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HILTON HOTELS CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
Amended and Restated Rights Agreement
Dated as of September 10, 1998
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AMENDED AND RESTATED RIGHTS AGREEMENT
Amended and Restated Rights Agreement, dated as of September 10,
1998, between Hilton Hotels Corporation, a Delaware corporation (the
"COMPANY"), and ChaseMellon Shareholder Services L.L.C., as Rights Agent (the
"RIGHTS AGENT").
RECITALS
WHEREAS, on July 9, 1998, the Company and the Rights Agent
entered into a Rights Agreement (the "ORIGINAL RIGHTS AGREEMENT") and in
connection therewith, the Board of Directors of the Company authorized and
declared a dividend of one preferred share purchase right (a "RIGHT") for
each Common Share (as defined in Section 1.6) of the Company outstanding at
the close of business on July 27, 1998 (the "RECORD DATE") and authorized and
directed the issuance of one Right (subject to adjustment as provided herein)
with respect to each Common Share that shall become outstanding between the
Record Date and the earliest of the Distribution Date and the Expiration Date
(as such terms are defined in Sections 3.1 and 7.1), each Right initially
representing the right to purchase one one-hundredth (subject to adjustment)
of a share of Series A Junior Participating Preferred Stock (the "PREFERRED
SHARES") of the Company having the rights, powers and preferences set forth
in the form of Certificate of Designation attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth PROVIDED,
HOWEVER, that Rights may be issued with respect to Common Shares that shall
become outstanding after the Distribution Date and prior to the Expiration
Date in accordance with Section 22; and
WHEREAS, pursuant to Section 26 of the Original Rights Agreement,
the Board of Directors of the Company has authorized an amendment and
restatement of the Original Rights Agreement (as amended and restated, the
"AGREEMENT") which will, among other things, eliminate all requirements that
Continuing Directors (as defined in the Original Rights Agreement) approve
certain actions under the Agreement and will provide that the Rights may be
redeemed by the Board of Directors at any time prior to a Trigger Event (as
defined in Section 1.13).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have the meanings indicated:
1.1. "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more of
the Common Shares of the Company then outstanding but shall not include an
Exempt Person (as such term is hereinafter defined). Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate
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number of shares beneficially owned by such Person to 15% or more of the
Common Shares of the Company then outstanding; PROVIDED, HOWEVER, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Shares
of the Company then outstanding solely by reason of share purchases by the
Company and shall, after such share purchases by the Company, become the
Beneficial Owner of one or more additional Common Shares of the Company
(other than pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Shares in Common Shares or pursuant to a
split or subdivision of the outstanding Common Shares), then such Person
shall be deemed to be an "Acquiring Person" unless upon becoming the
Beneficial Owner of such additional Common Shares of the Company such Person
does not beneficially own 15% or more of the Common Shares of the Company
then outstanding. Notwithstanding the foregoing, if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be
an "Acquiring Person," as defined pursuant to the foregoing provisions of
this Section 1.1, has become such inadvertently (including, without
limitation, because (A) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an
"Acquiring Person" or (B) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement), and without
any intention of changing or influencing control of the Company, and such
Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this Section 1.1, then such Person
shall not be deemed to be or have become an "Acquiring Person" at any time
for any purposes of this Agreement. For all purposes of this Agreement, any
calculation of the number of Common Shares outstanding at any particular
time, including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall
be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), as in effect on the date of this Agreement.
1.2. "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations, under the Exchange Act, as in effect on the date of this
Agreement.
1.3. 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 (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately, or only after the
passage of time, compliance with regulatory requirements, fulfillment of a
condition or otherwise) pursuant to any agreement, arrangement or
understanding, whether or not in writing (other than customary agreements
with and between underwriters and selling group
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members with respect to a bona fide public offering of securities), 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, (w) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, (x) securities which such Person has a
right to acquire upon the exercise of Rights at any time prior to the time
that any Person becomes an Acquiring Person, (y) securities issuable upon the
exercise of Rights from and after the time that any Person becomes an
Acquiring Person if 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 3.1 or Section 22 ("ORIGINAL RIGHTS") or pursuant to Section 11.9
or Section 11.15 with respect to an adjustment to Original Rights or (z)
securities which such Person or any of such Person's Affiliates or Associates
may acquire, does or do acquire or may be deemed to have the right to
acquire, pursuant to any merger or other acquisition agreement between the
Company and such Person (or one or more of his Affiliates or Associates) if
such agreement has been approved by the Board of Directors of the Company
prior to such Person's becoming an Acquiring Person; 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 security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to
a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) and
with respect to which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), whether or not in
writing, for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy or consent as described in the proviso to Section 1.3(ii)(B))
or disposing of any securities of the Company;
PROVIDED, HOWEVER, that no Person who is an officer, director or employee of
an Exempt Person shall be deemed, solely by reason of such Person's status or
authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" (as defined in this Section 1.3), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer,
director or employee of an Exempt Person.
1.4. "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
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1.5. "CLOSE OF BUSINESS" on any given date shall mean 5:00
p.m., California time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 p.m., California time, on the next
succeeding Business Day.
1.6. "COMMON SHARES" when used with reference to the Company
shall mean the shares of common stock, par value $2.50 per share, of the
Company. "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock with the greatest voting power, or
the equity securities or other equity interest having power to control or
direct the management, of such other Person or, if such Person is a
Subsidiary (as such term is hereinafter defined) of another Person, the
Person or Persons which ultimately control such first-mentioned Person, and
which has issued and outstanding such capital stock, equity securities or
equity interest.
1.7. [Intentionally Omitted]
1.8. "EXEMPT PERSON" shall mean: (i) the Company or any
Subsidiary of the Company, in each case including, without limitation, its
fiduciary capacity, (ii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iii) any entity or trustee holding shares of
capital stock of the Company for or pursuant to the terms of any such plan,
or for the purpose of funding other employee benefits for employees of the
Company or any Subsidiary of the Company, or (iv) the Hilton Interests.
1.9. "HILTON INTERESTS" shall mean Xxxxxx Xxxxxx or the Xxxxxx
X. Xxxxxx Fund.
1.10. "PERSON" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, unincorporated
association, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
1.11. "SHARES ACQUISITION DATE" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, the filing of a report pursuant to Section 13(d) of the
Exchange Act or pursuant to a comparable successor statute) by the Company or
an Acquiring Person that an Acquiring Person has become such or that
discloses information which reveals the existence of an Acquiring Person or
such earlier date as a majority of the Board of Directors shall become aware
of the existence of an Acquiring Person.
1.12. "SUBSIDIARY" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, of record or beneficially, directly
or indirectly, by such Person.
1.13. A "TRIGGER EVENT" shall be deemed to have occurred upon
any Person becoming an Acquiring Person.
