ANCHOR GAMING
and
THE CHASE MANHATTAN BANK,
as Rights Agent
Rights Agreement
October 17, 1997
Table of Contents
Section
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . 5
3. Issue of Rights Certificates. . . . . . . . . . . . . . . . . . . . . . 5
4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . 7
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . 8
6. Transfer, Split Up, Combination, and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost, or
Stolen Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . 9
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . . . 10
8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . 12
9. Reservation and Availability of
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . 14
11. Adjustment of Purchase Price, Number, and Kind of Shares or
Number of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12. Certificate of Adjusted Purchase Price or Number of Shares. . . . . . . 26
13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power . 26
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . 29
15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . 31
17. Rights Certificate Holder Not Deemed a Stockholder. . . . . . . . . . . 31
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . 32
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . 32
20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . 33
21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . 35
22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . 36
23. Redemption and Termination. . . . . . . . . . . . . . . . . . . . . . . 37
24. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . . . 38
25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
26. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . . . 40
27. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
28. Determinations and Actions by the Board of Directors, Etc.. . . . . . . 41
29. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . . . 41
30 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
32. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
33. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Exhibit A -- Form of Certificate of Designation, Preferences, and Rights
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 17, 1997 (the "AGREEMENT"), between
Anchor Gaming, a Nevada corporation (the "COMPANY"), and The Chase Manhattan
Bank, a bank chartered by the State of New York (the "RIGHTS AGENT").
BACKGROUND
On August 26, 1997 (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of common stock, par value $.01 per share, of the Company
(the "COMMON STOCK") outstanding at the Close of Business on October 20, 1997
(the "RECORD DATE"), and has authorized the issuance of one Right (as such
number may be adjusted pursuant to the provisions of SECTION 11(p)) for each
share of Common Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and the Distribution
Date, each Right initially representing the right to purchase one one-thousandth
of a share of Series A Junior Participating Preferred Stock of the Company
having the rights, powers, and preferences set forth in the form of Certificate
of Designation, Preferences, and Rights attached to this Agreement as EXHIBIT A,
upon the terms and subject to the conditions set forth below (the "RIGHTS");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" means any Person that, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, but does not include
(i) the Company; (ii) any Subsidiary of the Company; (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company; (iv) any
Person organized, appointed, or established by the Company for or pursuant
to the terms of any such plan; (v) Xxxxxxx X. Xxxxxx ("XXXXXX"), any
transferee or donee from Xxxxxx after the Record Date in a transaction not
involving a public offering of the Common Stock, or any heir or successor
to Xxxxxx upon his death, or any trust established by Xxxxxx for charitable
or estate planning purposes; (vi) any Person that has reported or is
required to report such beneficial ownership (but less than 18%) on
Schedule 13G (or any comparable or successor report) or on Schedule 13D
under the Exchange Act (or any comparable or successor report) under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), which
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Schedule 13D does not state any intention to, or reserve the right to,
control or influence the management or policies of the Company or engage in
any of the actions specified in Item 4 of such Schedule 13D (other than the
disposition of the Common Stock) and, within five (5) Business Days (as
defined below) of being requested by the Company to advise it regarding the
same, certifies to the Company that such Person acquired beneficial
ownership of shares of Common Stock in excess of 14.9% inadvertently or
without knowledge of the terms of the Rights and such certification is
accepted as true by a Requisite Majority (as defined below) acting in good
faith and that, together with all of such Person's Affiliates and
Associates, thereafter does not acquire additional shares of Common Stock
while the Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding; provided, however, that if the Person requested to so
certify fails to do so within five Business Days, then such Person will
become an Acquiring Person immediately after such five Business-Day Period;
and (vii) any Person that becomes an Acquiring Person solely as a result of
a reduction in the number of outstanding shares of Common Stock in a
transaction that is approved by a Requisite Majority, provided that such
Person will immediately be an Acquiring Person in the event such Person
thereafter acquires any additional shares of Common Stock (other than as a
result of a stock split or stock dividend) while the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding.
(b) "ADVERSE PERSON" means a Person (alone or together with any
other Person) as to which the Board of Directors has, after consultation
with such advisors and such other investigation as it considers necessary,
made the following determinations: (i) such Person or Persons any time
after the Rights Dividend Declaration Date have become the Beneficial Owner
of a substantial (but in no event less than 10% of the shares of Common
Stock then outstanding) amount of Common Stock; and (ii) (A) such Person or
Persons intend to cause the Company or its Affiliates to repurchase such
Common Stock beneficially owned by such Person or Persons or to exert
pressure against the Company to take any action or enter into any
transaction or series of transactions with the intent or effect of
providing such Person or Persons with short-term gains or profits under
circumstances in which the Board of Directors of the Company determines
that the long-term interests of the Company and its stockholders would not
be served by taking such action or entering into such transaction or series
of transactions; or (B) beneficial ownership of Common Stock by such Person
or Persons is reasonably likely to have a material adverse effect on the
business, competitive position, prospects, or financial condition of the
Company and its Subsidiaries; provided, however, that Xxxxxx will not be an
Adverse Person under the terms of this Agreement.
