or tax advantage provided by the
Company or any of its Subsidiaries, or (6) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire
(other than as a pro rata dividend) or dispose, in one transaction
or a series of transactions, to, from or with, as the case may be,
the Company or any of its subsidiaries (other than in connection
with the
21
lines of business, if any, engaged in between the Company and the
Acquiring Person or Associate or Affiliate thereof prior to the
time the Acquiring Person became such) assets having an aggregate
fair market value of more than $100,000,000; or
(B) any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person, other than pursuant
to a Permitted Tender Offer; or
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any
reverse stock split), or any recapitalization of the Company, or
any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries (whether or not
with or into or otherwise involving an Acquiring Person or any
Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of
equity securities of the Company or any of its Subsidiaries, or
securities exercisable for or convertible into equity securities
of the Company or any of its Subsidiaries, which is directly or
indirectly beneficially owned by any Acquiring Person or any
Affiliate or Associate of any Acquiring Person;
then, subject to the last sentence of Section 23(a) hereof, and except as
otherwise provided in this Section 11, each holder of a Right shall thereafter
have the right to receive, upon exercise of a Right in accordance with the terms
of this Rights Agreement and payment of the aggregate Purchase Price with
respect to the total number of shares of Common Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, such number of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the number
of shares of Common Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section
22
11(a)(ii) Event, and (y) dividing that product by 50% of the Current Market
Price per share of Common Stock on the date of such first occurrence (such
number of shares is herein called the "Adjustment Shares"); provided that the
number of Adjustment Shares shall be further appropriately adjusted to reflect
any events described in Sections 11(a)(i), (b) or (c) hereof occurring after the
date of such first occurrence; and provided, further, that if the transaction
that would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
Notwithstanding anything in this Rights Agreement to the contrary, from
and after the time (the "invalidation time") when (A) any Person first becomes
an Acquiring Person, other than through a Permitted Tender Offer or (B) there
occurs any event described in Section 11(a)(ii)(A) or (C) in respect of any
Acquiring Person who became such through a Permitted Tender Offer, any Rights
that are beneficially owned by (x) such Acquiring Person (or any Associate or
Affiliate of such Acquiring Person), (y) a transferee of such Acquiring Person
(or any such Associate or Affiliate) who becomes a transferee after the
invalidation time or (z) a transferee of such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the invalidation time pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of this paragraph, and subsequent transferees of such Persons,
shall become null and void without any further action and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such rights
under any provision of this Rights Agreement. The Company shall notify the
Rights Agent when this Section 11(a)(ii) applies and shall use all reasonable
efforts to ensure that the provisions of this Section 11(a)(ii) and of Section
4(b) hereof are complied with, but neither the Company nor the Rights Agent
shall have any liability to any holder of Right Certificates or other Person as
a result of
23
the Company's failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued pursuant to Section 3 hereof that represents Rights
beneficially owned by an Acquiring Person whose Rights would be null and void
pursuant to the provisions of this paragraph or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be null and void pursuant
to the provisions of this paragraph or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be null and void pursuant to the provisions of this paragraph
shall be cancelled.