1.14. The following terms shall have the meanings defined for
such terms in the Sections set forth below:
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TERM SECTION
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Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.1
Exchange Consideration 27
Existing Holder 1.1
Expiration Date 7.1
Final Expiration Date 7.1
Nasdaq 9
Original Rights 1.3
Preferred Shares Recitals
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4.1
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4.1
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable. In the event the Company appoints one
or more co-Rights Agents, the respective duties of the Rights Agent and any
co-Rights Agent shall be as the Company shall determine. Contemporaneously
with such appointment, if any, the Company shall notify the Rights Agent
thereof.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
3.1. RIGHTS EVIDENCED BY SHARE CERTIFICATES. Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day after the date of the commencement of, or first public
announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer the consummation of which would
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result in any Person (other than an Exempt Person) becoming the Beneficial
Owner of Common Shares aggregating 15% or more of the then outstanding Common
Shares of the Company (the earlier of (i) and (ii) being herein referred to
as the "DISTRIBUTION DATE"), (x) the Rights (unless earlier expired, redeemed
or terminated) will be evidenced (subject to the provisions of Section 3.2)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates for Common Shares shall also be deemed to be
Right Certificates) and not by separate certificates, and (y) the Rights (and
the right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying Common Shares. The preceding
sentence notwithstanding, prior to the occurrence of a Distribution Date
specified as a result of an event described in clause (ii) (or such later
Distribution Date as the Board of Directors of the Company may select
pursuant to this sentence), the Board of Directors may postpone, one or more
times, the Distribution Date which would occur as a result of an event
described in clause (ii) beyond the date set forth in such clause (ii).
Nothing herein shall permit such a postponement of a Distribution Date after
a Person becomes an Acquiring Person, except as a result of the operation of
the third sentence of Section 1.1. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign and the Company (or, if requested, the Rights Agent) will
send, by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date (other than any
Acquiring Person or any Associate or Affiliate of an Acquiring Person), at
the address of such holder shown on the records of the Company, one or more
certificates for Rights, in substantially the form of Exhibit B hereto (a
"RIGHT CERTIFICATE"), evidencing one Right (subject to adjustment as provided
herein) for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
3.2. SUMMARY OF RIGHTS. Following the Record Date, the Company
caused a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "SUMMARY OF
RIGHTS"), to be sent by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the Record Date at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the close of business on the
Record Date, until the Distribution Date (or the earlier Expiration Date),
the Rights will be evidenced by such certificates for Common Shares
registered in the names of the holders thereof together with a copy of the
Summary of Rights and the registered holders of the Common Shares shall also
be registered holders of the associated Rights. Until the Distribution Date
(or the earlier Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding at the close of business on the
Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
3.3. NEW CERTIFICATES AFTER RECORD DATE. Certificates for
Common Shares which become outstanding (whether upon issuance out of
authorized but unissued Common Shares, disposition out of treasury or
transfer or exchange of outstanding Common Shares) after
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the Record Date but prior to the earliest of the Distribution Date or the
Expiration Date, shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in an Agreement between Hilton Hotels
Corporation (the "Company") and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, dated as of July 9, 1998, as the same may be
amended from time to time (the "Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Agreement without charge after receipt of a
written request therefor. AS DESCRIBED IN THE AGREEMENT, RIGHTS WHICH
ARE OWNED BY, TRANSFERRED TO OR HAVE BEEN OWNED BY ACQUIRING PERSONS
OR ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED IN THE AGREEMENT)
SHALL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
The "Agreement" referred to in the foregoing legend shall include this
Agreement. With respect to such certificates containing the foregoing
legend, until the Distribution Date (or the earlier Expiration Date), the
Rights associated with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the surrender for transfer
of any such certificates, except as otherwise provided herein, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Notwithstanding this Section 3.3, the omission of a legend shall
not affect the enforceability of any part of this Agreement or the rights of
any holder of the Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the forms of election to purchase shares, certification and assignment
to be printed on the reverse thereof) shall be substantially the same as
Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or trading system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the terms and
conditions hereof, the Right Certificates, whenever issued, shall be dated as
of the Record Date, and shall show the date of countersignature by the Rights
Agent, and on their face shall entitle the holders thereof to purchase such
number of one one-hundredths of a Preferred Share as shall be set forth
therein at the price per one one-hundredth of a Preferred Share set forth
therein (the
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"PURCHASE PRICE"), but the number of such one one-hundredths of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided
herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right
Certificates shall be executed on behalf of the Company by its Chairman of
the Board of Directors, the Chief Executive Officer, President, any Vice
President or its Treasurer, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which
shall be attested by the Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
countersigned, either manually or by facsimile signature, by an authorized
signatory of the Rights Agent, but it shall not be necessary for the same
signatory to countersign all of the Right Certificates hereunder. No Right
Certificate shall 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, and 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 Certificate may be signed on
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
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, 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 certificate number of each of the Right Certificates and the date of each
of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
Subject to the provisions of Section 7.5, Section 11.1.2 and Section 14, 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 (other than Right Certificates representing Rights that
have become void pursuant to Section 11.1.2 or that have been exchanged
pursuant to Section 27) may be transferred, split up or combined or exchanged
for another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a Preferred Share
as the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up or
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender, together with any
required form of assignment and certificate duly completed, the Right
Certificate or Right Certificates to be transferred, split up or combined or
exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate or Right Certificates until the registered holder shall have
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completed and signed the certificate contained in the form of 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 shall reasonably request. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment 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 or combination or exchange of such Right Certificates.
Subject to the provisions of Section 11.1.2 , at any time after
the Distribution Date and prior to the Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make 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 RIGHTS.
7.1. EXERCISE OF RIGHTS. Subject to Section 11.1.2 and except
as otherwise provided herein, the registered holder of any Right Certificate
may exercise the Rights evidenced thereby in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase and certification on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price for the total number of one one-hundredths of a Preferred Share (or
other securities, cash or other assets) as to which the Rights are exercised,
at or prior to the time (the "EXPIRATION DATE") that is the earliest of (i)
the close of business on July 27, 2008 (the "FINAL EXPIRATION DATE"), (ii)
the time at which the Rights are redeemed as provided in Section 23 (the
"REDEMPTION DATE"), (iii) the closing of any merger or other acquisition
transaction involving the Company pursuant to an agreement of the type
described in Sections 1.3(ii)(A)(z) and 13.3, at which time the Rights are
deemed terminated, or (iv) the time at which the Rights are exchanged as
provided in Section 27.
7.2. PURCHASE. The Purchase Price for each one one-hundredth
of a Preferred Share pursuant to the exercise of a Right shall be initially
$140, shall be subject to adjustment from time to time as provided in
Sections 11, 13 and 26 and shall be payable in lawful money of the United
States of America in accordance with Section 7.3.
7.3. PAYMENT PROCEDURES. 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 total number of one one-hundredths of a Preferred Share to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9, in
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cash or by certified or cashier's check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i)(A) requisition
from any transfer agent of the Preferred Shares (or make available, if the
Rights Agent is the transfer agent) certificates for the number of Preferred
Shares to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depository agent, requisition from
the depositary agent depositary receipts representing interests in such
number of one one-hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs the depositary agent to comply with all such requests,
(ii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of the issuance of fractional shares in accordance with Section
14 or otherwise in accordance with Section 11.1.3, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate. In
the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section
11.1.3, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
7.4. PARTIAL EXERCISE. 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 and delivered to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14.
7.5. FULL INFORMATION CONCERNING OWNERSHIP. Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a
registered holder of Rights upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise shall have been duly completed and signed by
the registered holder thereof and the Company shall have been provided with
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
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
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right
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Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. The
Company covenants and agrees that from and after the Distribution Date it
will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares (and, following the occurrence of a Trigger Event,
out of its authorized and unissued Common Shares or other securities or out
of its shares held in its treasury) the number of Preferred Shares (and,
following the occurrence of a Trigger Event, Common Shares and/or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights.