(c) "AFFILIATE" and "ASSOCIATE" 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.
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(d) A Person will be deemed the "BENEFICIAL OWNER" of, and will be
deemed to "BENEFICIALLY OWN," any securities that:
(i) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement, or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person will not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event, or (C) securities issuable
upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any
of such Person's Affiliates or Associates prior to the Distribution
Date or pursuant to SECTION 3(a) or SECTION 22 (the "ORIGINAL
RIGHTS") or pursuant to SECTION 11(i) in connection with an
adjustment made with respect to any Original Rights;
(ii) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement, arrangement, or
understanding, whether or not in writing; provided, however, that a
Person will not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this SECTION 1(c)(ii) as a
result of an agreement, arrangement, or understanding to vote such
security if such agreement, arrangement, or understanding: (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (2) is not also then
reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such Person) with
which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement, or understanding
(whether or not in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the
proviso in SECTION 1(c)(ii)), or disposing of any voting securities
of the Company;
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provided, however, that nothing in this SECTION 1(c) will cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a bona fide firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(e) "BUSINESS DAY" means any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of Nevada are authorized
or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date will mean 5:00 p.m., Las
Vegas, Nevada time, on such date; provided, however, that if such date is
not a Business Day it will mean 5:00 p.m., Las Vegas, Nevada time, on the
next succeeding Business Day.
(g) "COMMON STOCK" means the common stock, par value $.01 per
share, of the Company, except that "COMMON STOCK" when used with reference
to any Person other than the Company will mean the capital stock of such
Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(h) "CONTINUING DIRECTOR" means (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 Adverse Person, an Affiliate or Associate of
an Acquiring Person or Adverse Person, or a representative or nominee of an
Acquiring Person or Adverse Person or of any such Affiliate or Associate,
and was a member of the Board prior to the date of this Agreement, or (ii)
any Person who subsequently becomes a member of the Board, while such
Person is a member of the Board, who is not an Acquiring Person or Adverse
Person, an Affiliate or Associate of an Acquiring Person or Adverse Person,
or a representative or nominee of an Acquiring Person or Adverse 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 or a nominating committee of the Board
consisting solely of Continuing Directors.
(i) "PERSON" means any individual, firm, corporation, partnership,
or other public or private entity.
(j) "PREFERRED STOCK" mean shares of Series A Junior Participating
Preferred Stock, par value $20.00 per share, of the Company, and, to the
extent that there are not a sufficient number of shares of Series A Junior
Participating Preferred Stock authorized to permit the full exercise of the
Rights, any other series of Preferred Stock, par value $20.00 per share, of
the Company
4
designated for such purpose containing terms substantially similar to
the terms of the Series A Junior Participating Preferred Stock.
(k) "REQUISITE MAJORITY" means, at any time, the affirmative vote
of a majority of the Continuing Directors then in office.
(l) "SECTION 11(a)(ii) EVENT" means any event described in SECTION
11(a)(ii) .
(m) "SECTION 13 EVENT" means any event described in clauses (x),
(y), or (z) of SECTION 13(a).
(n) "STOCK ACQUISITION DATE" means the first date of public
announcement (which, for purposes of this definition, will include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has
become an Acquiring Person.
(o) "SUBSIDIARY" means, with reference to any Person, any entity
of which an amount of voting securities sufficient to elect at least a
majority of the directors or similar Persons of such entity is beneficially
owned, directly or indirectly, by such Person, or otherwise controlled by
such Person.