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's certificate of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights is
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii) and the Rights shall become so exercisable, the Company shall,
to the extent permitted by applicable law and any material agreements in effect
on the date hereof to which the Company is a party: (A) determine the value of
the Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") and (B) with respect to each Right, upon exercise of such Right, issue
shares of Common Stock to the extent available for the exercise in full of such
Right and, to the extent shares of Common Stock are not so available, make
adequate provision to substitute for the Adjustment Shares not received upon
exercise of such Right (1) cash, (2) other equity securities of the Company
(including, without limitation, shares or units of shares of preferred stock
which, by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the Common Stock, are deemed in good faith by the Board
of Directors to have substantially the same value as shares of Common Stock
(such shares or units of shares of preferred stock are herein called "common
stock equivalents")), (3) debt securities of the Company, (4) other assets, (5)
a reduction of the Purchase Price or (6) any combination of the foregoing,
having a value which, when added
24
to the value of the shares of Common Stock actually issued upon exercise of such
Right, shall have an aggregate value equal to the Current Value, where such
aggregate value has been determined in good faith by the Board of Directors
based upon the advice of a nationally recognized independent investment banking
firm selected in good faith 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 days following the date (the "Section 11(a)(ii)
Trigger Date") which is the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to the extent available)
and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the excess of (x) the Current Value over (y) the Purchase Price times
the number of shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event. If the
Board of Directors shall determine in good faith that it is likely sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty day period set forth above may be extended to
the extent necessary, but not more than ninety days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares (such thirty day period, as it may be
extended, is herein called the "Substitution Period"). To the extent that the
Company determines that some action must be taken pursuant to the first and/or
second sentence of this Section 11(a)(iii), the Company shall provide, subject
to Section 11(a)(ii) hereof and the last sentence of this Section 11(a)(iii),
that such action shall apply uniformly to all outstanding Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall 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
25
suspension is no longer in effect, and the Company shall promptly provide the
Rights Agent copies of such announcements. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market Price per
share of the Common Stock on the Section 11(a)(ii) Trigger Date and the per
share or per unit value of any "common stock equivalent" shall be deemed to
equal the Current Market Price per share of the Common Stock on such date. The
Board of Directors may, but shall not be required to, establish procedures to
allocate the right to receive Common Stock upon the exercise of the Rights among
holders of rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Common
Stock entitling them to subscribe for or purchase (for a period expiring within
forty-five calendar days after such record date) Common Stock, shares having the
same rights, privileges and preferences as the Common Stock ("equivalent common
stock") or securities convertible into Common Stock or equivalent common stock
at a price per share of Common Stock or equivalent common stock (or having a
conversion price per share, if a security convertible into Common Stock or
equivalent common stock) less than the Current Market Price per share of Common
Stock on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock and/or equivalent common stock (and/or the
aggregate initial conversion price of the convertible securities so to be
offered, including the price required to be paid to purchase such convertible
security) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Common Stock outstanding on such record
date, plus the number of additional shares of Common Stock and/or equivalent
common stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration
26
part or all of which may be in a form other than cash, the value of such non-
cash 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. Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed,
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of Common Stock
on such record date, less the fair market value (as described 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 share of Common Stock and the denominator of which shall be such
Current Market Price per share of Common Stock. 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 (including
computations pursuant to Section 14 hereof), other than computations made
pursuant to Section 11(a)(iii) hereof, the "Current Market
27
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the thirty
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to but not including such date, and for purpose of computations made pursuant to
Section 11(a)(iii) hereof, the "Current Market Price" per share of the Common
Stock on any date shall be deemed to be the average of the daily closing prices
per share of the Common Stock for the ten consecutive Trading Days immediately
following such date but not including such date; provided, however, that in the
event that the Current Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer of the Common Stock of
(i) any dividend or distribution on the Common Stock (other than a regular
quarterly cash dividend) or (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the
requisite thirty Trading Day or ten Trading Day period, as set forth above, the
ex-dividend date for such dividend or distribution, or the effective date of
such subdivision, combination or reclassification occurs, then, and in each such
case, the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. 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 NYSE or, if the shares of
common stock are not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average of the
high bid and low asked price in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
28
making a market in the Common Stock selected by the Board of Directors. If on
any such date no market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith by the Board of
Directors shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not publicly held or
not so listed or traded, "Current Market Price" per share shall mean the fair
value per share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent 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 ten-thousandth of a 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
years from the date of the transaction which mandates such adjustment, or (ii)
one month prior to the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(i)
or (ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
applicable provisions with respect to the shares of common stock contained in
Sections 7, 9, 10, 11, 13, and 14 hereof, and such provisions shall apply on
like terms to any such other shares.