So long as the Preferred Shares (and, following the occurrence of
a Trigger Event, Common Shares and/or other securities) issuable upon the
exercise of Rights may be listed on any national securities exchange or
traded in the over-the-counter market and quoted on the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") (including
the National Market or Small Cap Market), the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable,
all shares reserved for such issuance to be listed or admitted to trading on
such exchange or quoted on Nasdaq upon official notice of issuance upon such
exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (and,
following the occurrence of a Trigger Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance
of Preferred Shares upon the exercise of Rights, to register and qualify such
Preferred Shares 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 exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 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. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
11
The Company further covenants and agrees that it will pay when
due and payable any and all Federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates for the Preferred
Shares (or Common Shares and/or other securities, as the case may be) in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for Preferred Shares (or Common Shares and/or other securities,
as the case may be) in a name other than that of the registered holder upon
the exercise of any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose
name any certificate for Preferred Shares (or Common Shares and/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
Preferred Shares (or Common Shares and/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 transfer taxes) was
made; PROVIDED, HOWEVER, that if the date of such surrender and payment is a
date upon which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares
and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder
of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number of Preferred Shares or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
11.1. POST-EXECUTION EVENTS.
11.1.1. CORPORATE DIVIDENDS, RECLASSIFICATIONS, ETC. In the
event the Company shall at any time after the date of this Agreement (A)
declare and pay a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the
12
continuing or surviving corporation), except as otherwise provided in this
Section 11.1, the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable
on such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred
Shares transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED, HOWEVER, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event occurs which would
require an adjustment under both Section 11.1.1 and Section 11.1.2, the
adjustment provided for in this Section 11.1.1 shall be in addition to, and
shall be made prior to, the adjustment required pursuant to, Section 11.1.2.
11.1.2. ACQUIRING PERSON EVENTS; TRIGGERING EVENTS. Subject to
Sections 23.1 and 27, in the event that a Trigger Event occurs, then, from
and after the first occurrence of such event, each holder of a Right, except
as provided below, shall thereafter have a right to receive, upon exercise
thereof at a price per Right equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for which
a Right is then exercisable (without giving effect to this Section 11.1.2),
in accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of Common Shares as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then number of one
one-hundredths of a Preferred Share for which a Right is then exercisable
(without giving effect to this Section 11.1.2) and (y) dividing that product
by 50% of the current per share market price of the Common Shares (determined
pursuant to Section 11.4) on the first of the date of the occurrence of, or
the date of the first public announcement of, a Trigger Event (the
"ADJUSTMENT SHARES"); PROVIDED, HOWEVER, that the Purchase Price and the
number of Adjustment Shares shall thereafter be subject to further adjustment
as appropriate in accordance with Section 11.6. Notwithstanding the
foregoing, upon the occurrence of a Trigger Event, any Rights that are or
were acquired or beneficially owned by (1) any Acquiring Person or any
Associate or Affiliate thereof, (2) a transferee of any Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (3) a transferee of any Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding which has as a primary purpose or
effect avoidance of this Section 11.1.2, and subsequent transferees, shall
become void without any further action, and any holder (whether or not such
holder is an Acquiring Person or an Associate or Affiliate of an Acquiring
Person) of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement or otherwise. The Company shall not
enter into any transaction of the type described
13
in this Section 11.1.2 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any arrangements
which, as a result of the consummation of such transaction, would eliminate
or substantially diminish the benefits intended to be afforded by the Rights.
From and after the Trigger Event, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 that represents Rights that are or have
become void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become void pursuant to the provisions of this paragraph shall be
canceled.
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11.1.2 are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to any Acquiring Person
or its Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event specified in Section
13.1, any Rights that theretofore have not been exercised pursuant to this
Section 11.1.2 shall thereafter be exercisable only in accordance with
Section 13 and not pursuant to this Section 11.1.2.
11.1.3. INSUFFICIENT SHARES. The Company may at its option
substitute for a Common Share issuable upon the exercise of Rights in
accordance with the foregoing Section 11.1.2 a number of Preferred Shares or
fraction thereof such that the current per share market price of one
Preferred Share multiplied by such number or fraction is equal to the current
per share market price of one Common Share. In the event that upon the
occurrence of one or more of the events listed in Section 11.1.2 above there
shall not be sufficient Common Shares authorized but unissued, or held by the
Company as treasury shares, to permit the exercise in full of the Rights in
accordance with the foregoing Section 11.1.2, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exercise of the Rights, PROVIDED, HOWEVER, that if the Company
determines that it is unable to cause the authorization of a sufficient
number of additional Common Shares, then, in the event the Rights become
exercisable, the Company, with respect to each Right and to the extent
necessary and permitted by applicable law and any agreements or instruments
in effect on the date hereof to which it is a party, shall: (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "CURRENT VALUE"), over (2) the Purchase Price (such
excess, the "SPREAD") and (B) with respect to each Right (other than Rights
which have become void pursuant to Section 11.1.2), make adequate provision
to substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Preferred Shares or other equity securities of the Company (including,
without limitation, shares, or fractions of shares, of preferred stock which,
by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the Common Shares, the Board of Directors of the
Company has deemed in good faith to have substantially the same value as
Common Shares) (each such share of preferred stock or fractions of shares of
preferred stock constituting a "COMMON STOCK EQUIVALENT")), (4) debt
securities of the Company, (5) other assets or (6) any combination of the
foregoing having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
14
based upon the advice of a nationally recognized investment banking firm
selected in good faith by the Board of Directors of the Company; PROVIDED,
HOWEVER, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following
the first occurrence of one of the events listed in Section 11.1.2 above,
then the Company shall be obligated to deliver, to the extent necessary and
permitted by applicable law and any agreements or instruments in effect on
the date hereof to which it is a party, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Common Shares (to
the extent available) and then, if necessary, such number or fractions of
Preferred Shares (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread. If the
Board of Directors of the Company shall determine in good faith that it is
unlikely that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended and re-extended to the extent necessary, but not
more than ninety (90) days following the first occurrence of one of the
events listed in Section 11.1.2 above, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period as may be extended, the "SUBSTITUTION PERIOD"). To the extent that
the Company determines that some action need be taken pursuant to the second
and/or third sentences of this Section 11.1.3, the Company (x) shall provide
that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended as well as a
public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11.1.3, the value of a Common Share shall be the
current per share market price (as determined pursuant to Section 11.4) on
the date of the occurrence of a Trigger Event and the value of any "common
stock equivalent" shall be deemed to have the same value as the Common Shares
on such date. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive Common
Shares upon the exercise of the Rights among holders of Rights pursuant to
this Section 11.1.3. Actions of the Company pursuant to this Section 11.1.3
shall require the vote of a majority of the Board of Directors.
