EXHIBIT 4.1
Parent Holding Corp.
(to be renamed Promus Hotel Corporation)
and
First Union National Bank
as Rights Agent
Rights Agreement
Dated as of December ___, 1997
RIGHTS AGREEMENT
Rights Agreement, dated as of December ___, 1997, between Parent
Holding Corp. (to be renamed Promus Hotel Corporation), a Delaware corporation
(the "COMPANY"), and First Union National Bank, a North Carolina corporation, as
Rights Agent (the "RIGHTS AGENT").
RECITALS
WHEREAS, on December ___, 1997, the Board of Directors of the
Company adopted this Agreement, and has 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 issued at or after the Effective Time
(the "Effective Time") of the mergers of wholly owned subsidiaries of the
Company with and into Doubletree Corporation and Promus Hotel Corporation
(together, the "Merger") and prior to 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 (which will be filed with the Secretary of State of the
State of Delaware following the Effective Time), 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.
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 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, then
such Person shall be deemed to be an "Acquiring Person." 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
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this Section 1.1, has become such inadvertently, 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 hereof.
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 members
with respect to a bona fide public offering of securities), or upon
the exercise of conversion rights, exchange rights, rights (other than
the Rights), warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed 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
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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) 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 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.
1.5 "CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., New
York time, on such date; PROVIDED, HOWEVER, that if such date is not a Business
Day it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
1.6 "COMMON SHARES" when used with reference to the Company shall
mean the shares of common stock, par value $.01 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 of
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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 "CONTINUING DIRECTOR" shall mean (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or an
employee, director, representative, nominee or designee of any Acquiring Person
or of any such Affiliate or Associate, and was a member of the Board prior to
the time that any Person becomes an Acquiring Person or (ii) any Person (during
such period in which such Person is a member of the Board) who, after the time
that any Person becomes an Acquiring Person, becomes a member of the Board and
who is not an Acquiring Person, or an Affiliate of Associate of an Acquiring
Person, or an employee, director, representative, nominee or designee of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by a
majority of the Continuing Directors.
1.8 "EXEMPT PERSON" shall mean the Company, any Subsidiary (as such
term is hereinafter defined) of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity or trustee holding
shares of capital stock of the Company for or pursuant to the terms of any such
plan, in its capacity as an agent or trustee for any such plan.
1.9 "PERSON" shall mean any individual, partnership, joint venture,
limited liability company, firm, corporation, unallocated association, trust or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
1.10 "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.
1.11 "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.
1.12 A "TRIGGER EVENT" shall be deemed to have occurred upon any
Person becoming an Acquiring Person.
1.13 The following terms shall have the meanings defined for such
terms in the Sections set forth below:
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
Effective Time Recitals
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
Merger Recitals
Nasdaq 9
Original Rights 1.3
Preferred Shares Recitals
Principal Party 13.2
Purchase Price 4
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3, shall prior to the Distribution Date also be
the holders of the Common Shares) 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 the
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Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding shares of
capital stock of the Company for or pursuant to the terms of any such plan,
in its capacity as an agent or trustee for any such plan) to commence, a
tender or exchange offer the consummation of which would result in any 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. 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,
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. As soon as practicable after the Effective
Time, the Company will send or cause to be sent a copy of a Summary of Rights
to Purchase Preferred Shares, in substantially the form attached hereto as
Exhibit C (the "SUMMARY OF RIGHTS"), by first-class, postage-prepaid mail, to
each person entitled to receive Common Shares in the Merger at the address of
such holder shown on the records of Doubletree or Promus, as the case may be.
3.3 CERTIFICATES. Certificates for Common Shares which become
outstanding (whether upon issuance in connection with the Merger, issuance
out of authorized but unissued Common
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Shares, issuance out of treasury or transfer or exchange of outstanding
Common Shares) at or after the Effective Time 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 Promus Hotel
Corporation (the "Company") and First Union National Bank, as Rights
Agent, dated as of December ___, 1997, 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.
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 Effective Time 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 or any Vice
President, 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 fascimile 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
completed and signed the certificate
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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 December, 2007 (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
$_____, 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 shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
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Certificate in accordance with Section 9, in 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 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, (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
12
shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
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 of this Agreement, in the event
(A) that any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall merge into the Company or otherwise combine
with the Company and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Shares of the
Company shall remain outstanding and not be changed into or exchanged for
stock or other securities of any other Person or the Company or cash or any
other property, or
(B) 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, one of the
events listed above in this Section 11.1.2 (the "ADJUSTMENT SHARES");
PROVIDED, HOWEVER, that if the transaction that would otherwise give rise to
the foregoing adjustment is also subject to the provisions of Section 13,
then only the provisions of Section 13 shall apply and no adjustment shall be
made pursuant to this Section 11.1.2; PROVIDED, FURTHER,
13
that nothing contained in this Section 11.1.2 shall limit or otherwise
diminish the power of the Board of Directors to postpone the Distribution
Date pursuant to Section 3.1; PROVIDED, FURTHER, 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 either of the events listed above in
this Section 11.1.2, 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 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.
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
14
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
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 first occurrence of one of the events listed in Section
11.1.2 above 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
15
Common Shares upon the exercise of the Rights among holders of Rights
pursuant to this Section 11.1.3.
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 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
16
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 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
17
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, "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 majority of the Continuing Directors then
in office, or if there are no Continuing Directors, 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.