(p) "TRIGGERING EVENT" means any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth
day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on
the Record Date) involving an Acquiring Person that has become such in a
transaction as to which a Requisite Majority has not made the determination
specified in SECTION 11(a)(ii)(B); (ii) the Close of Business on the tenth
Business Day (or such later date as the Board determines) after the date
that a tender offer or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed, or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or given
5
within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act, if upon consummation thereof, such Person would
be the Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding; or (iii) the Close of Business on the tenth Business
Day after a Person has become an Adverse Person (the earlier of the
times referred to in CLAUSES (i), (ii), and (iii) being referred to as
the "DISTRIBUTION DATE"), (x) the Rights will be evidenced (subject to
the provisions of this SECTION 3(b)) by the certificates for the Common
Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock will be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the Distribution Date, at the address of such holder
shown on the records of the Company, one or more rights certificates, in
substantially the form of EXHIBIT B (the "RIGHTS CERTIFICATES"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided in this Agreement. In the event that an
adjustment in the number of Rights per share of Common Stock has been
made pursuant to SECTION 11(p), at the time of distribution of the
Rights Certificates, the Company will make the necessary and appropriate
rounding adjustments (in accordance with SECTION 14(a)) so that Rights
Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
of EXHIBIT C, by first-class, postage prepaid mail, to each record holder
of the Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect
to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common
Stock will also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date (as defined in
SECTION 7), the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued will also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights will be issued in respect of all shares of Common Stock
that are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or
the Expiration Date. Certificates representing such shares of Common Stock
will also be deemed to be certificates for Rights, and will bear the
following legend:
6
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO
CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN
ANCHOR GAMING (THE "COMPANY") AND THE CHASE MANHATTAN BANK (THE
"RIGHTS AGENT") DATED AS OF OCTOBER 17, 1997 (AS AMENDED FROM
TIME TO TIME, THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE
HEREBY INCORPORATED IN THIS CERTIFICATE BY REFERENCE AND A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES
AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY
WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS
AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE
PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN
ACQUIRING PERSON OR AN ADVERSE PERSON OR ANY AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY
HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,
MAY BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration Date,
the Rights associated with the Common Stock represented by such
certificates will be evidenced by such certificates alone and registered
holders of Common Stock will also be the registered holders of the
associated Rights, and the transfer of any of such certificates will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse of the rights certificates)
will each be substantially in the form set forth in EXHIBIT B and may have
such marks of identification or designation and such legends, summaries, or
endorsements 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
quotation system on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of SECTION 11 and SECTION 22,
the Rights Certificates, whenever distributed, will be dated as of the
Record Date and on their face will entitle the holders of such Rights
Certificates to purchase such number of one one-thousandths of a share
7
of Preferred Stock as is set forth in such Rights Certificates at the
price set forth in such Rights Certificates (such exercise price per one
one-thousandth of a share, the "PURCHASE PRICE"), but the amount and
type of securities purchasable upon the exercise of each Right and the
Purchase Price will be subject to adjustment as provided in this
Agreement.
(b) Any Rights Certificate issued pursuant to SECTION 3(a) or
SECTION 22 that represents Rights beneficially owned by (i) an Acquiring
Person or an Adverse Person or any Associate or Affiliate of an Acquiring
Person or an Adverse Person, (ii) a transferee from an Acquiring Person or
an Adverse Person (or from any Associate or Affiliate of an Acquiring
Person or an Adverse Person) that becomes a transferee after the Acquiring
Person or an Adverse Person becomes an Acquiring Person or an Adverse
Person, or (iii) a transferee from an Acquiring Person or an Adverse Person
(or of any Associate or Affiliate of an Acquiring Person or an Adverse
Person) that becomes a transferee prior to or concurrently with the
Acquiring Person or an Adverse Person becoming an Acquiring Person or an
Adverse Person and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Acquiring Person or Adverse
Person or to any Person with whom such Acquiring Person or Adverse Person
has any continuing agreement, arrangement, or understanding regarding the
transferred Rights or (B) a transfer that the Board of Directors of the
Company has determined is part of an agreement, plan, arrangement, or
understanding that has as a substantial purpose or effect avoidance of
SECTION 7(e), and any Rights Certificate issued pursuant to SECTION 6 or
SECTION 11 upon transfer, exchange, replacement, or adjustment of any other
Rights Certificate referred to in this SECTION 4(b), will contain (to the
extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO IS, WAS, OR BECAME AN
ACQUIRING PERSON OR AN ADVERSE PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SUCH AGREEMENT.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates will be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
Chief Operating Officer, its President, or any Vice President, either
manually or by facsimile signature; will have affixed thereto the Company's
seal or a facsimile thereof; and will be attested by the Secretary or an
Assistant Secretary of the Company,
8
either manually or by facsimile signature. The Rights Certificates will
be countersigned by the Rights Agent, either manually or by facsimile
signature and will not be valid for any purpose unless so countersigned.
In case any officer of the Company who has signed any of the Rights
Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same
force and effect as though the Person who signed such Rights
Certificates had not ceased to be such officer of the Company, and any
Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, is
a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of such Rights Certificate any
such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued under this Agreement. Such books will show the names and addresses
of the respective holders of the Rights Certificates, the number of Rights
evidenced on the face of the Rights Certificates, and the date of each of
the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION, AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST, OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of SECTION 4(b), SECTION 7(e), and
SECTION 14, at any time after the Distribution Date, and at or prior to the
Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined, or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of
one one-thousandths of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash, or other property,
as the case may be) as the Rights Certificate or Rights Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split
up, combine, or exchange any Rights Certificate or Rights Certificates will
make such request in writing delivered to the Rights Agent, and will
surrender the Rights Certificate or Rights Certificates to be transferred,
split up, combined, or exchanged at the principal office or offices of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company will be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered
holder has completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and has provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
requests in good faith. Thereupon, the Rights Agent will,
9
subject to SECTION 4(b), SECTION 7(e), and SECTION 14, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination, or exchange of any Rights Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or
mutilation of a Rights Certificate, and, in case of loss, theft, or
destruction, of indemnity or security satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed, or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to SECTION 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided in this Agreement including, without limitation, the
restrictions on exercisability set forth in SECTION 9(c), SECTION
11(a)(iii), and SECTION 23(a)) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate on the reverse side of
the Rights Certificate duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with
respect to the total number of one one-thousandths of a share (or other
securities, cash, or other property, as the case may be) as to which
such surrendered Rights are then exercisable, at or prior to the earlier
of (i) the Close of Business on October 20, 2007, (the "FINAL EXPIRATION
DATE"), or (ii) the time at which the Rights are redeemed as provided in
SECTION 23 (the earlier of the times referred to in CLAUSES (i) and
(ii) being referred to as the "EXPIRATION DATE")).