11.2. DILUTIVE RIGHTS OFFERING. In case the Company shall fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Shares
(or securities having the same rights, privileges and preferences as the
Preferred Shares ("EQUIVALENT PREFERRED STOCK")) or securities convertible
into Preferred Shares or equivalent preferred stock at a price per Preferred
Share or per share of equivalent preferred stock (or having a conversion or
exercise price per share, if a security convertible into or exercisable for
Preferred Shares or equivalent preferred stock) less than the current per
share market price of the Preferred Shares (as determined pursuant to Section
11.4) 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 Preferred Shares and shares of equivalent preferred
stock outstanding on such record
15
date plus the number of Preferred Shares and shares of equivalent preferred
stock which the aggregate offering price of the total number of Preferred
Shares and/or shares of equivalent preferred stock to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current per share market price and the
denominator of which shall be the number of Preferred Shares and shares of
equivalent preferred stock outstanding on such record date plus the number of
additional Preferred Shares and/or shares of equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Preferred Shares
and shares of equivalent preferred stock owned by or held for the account of
the Company or any Subsidiary of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustments 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.
11.3. DISTRIBUTIONS. In case the Company shall fix a record
date for the making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash, securities or assets (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of the
last regular periodic cash dividend theretofore paid or, in case regular
periodic cash dividends have not theretofore been paid, at a rate not in
excess of 50% of the average net income per share of the Company for the four
quarters ended immediately prior to the payment of such dividend, or a
dividend payable in Preferred Shares (which dividend, for purposes of this
Agreement, shall be subject to the provisions of Section 11.1.1(A))) or
convertible securities, or subscription rights or warrants (excluding those
referred to in Section 11.2), 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 per share market price of the Preferred Shares (as
determined pursuant to Section 11.4) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets, securities or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares (as determined
pursuant to Section 11.4); PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. 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
16
shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
11.4. CURRENT PER SHARE MARKET VALUE.
11.4.1. GENERAL. For the purpose of any computation hereunder,
the "CURRENT PER SHARE MARKET PRICE" of any security (a "SECURITY" for the
purpose of this Section 11.4.1) on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; PROVIDED, HOWEVER, that in the event that the current per
share market price of the Security is determined during any period following
the announcement by the issuer of such Security of (i) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares or (ii) any subdivision, combination
or reclassification of such Security, and prior to the expiration of thirty
(30) Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current per share market
price" shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Security selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Security, the fair value of the Security on such
date as determined in good faith by the Board of Directors of the Company
shall be used. The term "TRADING DAY" shall mean a day on which the
principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Security is not publicly held or not so
listed or traded, or if on any such date the Security is not so quoted and no
such market maker is making a market in the Security, "current per share
market price" shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company or, if at the time of such
determination there is an Acquiring Person, by a nationally recognized
investment banking firm selected by the Board of Directors, which shall have
the duty to make such determination in a reasonable and objective manner,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
17
11.4.2. PREFERRED SHARES. Notwithstanding Section 11.4.1,
for the purpose of any computation hereunder, the "current per share market
price" of the Preferred Shares shall be determined in the same manner as set
forth above in Section 11.4.1 (other than the last sentence thereof). If the
current per share market price of the Preferred Shares cannot be determined
in the manner described in Section 11.4.1, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be an amount
equal to 100 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Shares occurring after the date of this Agreement) multiplied by the
current per share market price of the Common Shares (as determined pursuant
to Section 11.4.1). If neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, (as determined pursuant to Section
11.4.1). If neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, or if on any such date neither the Common Shares
nor the Preferred Shares are so quoted and no such market maker is making a
market in either the Common Shares or the Preferred Shares, "current per
share market price" of the Preferred Shares shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
or, if at the time of such determination there is an Acquiring Person, by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company, which shall have the duty to make such
determination in a reasonable and objective manner, which determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For purposes of this Agreement, the "current
per share market price" of one one-hundredth of a Preferred Share shall be
equal to the "current per share market price" of one Preferred Share divided
by 100.
11.5. INSIGNIFICANT CHANGES. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price. Any adjustments which by
reason of this Section 11.5 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 one-hundred thousandth of a Preferred Share or the nearest
one-hundredth of a Common Share or other share or security, as the case may
be.
11.6. SHARES OTHER THAN PREFERRED SHARES. If as a result of an
adjustment made pursuant to Section 11.1, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such other
shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained
in Sections 11.1, 11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the provisions
of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall
apply on like terms to any such other shares.
11.7. RIGHTS ISSUED PRIOR TO ADJUSTMENT. All Rights originally
issued by the Company subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a
18
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
11.8. EFFECT OF ADJUSTMENTS. Unless the Company shall have
exercised its election as provided in Section 11.9, upon each adjustment of
the Purchase Price as a result of the calculations made in Sections 11.2 and
11.3, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one-hundred thousandth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a
Preferred Share 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.
11.9. ADJUSTMENT IN NUMBER OF RIGHTS. The Company may elect on
or after the date of any adjustment of the Purchase Price to adjust the
number of Rights, in substitution for any adjustment in the number of one
one-hundredths of a Preferred Share issuable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one-hundredth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11.9,
the Company may, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14, 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.
11.10. RIGHT CERTIFICATES UNCHANGED. Irrespective of any
adjustment or change in the Purchase Price or the number of one
one-hundredths of a Preferred Share issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
19
express the Purchase Price per share and the number of one one-hundredths of
a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
11.11. PAR VALUE LIMITATIONS. Before taking any action that
would cause an adjustment reducing the Purchase Price below one one-hundredth
of the then par value, if any, of the Preferred Shares or other shares of
capital stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares or other such shares at such adjusted Purchase
Price.
11.12. DEFERRED ISSUANCE. In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made effective as
of a record date for a specified event, the Company may elect to defer until
the occurrence of such event the issuance to the holder of any Right
exercised after such record date of that number of Preferred Shares and
shares of other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Shares and shares of other
capital stock or other securities, assets or cash of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
11.13. REDUCTION IN PURCHASE PRICE. 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 it in its sole
discretion shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Shares, issuance wholly for cash of any of the
Preferred Shares at less than the current market price, issuance wholly for
cash of Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, dividends on Preferred Shares
payable in Preferred Shares or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such stockholders.
11.14. COMPANY NOT TO DIMINISH BENEFITS OF RIGHTS. The Company
covenants and agrees that after the earlier of the Shares Acquisition Date or
Distribution Date it will not, except as permitted by Section 23, Section 26
or Section 27, 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
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
11.15. ADJUSTMENT OF RIGHTS ASSOCIATED WITH COMMON SHARES.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that the Company shall at any time after the date hereof and prior to
the Distribution Date (i) declare or pay any dividend on the outstanding
Common Shares payable in Common Shares, (ii) effect a subdivision or
consolidation of the outstanding Common Shares (by reclassification or
otherwise than by the payment of dividends payable in Common Shares), or
(iii) combine the outstanding Common
20
Shares into a greater or lesser number of Common Shares, then in any such
case, the number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date or in accordance with Section 22 shall be proportionately adjusted so
that the number of Rights thereafter associated with each Common Share
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each Common Share immediately prior to such
event by a fraction, the numerator of which shall be the total number of
Common Shares outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event. The
adjustments provided for in this Section 11.15 shall be made successively
whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 or 13, the
Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Shares or the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained 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.