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 is publicly held or so listed
or traded, "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 majority of the Continuing Directors then in office, or if there
are no Continuing Directors, 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 such 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.
18
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
through 11.3, inclusive, 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 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
19
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 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 issuing to the holder of any Right exercised after
such record date of the Preferred Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares 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.
20
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 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, 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
21
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,
then, and in each such case, proper provision shall be made so that (i) each
holder of a Right (except as provided in Section 11.1.2 and as otherwise
provided herein) 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 Preferred
Shares or Common Shares, such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable Common Shares of the Principal Party
(as such term is hereinafter defined) not subject to any liens, encumbrances,
rights of first refusal or other advise 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 purchasable shall thereafter be adjusted in accordance
with Section 11.6 by reason of such subsequent events covered thereby occurring
in respect 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 enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the
22
consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. 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 will:
(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 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
23
current market price, 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 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 mergers or
consolidations or sales or other transfers.
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
24
any such case described in the foregoing clause (A) or (B) of this Section
13.2, if the Common Shares of such Person is not at such time or has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or
(2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of all of which is and has 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 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
25
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 fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.
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). 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 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
26
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;
(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
27
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.
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.
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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 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.
29
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 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.
30
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
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
31
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 (a)
shall, with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, granted
or awarded as of the Distribution Date, or upon exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of
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, (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 and
(iii) at the time of a determination by the Board of Directors to cause the
Company to issue a Right Certificate under clause (b) above, there must be
Continuing Directors then in office and any such determination shall require
the approval of at least a majority of such Continuing Directors.
32
Section 23. REDEMPTION.
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 $.01 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. Notwithstanding anything
contained in this Agreement to the contrary notwithstanding, the Rights shall
not be exercisable following a transaction or event described in Section
11.1.2 prior to the expiration or termination of the Company's right of
redemption hereunder.
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 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 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
33
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.
34
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 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:
Promus Hotel Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: 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:
First Union National Bank
0000 Xxxx X.X.Xxxxxx Xxxxxxxxx
Xxxxxxxx 0X0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Shareholder Services Group
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, (ii) to
shorten or lengthen any time period hereunder (which shortening or
lengthening, after the time a Person becomes an Acquiring Person, shall be
effective only if there are Continuing Directors and shall require the
approval of at least a majority of such Continuing Directors) or (iii) 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
35
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 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 the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan) and (ii) 10%. Notwithstanding
anything herein to the contrary, any supplement or amendment to this
Agreement, after the time that a Person becomes an Acquiring Person shall
require the affirmative vote of a majority of the Continuing Directors.
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, (i) 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 and (ii) the Board shall not be empowered to
effect an exchange for more than that number of Rights for which there are
sufficient Common Shares authorized but unissued, or held by the Company as
treasury shares, to permit the exchange for Rights. 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
exerciseable 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 one Common Share. The Company
shall promptly give public notice of any such exchange; PROVIDED,
36
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 which
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
Shares that would otherwise be issuable upon exchange of a Right, a number of
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. DETERMINATIONS 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
37
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.
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.
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
PARENT HOLDING CORP.
(TO BE RENAMED PROMUS HOTEL CORPORATION)
By
--------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By: -------------------------
Name:
Title:
39
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
PROMUS HOTEL CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
_____________________________
Promus Hotel 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 December ___,
1997.
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 $.01 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 _____. 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.
A-1
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 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 $.01 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
A-2
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
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.
A-3
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 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 (either as to
dividends or 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
A-4
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.
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
A-5
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 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
_______, 1997.
______________________________
Xxxxxxx X. Xxxxxxx
Chairman of the Board
A-7
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- Preferred Stock Purchase Rights
NOT EXERCISABLE AFTER DECEMBER ___, 2007 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
PROMUS HOTEL 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 Rights Agreement, dated as of December ___, 1997, as the same may be amended
from time to time (the "Agreement"), between Promus hotel Corporation, a
Delaware corporation (the "Company"), and First Union National Bank, a North
Carolina corporation, 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. (New York
City time) on December ___, 2007, 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 $.01 per share (the "Preferred Shares") of the Company, at a
purchase price of $______ 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
B-1
the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Right Certificates. Copies of the Agreement are
on file at the principal 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 $.01 per Right 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
thereof 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 herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Agreement.
B-2
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.
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: Promus Hotel Corporation
By ______________________ By _________________________________
Title: Title:
Countersigned:
First Union National Bank, 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: Promus Hotel 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
On December ___, 1997 the Board of Directors of Promus Hotel
Corporation (the "COMPANY") declared a dividend of one preferred share
purchase right (a "Right") for each share of common stock, $.01 par value
(the "COMMON SHARES"), of the Company outstanding at the close of business on
December __, 1997 (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 $_____
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 December ___, 1997, as the same may be
amended from time to time (the "AGREEMENT"), between the Company and First
Union National Bank, 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 ("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.
C-1
The Rights are not exercisable until the Distribution Date. The
Rights will expire on December __, 2007, 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 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.
C-2
At any time after a Person becomes an Acquiring Person and prior to
the earlier of one of the events described in the last sentence of the
previous paragraph or 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 of one Common Share per Right (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
$.01 per Right (the "REDEMPTION PRICE") by the Board of Directors at any time
prior to the time that an Acquiring Person has become such. The redemption
of the Rights 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.
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.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company beyond those as an existing
stockholder, 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.
C-3