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right will initially be
$400.00; will be subject to adjustment from time to time as provided in
SECTION 11, and SECTION 13(a); and will be payable in accordance with
SECTION 7(c).
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-thousandth of a share of
Preferred Stock (or other shares, securities, cash, or other property,
as the case may be) to be purchased
10
as set forth below and an amount equal to any applicable transfer tax,
the Rights Agent will, subject to SECTION 20(k), promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one one-thousandths of a
share of Preferred Stock to be purchased, (the Company hereby
irrevocably authorizing its transfer agent to comply with all such
requests), or (B) if the Company has elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights with a
depository agent, requisition from the depository agent depository
receipts representing such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case certificates for
the shares of Preferred Stock represented by such receipts will be
deposited by the transfer agent with the depository agent) and the
Company will direct the depository agent to comply with such request;
(ii) requisition from the Company the amount of cash, if any, to be paid
in lieu of fractional shares in accordance with SECTION 14; (iii) after
receipt of such certificates or depository receipts, cause such
certificates or depository receipts to be delivered to or upon the order
of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder; and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to SECTION
11(a)(iii)) will be made in cash or by certified bank check or bank
draft payable to the order of the Company. In the event that the Company
is obligated to issue other securities (including Common Stock) of the
Company, pay cash, or distribute other property pursuant to SECTION
11(a), the Company will make all arrangements necessary so that such
other securities, cash, or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the
right to require prior to the occurrence of a Triggering Event that,
upon any exercise of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate
exercises less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised will be issued by the Rights Agent and delivered to, or upon
the order of, the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of SECTION 14.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by any Person referred to in CLAUSES (i)
through (iii) below will become null and void without any further
action, and no holder of such Rights will have any rights whatsoever
with respect to such Rights, whether under any provision of this
Agreement or otherwise: (i) an Acquiring Person or an Adverse Person or
an Associate or Affiliate of an Acquiring Person or an Adverse Person,
(ii) a
11
transferee from an Acquiring Person or an Adverse Person (or from any
Associate or Affiliate of an Acquiring Person or Adverse Person) that
becomes a transferee after the Acquiring Person or an Adverse Person
becomes such, or (iii) a transferee from an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) that becomes a
transferee prior to or concurrently with the Acquiring Person or Adverse
Person becoming such and that receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring
Person or the Adverse Person to holders of equity interests in such
Acquiring Person or Adverse Person or to any Person with whom the
Acquiring Person or Adverse Person has any continuing agreement,
arrangement, or understanding regarding the transferred Rights or (B) a
transfer that the Board of Directors of the Company has determined is
part of an agreement, plan, arrangement, or understanding that has as a
substantial purpose or effect the avoidance of this SECTION 7(e). The
Company will use reasonable efforts to insure that the provisions of
this SECTION 7(e) and SECTION 4(b) are complied with, but will have no
liability under this Agreement to any holder of Rights Certificates or
other Person as a result of its failure to make any determinations with
respect to an Acquiring Person, an Adverse Person, or any of their
Affiliates, Associates, or transferees.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this SECTION 7 unless such registered
holder has (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
requests in good faith.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, will be cancelled by it, and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company will deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent will so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent will deliver all
cancelled Rights Certificates to the Company, or will, at the written request of
the Company, destroy such cancelled Rights Certificates, and in such case will
deliver a certificate of destruction to the Company.
12
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock or other
securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock or other securities) that
(as provided in this Agreement including, without limitation, SECTION
11(a)(iii)), will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on
any national securities exchange or automated quotation system, the Company
will use its reasonable efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange or automated quotation system upon official notice
of issuance upon such exercise.
(c) The Company will use its best reasonable efforts to (i) file,
as soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
in accordance with SECTION 11(a)(iii), a registration statement under
the Securities Act of 1933, as amended (the "ACT"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon
as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting
the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B)
the date of the expiration of the Rights. The Company will also take
such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the
date set forth in clause (i) of the first sentence of this SECTION 9(c),
the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company will 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. In addition, if the Company determines that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as
a registration statement has been declared effective.