13.1. CERTAIN TRANSACTIONS. In the event that, from and after
the first occurrence of a Trigger Event, directly or indirectly, (A) the
Company shall consolidate with, or merge with and into, any other Person and
the Company shall not be the continuing or surviving corporation, (B) any
Person shall consolidate with the Company, or 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 Common Shares
shall be changed into or exchanged for stock or other securities of the
Company or any other Person or cash or any other property, or (C) the Company
shall sell, exchange, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, exchange, mortgage or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company or one or more
wholly-owned Subsidiaries of the Company or any of the Hilton Interests in
one or more transactions each of which complies with Section 11.14), then,
and in each such case, proper provision shall be made so that (i) each holder
of a Right (other than Rights which have become void pursuant to Section
11.1.2) shall thereafter have the right to receive, upon the exercise thereof
at a price per Right equal to the then current Purchase Price multiplied by
the number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Trigger Event (as
subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and
11.12), in accordance with the terms of this Agreement and in lieu of
21
Preferred Shares or Common Shares, such number of validly authorized and
issued, fully paid, non-assessable and freely tradable Common Shares of the
Principal Party (as such term is hereinafter defined) not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the first occurrence of a
Trigger Event (as subsequently adjusted pursuant to Sections 11.1.1, 11.2,
11.3, 11.8, 11.9 and 11.12) and (y) dividing that product by 50% of the then
current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11.4) on the date of consummation of such
consolidation, merger, sale or transfer; PROVIDED, that the price per Right
so payable and the number of Common Shares of such Principal Party so
receivable upon exercise of a Right shall thereafter be subject to further
adjustment as appropriate in accordance with Section 11.6 to reflect any
events covered thereby occurring in respect of the Common Shares of such
Principal Party after the occurrence of such consolidation, merger, sale or
transfer; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such Principal Party;
and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; PROVIDED that, upon
the subsequent occurrence of any consolidation, merger, sale or transfer of
assets or other extraordinary transaction in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to receive, upon exercise
of a Right and payment of the Purchase Price as provided in this Section
13.1, such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of
such transaction, owned the Common Shares of the Principal Party receivable
upon the exercise of a Right pursuant to this Section 13.1, 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. The Company shall not
consummate any such consolidation, merger, sale or transfer unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that the
requirements of this Section 13.1 and Section 13.2 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 Agreement as the same shall have been assumed by the
Principal Party pursuant to this Section 13.1 and Section 13.2 and providing
that, as soon as practicable after executing such agreement pursuant to this
Section 13, the Principal Party, at its own expense, shall
(1) 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 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
22
Securities Act) until the Expiration Date and similarly comply with
applicable state securities laws;
(2) use its best efforts, if the Common Shares of the
Principal Party shall be listed or admitted to trading on the New York Stock
Exchange or on another national securities exchange, to list or admit to
trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on the New York Stock Exchange or
such securities exchange, or, if the Common Shares of the Principal Party
shall not be listed or admitted to trading on the New York Stock Exchange or
a national securities exchange, to cause the Rights and the securities
receivable upon exercise of the Rights to be authorized for quotation on
Nasdaq or on such other system then in use;
(3) 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
(4) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the Principal Party
subject to purchase upon exercise of outstanding Rights.
In case the Principal Party 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 (other than to
holders of Rights pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, Common Shares or common stock equivalents of such Principal Party at less
than the then current market price per share thereof (determined pursuant to
Section 11.4) or securities exercisable for, or convertible into, Common
Shares or common stock equivalents 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, taxes or similar
provision in connection with the issuance of the Common Shares of such
Principal Party pursuant to the provision 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 canceled, 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.
The Company covenants and agrees that it shall not, at any time
after the Trigger Event, enter into any transaction of the type described in
clauses (A) through (C) of this Section 13.1 if (i) at the time of or
immediately after such consolidation, merger, sale, transfer 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, (ii)
prior to, simultaneously with or immediately after such consolidation,
merger, sale, transfer or other transaction, the stockholders of the Person
who
23
constitutes, or would constitute, the Principal Party for purposes of Section
13.2 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates or Associates or (iii) the form or nature of
organization of the Principal Party would preclude or limit the
exercisability of the Rights. The provisions of this Section 13 shall
similarly apply to successive transactions of the type described in clauses
(A) through (C) of this Section 13.1.
13.2. PRINCIPAL PARTY. "Principal Party" shall mean:
(i) in the case of any transaction described in (A) or
(B) of the first sentence of Section 13.1: (i) the Person that is the issuer
of the securities into which the Common Shares are converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer the
Common Shares of which have the greatest aggregate market value of shares
outstanding, or (ii) 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 Shares of which
have 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 (C) of
the first sentence in Section 13.1, 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 is the issuer of Common Shares having the greatest aggregate market
value of shares outstanding; PROVIDED, HOWEVER, that in any such case
described in the foregoing clause (A) or (B) of this Section 13.2, if the
Common Shares of such Person are not at such time or have not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have 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 Shares 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 Common Shares 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.
13.3. APPROVED ACQUISITIONS. Notwithstanding anything contained
herein to the contrary, in the event of any merger or other acquisition
transaction involving the Company pursuant to a merger or other acquisition
agreement between the Company and any Person (or one or more of such Person's
Affiliates or Associates) which agreement has been approved by
24
the Board of Directors of the Company prior to any Person becoming an
Acquiring Person, this Agreement and the rights of holders of Rights
hereunder shall be terminated in accordance with Section 7.1.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
14.1. CASH IN LIEU OF FRACTIONAL RIGHTS. The Company shall not
be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights (except prior to the Distribution Date in
accordance with Section 11.15). In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole Right. For
the purposes of this Section 14.1, the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the current
market value of the Rights on such date shall be the fair value of the Rights
as determined in good faith by the Board of Directors of the Company, or, if
at the time of such determination there is an Acquiring Person, by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company, which shall have the duty to make such
determination in a reasonable and objective manner, which determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
14.2. CASH IN LIEU OF FRACTIONAL PREFERRED SHARES. The Company
shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share) upon exercise or exchange of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Interests in
fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; PROVIDED, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary
25
receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised or exchanged as herein provided an amount in cash equal
to the same fraction of the current per share market price of one Preferred
Share (as determined in accordance with Section 14.1) for the Trading Day
immediately prior to the date of such exercise or exchange.
14.3. CASH IN LIEU OF FRACTIONAL COMMON SHARES. The Company
shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares upon the exercise or
exchange of Rights. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional Common Shares would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole Common
Share (as determined in accordance with Section 14.1) for the Trading Day
immediately prior to the date of such exercise or exchange.
14.4. WAIVER OF RIGHT TO RECEIVE FRACTIONAL RIGHTS OR SHARES.
The holder of a Right by the acceptance of the Rights expressly waives his
right to receive any fractional Rights or any fractional shares upon exercise
or exchange of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, except the rights of action given to the Rights Agent
under Section 18, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his own behalf and for his own benefit, enforce this Agreement, and may
institute and maintain any suit, action or proceeding against the Company to
enforce this Agreement, or otherwise enforce or act in respect of his right
to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall be entitled
to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
(including, without limitation, the Company) subject to this 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 be
transferable only in connection with the transfer of the Common Shares;
26
(b) as of and after the Distribution Date, the Right
Certificates are 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; and
(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 Shares certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in
Section 24), or to receive dividends or subscription rights, 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. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder in accordance with a fee schedule to be mutually agreed upon
and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for the Preferred Shares or the Common
Shares or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
instruction, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
27
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation or limited liability company into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation or limited liability company resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation or limited liability company
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, PROVIDED that such
corporation or limited liability company would be eligible for appointment as
a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this
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 Agreement.