29
(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 shares of Common Stock
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 Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase that number of shares of Common Stock (calculated to the nearest ten-
thousandth) obtained by (i) multiplying (x) the number of 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 (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights, in addition to the
adjustment provided in Section 11(p) hereof. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for a number
of shares of Common Stock equal to the number of shares of Common Stock for
which a Right was exercisable immediately prior to such adjustment multiplied by
a fraction the numerator of which shall be the total number of Rights
outstanding immediately prior to such adjustment and the denominator of which
shall be the total number of Rights outstanding immediately following such
adjustment. 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, and shall
promptly give the Rights Agent a copy of such announcement. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least ten days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause
30
to be distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right 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
Right 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 shares of Common Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of shares which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the shares of Common Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action, including using its best efforts to obtain any required shareholder
approvals, which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (and shall give prompt written
notice of such election to the Rights Agent) until the occurrence of such event
the issuance to the holder of any Right exercised after such record date the
shares of Common Stock and cash, other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of Common
Stock and cash, other capital stock or securities of the Company, if any,
issuable upon such
31
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 of Common Stock and cash, other capital stock or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Common Stock, (ii) issuance for cash of any shares of Common Stock at less
than the Current Market Price, (iii) issuance for cash of shares of Common Stock
or securities which by their terms are convertible into or exchangeable for
shares of Common Stock, (iv) stock dividends or (v) issuance of rights, options
or warrants referred to in this Section 11, hereafter made by the Company to
holders of its Common Stock shall not be taxable to such shareholders. No
reduction in the Purchase Price shall be made as a consequence of the exercise
of qualified or unqualified stock options by employees of the Company to whom
stock options have been granted.
(n) The Company covenants and agrees that it shall not, at any time
after the earlier of the Distribution Date or the Stock Acquisition Date, (i)
consolidate with any other Person, (ii) merge with or into any other Person,
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (iv) engage
in any transaction described in Section 11(a)(ii) (A) or (C) hereof, if (x) at
the time of or immediately after such consolidation, merger, sale or other
transaction 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, (y)
prior to, simultaneously with or immediately after such consolidation, merger,
sale or other transactions, the shareholders of the Person who constitutes, or
would
32
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates or (z) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights.
(o) The Company covenants and agrees that, after the earlier of the
Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
(p) Anything in this Rights Agreement to the contrary
notwithstanding, in the event that the Company shall at anytime after the Record
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
Section 12. Certification of Adjustments. Whenever an adjustment is
----------------------------
made as provided in Sections 11 and 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
computations and facts giving rise to such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Common Stock a copy of
such certificate and (c) mail a brief summary thereof to each record holder of a
Right (or, if prior to the Distribution Date, to each holder of Common Stock) in
accordance with Section 25 hereof. Notwithstanding the foregoing
33
sentence, the failure of the Company to give such notice shall not affect the
validity of or the force or effect of or the requirement for such adjustment.
The Rights Agent shall be fully protected in relying on any certificate prepared
by the Company pursuant to Sections 11 and 13 and on any adjustment therein
contained and shall have no duty with respect to and shall not be deemed to have
knowledge of any such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) In the event that, at anytime on or after the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with any other
Person or Persons or shall merge with and into any other Person or Persons and
the Company shall not be the surviving or continuing corporation of such merger,
or (y) any Person or Persons shall merge with and into the Company, and the
Company shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person or of the Company or cash or any other property, or (z) the Company
or one or more of its Subsidiaries shall sell or otherwise transfer to any other
Person or any Affiliate or Associate of such Person, in one or more
transactions, or the Company or one or more of its Subsidiaries shall sell or
otherwise transfer to any Person in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, except as may be contemplated by Section 13(d),
proper provision shall be made so that (i) each holder of record of a Right,
other than as provided in Section 11(a)(ii), shall thereafter have the right to
receive, upon the exercise thereof and payment of the aggregate Purchase Price
with respect to the total number of shares for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if earlier,
the first occurrence of a Section 11(a)(ii) Event) in accordance with the terms
of this Rights Agreement, such number of shares of validly issued, fully paid
and nonassessable and freely tradeable common stock of the Principal Party (as
defined herein) not subject to
34
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 shares of Common Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event (or,
if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the Purchase Price in effect immediately prior to
the first occurrence of a Section 11(a)(ii) Event by the number of shares of
Common Stock for which a Right was exercisable immediately prior to such first
occurrence of a Section 11(a)(ii) Event) and (2) dividing that product by 50% of