13
Notwithstanding any provision of this Agreement to the contrary, the
Rights will not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction has not been obtained, the exercise
of such Rights is not permitted under applicable law, or a registration
statement has not been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock or other
securities) delivered upon exercise of Rights will, 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.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-thousandths of
a share of Preferred Stock (or Common Stock or other securities, as the
case may be) upon the exercise of Rights. The Company will not, however, be
required to pay any transfer tax that may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-thousandths of a share of
Preferred Stock (or Common Stock or other securities, as the case may be)
in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of one one-thousandths of a share
of Preferred Stock (or Common Stock 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 such tax has been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock or other securities, as the case may be) is issued upon the
exercise of Rights will for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock or other
securities, as the case may be) represented thereby on, and such certificate
will be dated, the date upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock (or Common Stock or other
securities, as the case may be) transfer books of the Company are closed, such
Person will be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate will be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock 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 Rights Certificate
will not be
15
entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights is exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions, or to exercise any preemptive rights, and will not be
entitled to receive any notice of any proceedings of the Company, except
as provided in this Agreement.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES, OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this SECTION 11.
(a) (i) In the event the Company at any time after the date of
this Agreement (A) declares a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivides the
outstanding Preferred Stock, (C) combines the outstanding Preferred
Stock into a smaller number of shares, or (D) issues any shares of
its capital stock in a reclassification of the Preferred Stock
(including, without limitation, any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this SECTION 11(a) and SECTION 7(e), 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 Preferred
Stock or capital stock, as the case may be, issuable on such date,
will be proportionately adjusted so that the holder of any Right
exercised after such time will be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind
of shares of Preferred Stock or capital stock, as the case may be,
that, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the
Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend,
subdivision, combination, or reclassification. If an event occurs
that would require an adjustment under both this SECTION 11(a)(i)
and SECTION 11(a)(ii), the adjustment provided for in this SECTION
11(a)(i) will be in addition to, and will be made prior to, any
adjustment required pursuant to SECTION 11(a)(ii).
(ii) In the event that:
(A) Any Acquiring Person or Adverse Person or any
Associate or Affiliate of any Acquiring Person or Adverse
Person, at any time after the Stock Acquisition Date, directly
or indirectly, (1) merges from, with, or into the Company or
otherwise combines with the Company and the Company is the
continuing or surviving Person of such merger or combination
and the Common Shares of the Company or other equity
securities of the Company remain
15
outstanding, (2) in one transaction or a series of
transactions, transfers any assets to the Company or to any of
the Company's Subsidiaries in exchange (in whole or in part)
for Common Stock, for shares of other equity securities of the
Company, or for securities exercisable for or convertible into
shares of equity securities of the Company (Common Stock or
otherwise) or otherwise obtains from the Company, with or
without consideration, any additional shares of such equity
securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a pro
rata distribution to all holders of Common Shares), (3) sells,
purchases, leases, exchanges, mortgages, pledges, transfers,
or otherwise acquires or disposes of assets in one transaction
or a series of transactions, to, from, or with (as the case
may be) the Company or any of the Company's Subsidiaries, on
terms or conditions less favorable in any respect than the
Company or such Subsidiary would be able to obtain in
arm's-length negotiation with an unaffiliated third party,
other than pursuant to a Section 13 Event, (4) sells,
purchases, leases, exchanges, mortgages, pledges, transfers,
or otherwise acquires or disposes of assets having an
aggregate fair market value of more than $3,000,000 in one
transaction or a series of transactions to, from, or with (as
the case may be) the Company or any of the Company's
Subsidiaries (other than incidental to the lines of business,
if any, engaged in as of the date of this Agreement between
the Company or such Subsidiary, on the one hand, and such
Acquiring Person or Adverse Person or such Associate or
Affiliate, on the other), other than pursuant to a Section 13
Event, (5) receives any compensation from the Company or any
of the Company's Subsidiaries other than compensation for
full-time employment as a regular employee at rates in
accordance with the Company's (or such Subsidiaries') past
practices, or (6) receives the benefits, directly or
indirectly (except proportionately as a stockholder and as a