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 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
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
20.1. LEGAL COUNSEL. The Rights Agent may consult with legal
counsel selected by it (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
20.2. CERTIFICATES AS TO FACTS OR MATTERS. Whenever in the
performance of its duties under this 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 or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company and delivered to the Rights Agent; and
such
28
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement
in reliance upon such certificate.
20.3. STANDARD OF CARE. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful misconduct.
20.4. RELIANCE ON AGREEMENT AND RIGHT CERTIFICATES. The Rights
Agent shall not be liable for or by reason of any of the statements of fact
or recitals contained in this Agreement or in the Right Certificates (except
as to 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.
20.5. NO RESPONSIBILITY AS TO CERTAIN MATTERS. The Rights Agent
shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11.1.2) or any adjustment required
under the provisions of Sections 3, 11, 13, 23 or 27 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 change or adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or other securities to
be issued pursuant to this Agreement or any Right Certificate or as to
whether any Preferred Shares will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
20.6. FURTHER ASSURANCE BY COMPANY. The Company agrees that it
will perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent
for the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
20.7. AUTHORIZED COMPANY OFFICERS. The Rights Agent is hereby
authorized and directed to accept instructions with respect to the
performance of its duties hereunder from any one of the Chairman of the Board
of Directors, the Chief Executive Officer, the President, the Chief Financial
Officer, any Vice President, the Treasurer, the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties under this
Agreement, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for these instructions. 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 or omitted by the Rights Agent with respect to its
duties or obligations under this Agreement and the date on and/or after which
such
29
action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable to the Company for any action taken by, or omission of,
the Rights Agent in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not be
less than three business days after the date any such officer actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking of any such action (or
the effective date in the case of omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
20.8. FREEDOM TO TRADE IN COMPANY SECURITIES. The Rights Agent
and any stockholder, director, officer or employee of the Rights Agent may
buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
20.9. RELIANCE ON ATTORNEYS AND AGENTS. The Rights Agent may
execute and exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or accountable for any
act, omission, default, neglect or misconduct of any such attorneys or agents
or for any loss to the Company resulting from any such act, omission,
default, neglect or misconduct, PROVIDED that reasonable care was exercised
in the selection and continued employment thereof.
20.10. INCOMPLETE CERTIFICATE. If, with respect to any Rights
Certificate 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 not been
completed to certify the holder is not an Acquiring Person (or an Affiliate
or Associate thereof), the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company.
20.11. RIGHTS HOLDERS LIST. At any time and from time to time
after the Distribution Date, upon the request of the Company, the Rights
Agent shall promptly deliver to the Company a list, as of the most recent
practicable date (or as of such earlier date as may be specified by the
Company), of the holders of record of Rights.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares and/or Preferred Shares, as
applicable, by registered or certified mail. Following the Distribution
Date, the Company shall promptly notify the holders of the Right Certificates
by first-class mail of any such resignation. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares and/or Preferred
30
Shares, as applicable, 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 resigning,
removed, or incapacitated Rights Agent shall remit to the Company, or to any
successor Rights Agent designated by the Company, all books, records, funds,
certificates or other documents or instruments of any kind then in its
possession which were acquired by such resigning, removed or incapacitated
Rights Agent in connection with its services as Rights Agent hereunder, and
shall thereafter be discharged from all duties and obligations hereunder.
Following notice of such removal, resignation or incapacity, the Company
shall appoint a successor to such Rights Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after giving notice
of such removal or after it has 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 registered holder 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 corporation organized
and doing business under the laws of the United States or of the State of New
York or the State of California (or any other state of the United States so
long as such corporation is authorized to do business as a banking
institution in the State of New York or California) in good standing, having
an office in the State of New York or the State of California, which is
authorized under such laws to exercise stock transfer or corporate trust
powers and is subject to supervision or examination by Federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $10 million. 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 Shares and/or
Preferred Shares, as applicable, and, following the Distribution Date, 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 Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the Expiration Date, the Company shall,
with respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, granted or awarded
as of the Distribution Date, or upon exercise, conversion or exchange of
securities hereinafter issued by
31
the Company, 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
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 Right Certificate would be issued and (ii) no such Right
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.
Section 23.1. RIGHT TO REDEEM. The Board of Directors of the
Company may, at its option, at any time prior to a Trigger Event, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$.001 per Right, appropriately adjusted to reflect any stock split, stock
dividend, recapitalization or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"REDEMPTION PRICE"), and the Company may, at its option, pay the Redemption
Price in Common Shares (based on the "current per share market price,"
determined pursuant to Section 11.4, of the Common Shares at the time of
redemption), cash or any other form of consideration deemed appropriate by
the Board of Directors. The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and subject to
such conditions as the Board of Directors in its sole discretion may
establish.
Section 23.2. REDEMPTION PROCEDURES. Immediately upon the action
of the Board of Directors of the Company ordering the redemption of the
Rights (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), 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 for each Right so held. The Company shall promptly give public notice
of such redemption; PROVIDED, HOWEVER, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
The Company shall promptly give, or cause the Rights Agent to give, notice of
such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates (other than
Hilton Interests) may redeem, acquire or purchase for value any Rights at any
time in any manner other than that specifically set forth in this Section 23
or in Section 27, and other than in connection with the purchase, acquisition
or redemption of Common Shares prior to the Distribution Date.
Section 24. NOTICE OF CERTAIN EVENTS. In case the Company
shall propose at any time after the earlier of the Shares Acquisition Date
and the Distribution Date (a) to pay any dividend payable in stock of any
class to the holders of Preferred Shares or to make any other distribution to
the holders of Preferred Shares (other than a regular periodic cash dividend
at a
32
rate not in excess of 125% of the rate of the last regular periodic cash
dividend theretofore paid or, in case regular periodic cash dividends have
not theretofore been paid, at a rate not in excess of 50% of the average net
income per share of the Company for the four quarters ended immediately prior
to the payment of such dividends, or a stock dividend on, or a subdivision,
combination or reclassification of the Common Shares), or (b) to offer to the
holders of Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or
any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), or (d) to
effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person (other than pursuant to a merger or other
acquisition agreement of the type described in Section 1.3(ii)(A)(z)), or (e)
to effect the liquidation, dissolution or winding up of the Company, or (f)
to declare or pay any dividend on the Common Shares payable in Common Shares
or to effect a subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to the Rights Agent
and to each holder of a Right Certificate, in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares and/or Common
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least ten (10)
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action, at
least ten (10) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Preferred Shares
and/or Common Shares, whichever shall be the earlier.
In case any event set forth in Section 11.1.2 or Section 13 shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25, a notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11.1.2 and Section 13, and (ii) all
references in this Section 24 to Preferred Shares shall be deemed thereafter
to refer to Common Shares and/or, if appropriate, other securities.
Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this
Agreement and no other notice need be given.