the Current Market Price (determined as provided in Section 11(d) hereof with
respect to the Common Stock) per share of the common stock of such Principal
Party on the date of consummation of such Section 13 Event; provided that the
Purchase Price and the number of shares of common stock of such Principal Party
issuable upon exercise of each Right shall be further adjusted as provided in
this Rights Agreement to reflect any events occurring after the date of the
first occurrence of a Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Rights Agreement;
(iii) the term "Company" for all purposes of this Rights Agreement shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its common stock in accordance
with Section 9 hereof) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of common stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise or a Right and payment of the Purchase Price,
such
35
cash, shares, rights, warrants and other property which such holder would have
been entitled to receive had he, she or it, at the time of such transaction,
owned the shares of common stock of the Principal Party purchasable upon the
exercise of a Right, and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be necessary to
permit the subsequent exercise of the Rights in accordance with the terms hereof
for such cash, shares, rights, warrants and other property and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y)
of the first sentence of Section 13(a) hereof; (A) the Person
that is the issuer of the securities into which shares of Common
Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the
issuer the common stock of which has the greatest aggregate
market value of shares outstanding or (B) if no securities are so
issued, (x) the Person that is the other party to the merger, if
such Person survives said merger or, if there is more than one
such Person, the Person, the common stock of which has the
greatest aggregate market value of shares outstanding or (y) if
the Person that is the other party to the merger does not survive
the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the
consolidation; and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions,
or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined,
whichever of such Persons as is the issuer of
36
common stock having the greatest aggregate market value of shares
outstanding;
provided, however, that in any such case described in the foregoing (b)(i) or
(b)(ii), if the common stock of such Person is not at such time or has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act, and (1) if such Person is a direct or indirect Subsidiary of
another Person the common stock of which is and has been so registered, the term
"Principal Party" shall refer to such other Person, or (2) if such Person is a
Subsidiary, directly or indirectly, of more than one Person, the common stock of
all of which are and have been so registered, the term "Principal Party" shall
refer to whichever of such Persons is the issuer of the common stock having the
greatest aggregate market value of shares outstanding or (3) if such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in clauses (1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the Principal Party in
each such case shall bear the obligations set forth in this Section 13 in the
same ratio as its interest in such Person bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger, sale
or transfer referred to in Section 13(a) unless prior thereto the Company and
the Principal Party involved therein shall have executed and delivered to the
Rights Agent an agreement confirming that the requirements of Sections 13(a) and
(b) hereof shall promptly be performed in accordance with their terms and that
such consolidation, merger, sale or transfer of assets shall not result in a
default by the Principal Party under this Rights Agreement as the same shall
have been assumed by the Principal Party pursuant to Sections 13(a) and (b)
hereof and further providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
37
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, if the common stock of the Principal
Party shall become listed on a national securities exchange, to list
(or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on such securities exchange and, if the
common stock of the Principal Party shall not be listed on a national
securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by NASDAQ or
such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of common stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).
(d) Furthermore, in case the Principal Party which is to be a party
to a transaction referred to in this Section 13 has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of common stock of such Principal Party at less than the
38
then Current Market Price per share (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, common stock of such
Principal Party at less than such then Current Market Price (other than to
holders of Rights pursuant to this Section 13) or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of the common
stock of such Principal Party pursuant to the provisions of Section 13; then, in
such event, the Company hereby agrees with each holder of Rights that it shall
not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. If the
Company shall not issue fractions of Rights, in lieu of such fractional Rights,
there shall be paid to the holders of record of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the then current market value of a whole
Right. For the purposes of this Section 14(a), the then current market value of
a Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which fractional Rights would have been issuable,
determined in the same manner as the closing price of a share of Common Stock
shall be determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares of
Common Stock or other securities of the Company upon exercise of the Rights or
to distribute certificates which evidence fractional shares. In lieu of issuing
fractions of shares of Common Stock or other securities of the Company, there
shall be paid to the holders of record of Right Certificates at the time such
Right Certificates are exercised as herein provided an amount in cash equal to
the same fraction of the then current market value of a share of Common Stock or
other securities of the Company. For purposes of this Section 14(b), the then
current market value of a share of
39
Common Stock or other securities of the Company shall be the closing price
thereof for the Trading Day immediately prior to the date of such exercise, as
determined pursuant to Section 11(d) hereof or in the same manner as the closing
price of a share of Common Stock shall be determined pursuant to Section 11(d)
hereof, as the case may be.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Common Stock or other securities of the Company upon exercise of a Right.