result of any requirement of law or governmental regulation),
of any loans, advances, guarantees, pledges, or other
financial assistance or any tax credits or other tax advantage
provided by the Company or any of the Company's Subsidiaries;
(B) any Person, alone or together with its
Affiliates or Associates, at any time after the Rights
Dividend Declaration Date, becomes an Acquiring Person, unless
the event causing such Person to become an Acquiring Person is
a Section 13 Event, or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Common Stock at a price and on terms
determined by a Requisite Majority,
16
after receiving advice from one or more nationally recognized
investment banking firms selected by such Requisite Majority,
to be (1) fair to all stockholders, after taking into
consideration all factors that such Requisite Majority deems
relevant, including, without limitation, the long-term
prospects and value of the Company and the prices and terms
that such Requisite Majority believes, in good faith, could
reasonably be achieved if the Company or its assets were sold
on an orderly basis designed to realize maximum value; and (2)
otherwise in the best interests of the Company and its
stockholders;
(C) during such time as there is an Acquiring Person
or Adverse Person, there is any reclassification of securities
(including any reverse stock split), recapitalization of the
Company, or any merger or consolidation of the Company into,
from, or with any of its Subsidiaries or any other transaction
or series of transactions involving the Company or any of its
Subsidiaries, other than a Section 13 Event, or series of such
events (whether or not with or into or otherwise involving and
Acquiring Person or Adverse Person) that has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of
equity securities (or securities convertible into such equity
securities) of the Company or any of its Subsidiaries that is
directly or indirectly beneficially owned by an Acquiring
Person or Adverse Person or any Associate or Affiliate of any
Acquiring Person or Adverse Person; or
(D) the Board of Directors of the Company declares
any Person to be an Adverse Person;
then, promptly following the first occurrence of a Section 11(a)(ii)
Event, proper provision will be made so that each holder of a Right
(except as provided below in this SECTION 11(a)(ii) and in SECTION 7(e))
will thereafter have the right to receive, upon exercise of such Right
at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-thousandths of a share of
Preferred Stock, such number of shares of Common Stock of the Company as
equals the result obtained by (x) multiplying the then current Purchase
Price by the then number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, will thereafter be referred to
as the "PURCHASE PRICE" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined pursuant to
SECTION 11(d)) per share of Common Stock on the date of such first
occurrence (such number of shares, the "ADJUSTMENT SHARES").
17
(iii) In the event that the number of shares of Common Stock
that are authorized by the Company's articles of incorporation
but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance with
SECTION 11(a)(ii), the Company will (A) determine the value of
the Adjustment Shares issuable upon the exercise of a Right
(the "CURRENT VALUE"), and (B) with respect to each Right
(subject to SECTION 7(e)), make adequate provision to
substitute for the Adjustment Shares, upon the exercise of a
Right and payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock,
such as the Preferred Stock, that a Requisite Majority has
deemed to have essentially the same value or economic rights
as shares of Common Stock (such securities being referred to
as "COMMON STOCK EQUIVALENTS")), (4) debt securities of the
Company, (5) other assets or property, or (6) any combination
of the foregoing, having an aggregate value equal to the
Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been
conclusively determined by a Requisite Majority based upon the
advice of a nationally recognized investment banking firm
selected by a Requisite Majority; provided, however, that if
the Company has not made adequate provision to deliver value
pursuant to CLAUSE (B) above within thirty (30) days following
the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of
redemption pursuant to SECTION 23(a) expires (the later of (x)
and (y) being referred to as the "SECTION 11(a)(ii) TRIGGER
DATE"), then the Company will be obligated to deliver, upon
the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares
or cash have an aggregate value equal to the Spread. For
purposes of the preceding sentence, the term "SPREAD" means
the excess of (i) the Current Value over (ii) the Purchase
Price. If the Board determines in good faith that it is likely
that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company
may seek shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be
extended, being the "SUBSTITUTION PERIOD"). To the extent that
action is to be taken pursuant to the first or third sentences
of this SECTION 11(a)(iii), the Company (1) will provide,
subject to SECTION 7(e), that such action will apply uniformly
to all outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in
18
order to seek such shareholder approval for such authorization
of additional shares or to determine the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value of such distribution. In the event of any
such suspension, the Company will issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For
purposes of this SECTION 11(a)(iii), the value of each
Adjustment Share will be the Current Market Price per share of
the Common Stock on the Section 11(a)(ii) Trigger Date and the
per share or per unit value of any Common Stock Equivalent
will be deemed to equal the Current Market Price per share of
the Common Stock on such date.