Section 25. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the
33
Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Hilton Hotels Corporation
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 and Section 24, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
000 X. Xxxxx Xxxxxx
0xx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing Common
Shares) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. For so long as the
Rights are then redeemable, the Company may in its sole and absolute
discretion, and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement in any respect without the approval
of any holders of Rights or Common Shares. From and after the time that the
Rights are no longer redeemable, the Company may, and the Rights Agent shall,
if the Company so directs, from time to time supplement or amend this
Agreement without the approval of any holders of Rights (i) to cure any
ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein or (ii) to
make any other changes or provisions in regard to matters or questions
arising hereunder which the Company may deem necessary or desirable,
including but not limited to extending the Final Expiration Date, PROVIDED,
HOWEVER, that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person), and no such supplement or
amendment may cause the Rights again to become redeemable or cause this
Agreement again to become amendable other than in accordance with this
sentence; PROVIDED FURTHER, that the right of the Board of Directors to
extend the Distribution Date shall not require any amendment or supplement
hereunder. Upon the delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Without limiting the foregoing, at any time
prior to such time as any Person becomes an
34
Acquiring Person, the Company and the Rights Agent may amend this Agreement
to lower the thresholds set forth in Sections 1.1 and 3.1 to not less than
the greater of (i) any percentage greater than the largest percentage of the
outstanding Common Shares then known by the Company to be beneficially owned
by any Person (other than an Exempt Person) and (ii) 10%.
Section 27. EXCHANGE.
27.1. EXCHANGE OF COMMON SHARES FOR RIGHTS. The Board of
Directors of the Company may, at its option, at any time after the occurrence
of a Trigger Event, exchange Common Shares for all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11.1.2) by exchanging at an
exchange ratio of that number of Common Shares having an aggregate value
equal to the Spread (with such value being based on the current per share
market price (as determined pursuant to Section 11.4) on the date of the
occurrence of a Trigger Event) per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the
date hereof (such amount per Right being hereinafter referred to as the
"EXCHANGE CONSIDERATION"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after
any Acquiring Person shall have become the Beneficial Owner of 50% or more of
the Common Shares then outstanding. From and after the occurrence of an
event specified in Section 13.1, any Rights that theretofore have not been
exchanged pursuant to this Section 27.1 shall thereafter be exercisable only
in accordance with Section 13 and may not be exchanged pursuant to this
Section 27.1. The exchange of the Rights by the Board of Directors may be
made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
27.2. EXCHANGE PROCEDURES. Immediately upon the action of the
Board of Directors of the Company ordering the exchange for any Rights
pursuant to Section 27.1 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive the Exchange
Consideration. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange shall state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than the Rights that
have become void pursuant to the provisions of Section 11.1.2) held by each
holder of Rights.
27.3. INSUFFICIENT SHARES. The Company may at its option
substitute, and, in the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit an
exchange of Rights for Common Shares as contemplated in accordance with this
Section 27, the Company shall substitute to the extent of such insufficiency,
for each Common Share that would otherwise be issuable upon exchange of a
Right, a number of
35
Preferred Shares or fraction thereof (or equivalent preferred stock, as such
term is defined in Section 11.2) such that the current per share market price
(determined pursuant to Section 11.4) of one Preferred Share (or equivalent
preferred share) multiplied by such number or fraction is equal to the
current per share market price of one Common Share (determined pursuant to
Section 11.4) as of the date of such exchange.
Section 28. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person or corporation other than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Shares).
Section 30. DETERMINATION AND ACTIONS BY THE BOARD OF
DIRECTORS. The Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise the rights
and powers specifically granted to the Board of Directors of the Company or
to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors of the Company in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 32. GOVERNING LAW. This Agreement and each Right
Certificate issued 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.
36
Section 33. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. DESCRIPTIVE HEADING. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
HILTON HOTELS CORPORATION
By /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President
and General Counsel
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Assistant Vice President
S-1
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HILTON HOTELS CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
_____________________________
Hilton Hotels Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter
called the "CORPORATION"), hereby certifies that the following resolution
was adopted by the Board of Directors of the Corporation as required by
Section 151 of the General Corporation Law at a meeting duly called and
held on July 9, 1998.
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation (hereinafter called the "BOARD OF
DIRECTORS" or the "BOARD") in accordance with the provisions of the
Certificate of Incorporation of this Corporation, the Board of Directors
hereby creates a series of Preferred Stock, par value $1.00 per share (the
"PREFERRED STOCK"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, powers and preferences, and
qualifications, limitations and restrictions thereof as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"SERIES A PREFERRED STOCK") and the number of shares constituting the Series
A Preferred Stock shall be 3,000,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors; PROVIDED, that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by
the Corporation convertible into Series A Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any class or series of stock of this Corporation ranking prior
and superior to the Series A
A-1
Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock,
par value $2.50 per share (the "COMMON STOCK"), of the Corporation, and
of any other stock ranking junior to the Series A Preferred Stock, shall
be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a
"QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of
a share of Series A Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $1.00 or (b) subject to
the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred
Stock. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision, combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a
A-2
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designations creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on
A-3
shares of Series A Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Corporation
ranking junior (both as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new
series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Certificate of Incorporation, or in any
other Certificate of Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
A-4
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the
holders of shares of Series A Preferred Stock shall have received an amount
per share (the "Series A Liquidation Preference") equal to $100 per share,
plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, provided that
the holders of shares of Series A Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and
all such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other classes and
series of stock of the Corporation, if any, that rank on a parity with
the Series A Preferred Stock in respect thereof, then the assets
available for such distribution shall be distributed ratably to the
holders of the Series A Preferred Stock and the holders of such parity
shares in proportion to their respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
each share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or
A-5
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case
the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A Preferred
Stock shall not be redeemable by the Company.
Section 9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, junior to all series of any other
class of the Corporation's Preferred Stock, except to the extent that any
such other series specifically provides that it shall rank on a parity with
or junior to the Series A Preferred Stock.
Section 10. AMENDMENT. At any time any shares of Series A
Preferred Stock are outstanding, the Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting separately as a single class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Stock.
A-6
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board this ___ day of _______,
____.
______________________________
Chairman of the Board
A-7
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JULY 27, 2008 OR EARLIER IF NOTICE OF REDEMPTION
OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED PURSUANT
TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(ii)(A)(z) OF THE
AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT,
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT),
RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS
DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
HILTON HOTELS CORPORATION
This certifies that __________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Amended and Restated Rights Agreement, dated as of September 10, 1998,
as the same may be amended from time to time (the "Agreement"), between
Hilton Hotels Corporation, a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C ., as Rights Agent (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
and prior to 5:00 P.M. (California time) on July 27, 2008, at the offices of
the Rights Agent, or its successors as Rights Agent, designated for such
purpose, one one-hundredth of a fully paid, nonassessable share of Series A
Junior Participating Preferred Stock, par value $1.00 per share (the
"Preferred Shares") of the Company, at a purchase price of $140 per one
one-hundredth of a Preferred Share, subject to adjustment (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase and certification duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of ________, ____ based on the Preferred Shares
as constituted at such date. Capitalized terms used in this Right Certificate
without definition shall have the meanings ascribed to them in the Agreement.