(d) Whenever a payment for fractional Rights or fractional shares of
Common Stock or other securities of the Company is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a
certificate setting forth in reasonable detail the facts related to such payment
and the prices and/or formulas utilized in calculating such payments, and (ii)
provide sufficient monies to the Rights Agent in the form of fully collected
funds to make such payments. The Rights Agent shall be fully protected in
relying upon such a certificate and shall have no duty with respect to, and
shall not be deemed to have knowledge of any payment for fractional Rights or
fractional shares of Common Stock or other securities of the Company under any
Section of this Rights Agreement relating to the payment of fractional Rights or
fractional shares of Common Stock or other securities of the Company unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
Section 15. Rights of Action. All rights of action in respect of
----------------
this Rights Agreement are vested in the respective holders of record of the
Right Certificates (and, prior to the Distribution Date, the holders of record
of the Common Stock); and any holder of record of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his, her or its own behalf and
for his, her or its own benefit, enforce, and may institute and maintain any
suit, action or
40
proceeding against the Company or any other Person to enforce, or otherwise act
in respect of, his, her or its right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Rights 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 breach of this Rights
Agreement and, accordingly, that they 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 Rights Agreement.
Section 16. Agreement of Right 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 not be evidenced
by a Right Certificate and will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer with all required certifications
completed;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent or the transfer agent
of the Common Stock) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Rights Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Rights Agreement by reason of any preliminary
or
41
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
-------------------------------------------------
No holder of a Right, as such, shall be entitled to vote, receive
dividends in respect of or be deemed for any purpose to be the holder of Common
Stock or any other securities of the Company which may at any time be issuable
upon the exercise of the Rights, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders, or to receive dividends or subscription rights in respect of any
such stock or securities, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, negotiation, delivery,
administration, amendment and execution of this Rights 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, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense (including, without limitation, the reasonable fees and expenses of
legal counsel) incurred without gross negligence, bad faith or willful
42
misconduct on the part of the Rights Agent (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction) for any action
taken, suffered or omitted by the Rights Agent in connection with the
acceptance, administration, exercise and performance of its duties under this
Rights Agreement, including, without limitation, the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company. The provisions of this Section 18
and Section 20 below shall survive the termination of this Rights Agreement, the
exercise or expiration of the Rights and the resignation or removal of the
Rights Agent.
(b) The Rights Agent shall be authorized and protected and shall
incur no liability for or in respect of any action taken, suffered or omitted by
it in connection with its acceptance and administration of this Rights Agreement
and the exercise and performance of its duties hereunder, in reliance upon any
Right Certificate, certificate for Common Stock or 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, guaranteed, verified or acknowledged, by the proper Person or
Persons, or otherwise upon the advise of counsel as set forth in Section 20
hereof. The Rights Agent shall not be deemed to have knowledge of any event of
which it was supposed to receive notice thereof hereunder, and the Rights Agent
shall be fully protected and shall incur no liability for failing to take any
action in connection therewith unless and until it has received such notice in
writing.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
------
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights
43
Agent under this Rights Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by the Rights Agreement, any of the Right
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 Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes to
----------------------
perform only the duties and obligations expressly imposed by this Rights
Agreement (and no implied duties) upon the following terms and conditions, by
all of which the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or an employee of the Rights Agent), and the advice or
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it in accordance with such
advice or opinion.