(b) In case the Company fixes a record date for the
issuance of rights, options, or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such
record date) Preferred Stock (or securities having the same rights,
privileges, and preferences as the shares of Preferred Stock
("EQUIVALENT PREFERRED STOCK")) or securities convertible into
Preferred Stock or Equivalent Preferred Stock at a price per share
of Preferred Stock or per share of Equivalent Preferred Stock (or
having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the
Current Market Price (as determined pursuant to SECTION 11(d)) per
share of Preferred Stock on such record date, the Purchase Price to
be in effect after such record date will be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which is the number of
shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock that the aggregate offering
price of the total number of shares of Preferred Stock or
Equivalent Preferred Stock so to be offered (or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the
denominator of which is the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional
shares of Preferred Stock or Equivalent Preferred Stock to be
offered for subscription or purchase (or into the maximum number of
shares into which the convertible securities so to be offered are
initially convertible). In the event that the number of shares of
Preferred Stock or Equivalent Preferred Stock issuable under the
terms of a convertible security, or the conversion or exercise
price of such convertible security, changes after the initial
issuance of such convertible security, an adjustment will be made
to the Purchase Price that conforms with the adjustment set forth
in this SECTION 11(b). In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration will be as
conclusively determined in good faith by a Requisite Majority,
whose determination will be described in a statement filed with the
Rights Agent and will be binding on the Rights Agent and the
holders of
19
the Rights. Shares of Preferred Stock owned by or held for the
account of the Company will be deemed not to be outstanding for the
purpose of any such computation. Such adjustment will be made
successively whenever such a record date is fixed, and in the event
that such rights, options, or warrants are not so issued, the
Purchase Price will be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
(c) In case the Company fixes a record date for a distribution
to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including
any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in
SECTION 11(b)), the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which is the Current Market Price (as determined
pursuant to SECTION 11(d)) per share of Preferred Stock on such
record date, less the fair market value (as conclusively determined
in good faith by a Requisite Majority, whose determination will be
described in a statement filed with the Rights Agent) of the
portion of the cash, assets, or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable
to a share of Preferred Stock and the denominator of which is such
Current Market Price (as determined pursuant to SECTION 11(d)) per
share of Preferred Stock). Such adjustments will be made
successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price will be
adjusted to be the Purchase Price that would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation under this
Agreement, other than computations made pursuant to SECTION
11(a)(iii), the "CURRENT MARKET PRICE" per share of Common
Stock on any date will be deemed to be the average of the
daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as defined below)
immediately prior to such date, and for purposes of
computations made pursuant to SECTION 11(a)(iii), the "CURRENT
MARKET PRICE" per share of Common Stock on any date will be
deemed to be the average of the daily closing prices per share
of such Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in
the event that the Current Market Price per share of the
Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the
20
Rights), or (B) any subdivision, combination, or
reclassification of such Common Stock, and the ex-dividend
date for such dividend or distribution, or the record date for
such subdivision, combination, or reclassification has not
occurred prior to the commencement of the requisite thirty
(30) Trading Day or ten (10) Trading Day period, as set forth
above, then, and in each such case, the Current Market Price
will be properly adjusted to take into account ex-dividend
trading. The closing price for each day will 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 shares of Common Stock 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 shares of Common
Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted 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 shares
of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by a Requisite Majority. If on any such date no
market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith
by a Requisite Majority will be used. The term "TRADING DAY"
means a day on which the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business
Day. If the Common Stock is not publicly held or not so listed
or traded, Current Market Price per share will mean the fair
value per share as determined in good faith by a Requisite
Majority, the determination of which will be described in a
statement filed with the Rights Agent and will be conclusive
for all purposes.
(ii) For the purpose of any computation under this
Agreement, the "CURRENT MARKET PRICE" per share of Preferred
Stock will be determined in the same manner as set forth above
for the Common Stock in SECTION 11(d)(i) (other than the last
sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed
or traded in a manner described in SECTION 11(d)(i), the
Current Market Price per share of Preferred Stock will be
conclusively deemed to be an amount equal to one thousand
(1,000) (as such number may be
21
appropriately adjusted for such events as stock splits, stock
dividends, and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied
by the Current Market Price per share of the Common Stock. If
neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, Current Market Price per share of
the Preferred Stock will mean the fair value per share as
determined in good faith by a Requisite Majority, whose
determination will be described in a statement filed with the
Rights Agent and will be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of one
one-thousandth of a share of Preferred Stock will be equal to
the Current Market Price of one share of Preferred Stock
divided by one thousand (1,000).
(e) Anything in this Agreement to the contrary
notwithstanding, no adjustment in the Purchase Price will be
required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments that by reason of this
SECTION 11(e) are not required to be made will be carried forward
and taken into account in any subsequent adjustment. All
calculations under this SECTION 11 will be made to the nearest cent
or to the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this SECTION
11(e), any adjustment required by this SECTION 11 will be made no
later than the earlier of (i) three (3) years from the date of the
transaction that mandates such adjustment or (ii) the Expiration
Date.