As provided in the Agreement, the Purchase Price and the number of Preferred
Shares which may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
B-1
This Right Certificate is subject to all of the terms, provisions
and conditions of the Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Agreement are on file at the principal offices of the Company and the
Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the offices 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 to purchase a
like aggregate number of one one-hundredths of a Preferred Share as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Agreement, the Board of Directors
may, at its option, (i) redeem the Rights evidenced by this Right Certificate
at a redemption price of $.001 per Right at any time prior to a Trigger Event
or (ii) exchange Common Shares for the Rights evidenced by this Certificate,
in whole or in part.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions of Preferred
Shares which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depository
receipts), but in lieu there of a cash payment will be made, as provided in
the Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Agreement or he rein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Agreement.
If any term, provision, covenant or restriction of the 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 the Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
B-2
This Right Certificate shall not be valid or binding 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 _______________.
Attest: HILTON HOTELS CORPORATION
By By
-------------------------------- ----------------------------------
Title: Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent
By
--------------------------------
Authorized Signature
B-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
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:
------------------------
-------------------------------
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.
B-4
-------------------------------------------------------------------------------
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person or an
Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this
Right Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof.
Dated:
------------------------
-------------------------------
Signature
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: HILTON HOTELS CORPORATION
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities or
property of the Company or of any other Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be
issued in the name of:
------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------
Dated:
------------------------
-------------------------------
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.
B-6
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person or an
Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:
------------------------
-------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Form of Assignment and Form of
Election to Purchase must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or Form of Election to Purchase is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Right Certificate
to be an Acquiring Person or an Affiliate or Associate hereof and such
Assignment or Election to Purchase will not be honored.
B-7
EXHIBIT C
AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS WHICH ARE
HELD BY OR HAVE BEEN HELD BY AN ACQUIRING PERSON OR ASSOCIATES
OR AFFILIATES THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF SHALL BECOME NULL AND VOID AND
WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES (1)
On July 9, 1998 the Board of Directors of HILTON HOTELS CORPORATION
(the "COMPANY") declared a dividend of one preferred share purchase right (a
"Right") for each share of common stock, $2.50 par value (the "COMMON
SHARES"), of the Company outstanding at the close of business on July 27,
1998 (the "RECORD DATE"). As long as the Rights are attached to the Common
Shares, the Company will issue one Right (subject to adjustment) with each
new Common Share so that all such shares will have attached Rights. When
exercisable, each Right will entitle the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock (the "PREFERRED SHARES") at a price of $140 per one
one-hundredth of a Preferred Share, subject to adjustment (the "PURCHASE
PRICE"). The description and terms of the Rights are set forth in a Rights
Agreement, dated as of July 9, 1998, as the same may be amended from time to
time (the "AGREEMENT"), between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "RIGHTS AGENT").
Until the earlier to occur of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the Common Shares (an "ACQUIRING PERSON") or (ii) ten (10) business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated persons
becomes an Acquiring Person) following the commencement or announcement of an
intention to make a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more
of the Common Shares (the earlier of (i) and (ii) being called the
"DISTRIBUTION DATE"), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record Date, by such
Common Share certificate together with a copy of this Summary of Rights.
The Agreement provides that until the Distribution Date (or earlier
redemption exchange, termination, or expiration of the Rights), the Rights
will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the close of business on the Record
Date upon transfer or new issuance of the Common Shares will contain a
notation incorporating the Agreement by reference. Until the Distribution
Date (or earlier redemption, exchange, termination or expiration of the
Rights), the surrender for transfer of any certificates for Common Shares,
with or without such notation or a copy of this Summary of Rights, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights
--------------------
(1) This Summary of Rights was previously sent to holders of Common Shares
following the Record Date. Paragraph 10 of this Summary is now amended by
the Agreement (see Section 23 of the Agreement). Pursuant to Section 24 of
the Agreement, no additional Summary of Rights is required to be sent to
holders of Common Shares.
C-1
("RIGHT CERTIFICATES") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on July 27, 2008, subject to the Company's right to extend
such date (the "FINAL EXPIRATION DATE"), unless earlier redeemed or exchanged
by the Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will
be entitled, when, as and if declared, to a minimum preferential quarterly
dividend payment of $1.00 per share but will be entitled to an aggregate
dividend of 100 times the dividend, if any, declared per Common Share. In
the event of liquidation, dissolution or winding up of the Company, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100 per share (plus any accrued but unpaid dividends)
but will be entitled to an aggregate payment of 100 times the payment made
per Common Share. Each Preferred Share will have 100 votes and will vote
together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
Common Share. Preferred Shares will not be redeemable. These rights are
protected by customary antidilution provisions. Because of the nature of the
Preferred Share's dividend, liquidation and voting rights, the value of one
one-hundredth of a Preferred Share purchasable upon exercise of each Right
should approximate the value of one Common Share.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of
the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares
of certain rights or warrants to subscribe for or purchase Preferred Shares
or convertible securities at less than the current market price of the
Preferred Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness, cash, securities or assets (excluding
regular periodic cash dividends at a rate not in excess of 125% of the rate
of the last regular periodic cash dividend theretofore paid or, in case
regular periodic cash dividends have not theretofore been paid, at a rate not
in excess of 50% of the average net income per share of the Company for the
four quarters ended immediately prior to the payment of such dividend, or
dividends payable in Preferred Shares (which dividends will be subject to the
adjustment described in clause (i) above)) or of subscription rights or
warrants (other than those referred to above).
In the event that a Person becomes an Acquiring Person or if the
Company were the surviving corporation in a merger with an Acquiring Person
or any affiliate or associate of an Acquiring Person and the Common Shares
were not changed or exchanged, each holder of a Right, other than Rights that
are or were acquired or beneficially owned by the Acquiring Person (which
Rights will thereafter be void), will thereafter have the right to receive
upon exercise that number of Common Shares having a market value of two times
the then current Purchase Price of the Right. In the event that, after a
person has become an Acquiring Person, the Company were acquired in a merger
or other business combination transaction or more than 50% of its
C-2
assets or earning power were sold, proper provision shall be made so that
each holder of a Right shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price of the Right, that number
of shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the then current Purchase
Price of the Right.
Once a Person has become an Acquiring Person and prior to the
acquisition by such Acquiring Person of 50% or more of the outstanding Common
Shares, the Board of Directors may cause the Company to exchange the Rights
(other than Rights owned by an Acquiring Person which will have become void),
in whole or in part, for Common Shares at an exchange rate based on the value
of the Common Shares at that time (subject to adjustment).
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares or Common Shares will be issued (other
than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depository receipts), and in lieu thereof, a payment
in cash will be made based on the market price of the Preferred Shares or
Common Shares on the last trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of
$.001 per Right (the "REDEMPTION PRICE") by the Board of Directors at any
time on such basis as the Board of Directors in its sole discretion may
establish, prior to the tenth day following the public announcement that a
Person has become an Acquiring Person, provided, that the Board of Directors,
with the concurrence of a majority of the Continuing Directors (as defined),
may extend the period during which the Rights are redeemable beyond such
time. Under certain circumstances set forth in the Rights Agreement, the
decision to redeem shall require the concurrence of a majority of the
Continuing Directors. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.(2)
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Any of the provisions of the Agreement may be amended by the Board
of Directors of the Company for so long as the Rights are then redeemable,
and after the Rights are no longer redeemable, the Company may amend or
supplement the Agreement in any manner that does not adversely affect the
interests of the holders of the Rights.
A copy of the Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of
the Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Agreement, which is incorporated herein by
reference.
--------------
(2) See footnote 1.
C-3