44
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking, suffering or
omitting to take any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall be
full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it under the provisions of this Rights 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 gross negligence, bad faith or willful misconduct
(each as determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction). Anything to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage. Any liability of the Rights Agent under this
Rights Agreement will be limited to the amount of fees paid by the Company to
the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right 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 have any liability for or be under any
responsibility in respect of the validity of this Rights Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its
45
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any change or adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Common Stock to be
issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any shares of Common Stock 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 Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Vice Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer, or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instructions shall be full
authorization and protection to the Rights Agent and the Rights Agent shall not
be liable for or in respect of any action taken, suffered or omitted by it in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. The Rights Agent shall be fully authorized
and protected in relying upon the most recent instructions received by any such
officer. Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken, suffered or omitted by the
46
Rights Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable for any action taken or suffered 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 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, suffered or omitted.
(h) The Rights Agent and any shareholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent or any such shareholder, affiliate, director, officer or employee
from acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself (through
its directors, officers and employees) 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 or any other Person resulting from any such act, default, neglect
or misconduct, absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof (each as determined by a final, non-
appealable order, judgment, decree or ruling of a court of competent
jurisdiction).
(j) If, with respect to any Right Certificates surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to
47
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.
(k) No provision of this Rights Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock known to the Rights Agent by registered
or certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause) upon 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 Common Stock by registered or certified mail, and to the holders of the
Right 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. Notwithstanding the foregoing provisions of
this Section 21, in no event shall the resignation or removal of a Rights Agent
be effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the holder of record of any Right 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 be (a) a Person organized and doing business under the laws
of the United States or any State thereof, in good standing, which is subject to
supervision or
48
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
$50,000,000 or (b) an Affiliate of such a Person. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the registered holders of the Right 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.
Section 22. Issuance of New Right Certificates. Notwithstanding any
----------------------------------
of the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares of
stock or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Rights Agreement. In addition,
in connection with the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company may, with respect to shares of Common Stock 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 hereafter issued by the
Company, or in any other case, if deemed necessary or appropriate by the Board
of Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Right Certificate shall be issued if, and to the extent that, the
49
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
----------
(a) The Board of Directors may, at its option, at any time prior to
the earlier of (i) the close of business on the tenth day following the Stock
Acquisition Date, subject to extension by the Board of Directors as provided in
Section 26 hereof, or (ii) the close of business on the Final Expiration Date,
cause the Company to redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). Notwithstanding anything
contained in this Rights Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of any of the transactions referred to in
Section 11(a)(ii) hereof until such time as the Board of Directors' right of
redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price,
without any interest thereon. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give written
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock (with prompt
written notice thereof to 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 redemption will state the method by which the
payment of the Redemption Price will be made and
50
the time for such payment. The failure to give notice required by this Section
23(b) or any defect therein shall not affect the legality or validity of the
action taken by the Company.
(c) The Board of Directors may, until a Triggering Event shall have
occurred, upon written notice (including notice by facsimile) to the Rights
Agent, determine to waive the application of either Section 13 or Section
11(a)(ii), whichever is applicable, to a Triggering Event.
Section 24. Notice of Proposed Actions.
--------------------------
(a) In case the Company, after the earlier of the Distribution Date
or the Stock Acquisition Date, shall propose (i) to effect any of the
transactions referred to in Section 11(a)(i) or to pay any dividend to the
holders of record of its Common Stock payable in stock of any class or to make
any other distribution to the holders of record of its Common Stock (other than
a regular quarterly cash dividend), (ii) to offer to the holders of record of
its Common Stock options, warrants, or other rights to subscribe for or to
purchase shares of Common Stock (including any security convertible into or
exchangeable for Common Stock) or shares of stock of any class or any other
securities, options, warrants, convertible or exchangeable securities or other
rights, (iii) to effect any reclassification of its Common Stock or any
recapitalization or reorganization of the Company, (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and to each holder of record of a Right Certificate, in
accordance with Section 25 hereof, notice of such proposed action, which shall
specify the record date for the purpose of such transaction referred to in
Section 11(a)(i), or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale
or transfer of assets, liquidation, dissolution, or winding up is to take place
and the record date for determining participation therein by the holders of
record of Common Stock, if any such
51
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of record of the Common Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of record of Common Stock, whichever shall be the earlier. The
failure to give notice required by this Section 24 or any defect therein shall
not affect the legality or validity of the action taken by the Company or the
vote upon any such action.
(b) In case any of the transactions referred to in Section
11(a)(ii)(A) or (C) or Section 13 of this Rights Agreement are proposed after
the earlier of the Distribution Date or the Stock Acquisition Date, then, in any
such case, the Company shall give to the Rights Agent and to each holder of
Rights, in accordance with Section 25 hereof, notice of the proposal of such
transaction, which notice shall specify the proposed event and the consequences
of the event to holders of Rights under Section 11(a)(ii)(A) or (C) or Section
13 hereof, as the case may be, and, upon consummating such transaction, shall
similarly give notice thereof to the Rights Agent and to each holder of Rights.
Section 25. Notices. Notices or demands authorized by this Rights
-------
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) or by facsimile transmission
as follows:
Dover Downs Gaming & Entertainment, Inc.
One Xxxxxxx Plaza
0000 Xxxxxxx Xxxx
00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the
52
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) or by facsimile transmission as follows:
Mellon Investor Services LLC
00 Xxxx Xxxxxx, 0/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Relationship Manager
Facsimile No.: (000) 000-0000
with a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right 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 it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent.
Section 26. Supplements and Amendments. For as long as the Rights are
--------------------------
then redeemable and except as provided in the penultimate sentence of this
Section 26, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs but subject to the other provisions of
this Section, supplement or amend any provision of this Rights Agreement without
the approval of any holders of the Rights or the Common Stock. At any time when
the Rights are not then redeemable and except as provided in the penultimate
sentence of this Section 26, the Company may, and the Rights Agent shall if the
Company so directs but subject to the other provisions of this Section,
supplement or amend this Rights Agreement without the approval of any holders of
Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or (iii) to change or supplement the
provisions hereunder in any manner which the
53
Company may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided,
that no such supplement or amendment shall adversely affect the interests of the
holders of Right Certificates as such (other than any Acquiring Person who
became such other than pursuant to a Permitted Tender Offer or has participated
in a Section 11(a)(ii) Event or an Affiliate or Associate of such an Acquiring
Person); provided, further, that this Rights 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 or this Rights Agreement
amended at the sole and absolute discretion of the Company 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 as such (other than any
Acquiring Person who became such other than pursuant to a Permitted Tender Offer
or has participated in a Section 11(a)(ii) or an Affiliate or Associate of such
an Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company and, if requested by the Rights Agent, an opinion of
counsel, which states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything contained in this Rights
Agreement to the contrary, (a) no supplement or amendment shall be made which
changes the Redemption Price, the Final Expiration Date or the number of shares
of Common Stock for which a Right is exercisable and (b) the Rights Agent may,
but shall not be obligated to, enter into any supplement or amendment that
affects the Rights Agent's own rights, duties, obligations or immunities under
this Rights Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.
Section 27. Successors. All of the covenants and provisions of this
----------
Rights 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.
54
Section 28. Determinations and Actions by the Board of Directors, etc.
---------------------------------------------------------
For all purposes of this Rights Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors shall have the
exclusive power and authority to administer this Rights 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 Rights Agreement, including, without limitation, the right and power (i) to
interpret the provisions of this Rights Agreement, and (ii) to make all
determinations or calculations deemed necessary or advisable for the
administration of this Rights Agreement (including a determination to redeem or
not redeem the Rights or to amend the Rights 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 Right Certificates
and all other Persons, and (y) not subject the Board of Directors to any
liability to the holders of the Rights. The Rights Agent shall always be
entitled to assume that the Board of Directors acted in good faith and shall be
fully protected and incur no liability in reliance thereon.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
---------------------------------
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the holders of
record of the Right Certificates (and, prior to the Distribution Date, the
Common Stock).
Section 30. Delaware Contract. This Rights Agreement and each Right
-----------------
Certificate issued
55
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State; provided, however, that all provisions regarding the
rights, duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts, made and to be performed entirely within such State.
Section 31. Counterparts. This Rights Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 33. Severability. If any term, provision, covenant or
------------
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
56
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed, all as of the day and year first above written.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
By: /s/ Xxxxx Xxxxxxxxxx
------------------------------------
Vice President-General Counsel
and Secretary
MELLON INVESTOR SERVICES LLC, as Rights Agent
By: /s/ Xxxxxx Xxxx
------------------------------------
57
EXHIBIT A
[Form of Right Certificate]
Certificate No. ___________ Rights
NOT EXERCISABLE AFTER JANUARY 1, 2012 OR EARLIER IF REDEEMED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER
RIGHT (SUBJECT TO ADJUSTMENT) ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE
ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON OR A TRANSFEREE OF THE RIGHTS PREVIOUSLY
OWNED BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OF THE RIGHTS AGREEMENT.
Right Certificate
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of January 2, 2002 ("Rights
Agreement"), between DOVER DOWNS GAMING & ENTERTAINMENT, INC., a Delaware
corporation ("Company"), and Mellon Investor Services LLC, a New Jersey limited
liability company ("Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York time) on January 1, 2012 at the office of the
Rights Agent, or its successors as Rights Agent, in New York, New York, one
fully paid and nonassessable share of Common Stock, par value $0.10 per share
("Common Stock"), of the Company, at a purchase price of $200.00, as the same
may from time to time be adjusted in accordance with the Rights Agreement
("Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Common Stock which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are
58
subject to modification and adjustment upon the happening of certain events and,
upon the happening of certain events, securities other than shares of Common
Stock, or other property, may be acquired upon exercise of the Rights evidenced
by this Right Certificate, as provided by the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of this Right Certificate. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder of record to purchase a like
aggregate number of shares of Common Stock 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 Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company by the action of the Board of
Directors at its option at a redemption price of $0.01 per Right at any time
prior to the earlier of the close of business on (i) the tenth day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement) and (ii) the Final Expiration Date.
No fractional shares of Common Stock or other securities of the Company
are required to be issued upon the exercise of any Right or Rights evidenced
hereby, and in lieu thereof, as provided in the Rights Agreement, a cash payment
will be made.
59
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Common Stock or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting shareholders 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 Rights 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 ________________ ____, 20___.
ATTEST: DOVER DOWNS GAMING &
ENTERTAINMENT, INC.
______________________________ By:______________________
Name: Name:
Secretary Title:
Countersigned:
MELLON INVESTOR SERVICES LLC,
as Rights Agent
By:___________________________
Authorized signature
60
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder desires to transfer this
Right Certificate.)
FOR VALUE RECEIVED _____________________________hereby sells, assigns
and transfers unto______________________________________________________________
_________________________________________________________________________(Please
print name and address of transferee)
Rights evidenced by 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:_________________ _______, 20______
_________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement); and
61
(2) after due inquiry and to the best knowledge of the undersigned, I, we
or it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any transferee of such Persons.
Dated: _____________________ ___________, 20________ __________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
NOTICE
The signature to the Form of Assignment or Form of Election to Purchase,
as the case may be, must correspond 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 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 Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if registered holder desires to
exercise the Right Certificate.)
TO: DOVER DOWNS GAMING & ENTERTAINMENT, INC.
The undersigned hereby irrevocably elects to exercise
______________________________________ Rights represented by this Right
Certificate to purchase the shares of Common Stock issuable upon the exercise of
such Rights and requests that certificates for such share(s) be issued in the
name:
62
______________________________________________________ (Please print name and
address)
Please insert social security
or other tax identifying number
_________________________________________
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 print name and
address)
Please insert social security
or other tax identifying number
_________________________________________
Dated: ______________ ____, 20_______
______________________
Signature
(Signature must conform in all respects to
name/s of holder/s as specified on the face of
this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, I, we
or it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any transferee of such Persons.
63
Dated: _________________ _________ , 20______ _______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
64