(f) If, as a result of an adjustment made pursuant to
SECTION 11(a)(ii) or SECTION 13(a), the holder of any Right
thereafter exercised becomes entitled to receive any shares of
capital stock other than Preferred Stock, then the number of such
other shares so receivable upon exercise of any Right and the
Purchase Price will 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 Stock contained in
SECTIONS 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (m), and
(q) and the provisions of SECTIONS 7, 9, 10, 13, and 14 with
respect to the Preferred Stock will apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price under this Agreement
will evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-thousandths of a share of Preferred
Stock purchasable from time to time under this Agreement upon
exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(h) Unless the Company has exercised its election as
provided in SECTION 11(i), upon each adjustment of the Purchase
Price as a result of the
22
calculations made in SECTIONS 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment will thereafter
evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one one-thousandths of a 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.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after such an adjustment in the
number of Rights will be exercisable for the number of one
one-thousandths of a share of Preferred Stock 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 will
become that number of Rights (calculated to the nearest one
ten-thousandth) 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 will make a public announcement of its
election to adjust the number of Rights, indicating the record date
for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, will be at least ten (10)
days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this SECTION 11(i), the Company will, as
promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights
Certificates evidencing, subject to SECTION 14, the additional
Rights to which such holders are entitled as a result of such
adjustment, or, at the option of the Company, will cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior
to the date of adjustment, and upon surrender thereof, if required
by the Company, new Rights Certificates evidencing all the Rights
to which such holders are entitled after such adjustment. Rights
Certificates so to be distributed will be issued, executed, and
countersigned in the manner provided for in this Agreement (and may
bear, at the option of the Company, the adjusted Purchase Price)
and will be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter
23
issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandths of
a share that were expressed in the initial Rights Certificates
issued under this Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of
the number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company will take any
corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
such number of fully paid and nonassessable one one-thousandths of
a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 requires that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of one
one-thousandths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-thousandths of a
share of Preferred Stock 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 will deliver to such holder a due xxxx or
other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this SECTION 11 to the contrary
notwithstanding, the Company will be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this SECTION 11, as and to the extent that,
in its good faith judgment, the Board of Directors of the Company
determines it to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current
market price, (iii) issuance wholly for cash of shares of Preferred
Stock or securities that by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends,
or (v) issuance of rights, options, or warrants referred to in this
SECTION 11, hereafter made by the Company to holders of its
Preferred Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that it will not, at
any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a
transaction that complies with SECTION 11(o)), (ii) merge with,
from, or into any other Person (other than a Subsidiary of the
Company in a transaction that complies with SECTION 11(o)), or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a
24
series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with SECTION 11(o)), if (x) at
the time of or immediately after such consolidation, merger, sale,
or transfer, there are any rights, warrants, or other instruments
or securities outstanding or agreements in effect that could
reasonably be expected to substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with, or immediately after, such
consolidation, merger, sale, or transfer, the stockholders of the
Person that constitutes, or would constitute, the "PRINCIPAL PARTY"
for purposes of SECTION 13(a) has received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by SECTION 23
or SECTION 26, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable
that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company at any time after
the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declares a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, or (iii) combines the
outstanding shares of Common Stock into a smaller number of shares,
the number of Rights associated with each share of Common Stock
then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, will be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common
Stock following any such event will equal the result obtained by
multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the
numerator of which is the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and
the denominator of which is the total number of shares of Common
Stock outstanding immediately following the occurrence of such
event.
(q) In the event that the Rights become exercisable
following a Section 11(a)(ii) Event, the Company, by action of a
Requisite Majority, may permit the Rights, subject to SECTION 7(e),
to be exercised for 50% of the shares of Common Stock (or cash or
other securities or assets to be substituted for the Adjustment
Shares pursuant to SECTION 11(a)(iii)) that would otherwise be
purchasable under SECTION 11(a) in consideration of the surrender
to the Company of the Rights so exercised and without other payment
of the Purchase
25
Price. Rights exercised under this SECTION 11(q) will be deemed to
have been exercised in full and will be cancelled.
(r) The failure by the Board of Directors at any time to
determine a Person to be an Adverse Person following such Person
becoming a Beneficial Owner of 10% or more of the outstanding
Common Stock will not create any implication that such Person is
not or may not later be determined to be an Adverse Person.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in SECTION 11 or
SECTION 13, the Company will (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 Preferred Stock and the Common Stock, a copy of
such certificate, and (c) mail a brief summary thereof to each holder of
a Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in
accordance with SECTION 25. The Rights Agent will be fully protected in
relying on any such certificate and on any adjustment contained in such
certificate.
Section 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (x) the Company consolidates with, or
merges from, with, or into, any other Person (other than a
Subsidiary of the Company in a transaction that complies with
SECTION 11(o)), and the Company is not the continuing or surviving
Person of such consolidation or merger; (y) any Person (other than
a Subsidiary of the Company in a transaction that complies with
SECTION 11(o)) consolidates with, or merges from, with, or into,
the Company, and the Company is the continuing or surviving
corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares
of Common Stock of the Company is changed into or exchanged for
stock or other securities of any other Person or cash or any other
property; or (z) the Company sells or otherwise transfers (or one
or more of its Subsidiaries sells or otherwise transfers), in one
transaction or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any Person
or Persons (other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with SECTION
11(o)), then, and in each such case (except as contemplated by
SECTION 13(d)), proper provision will be made so that (i) each
holder of a Right, except as provided in SECTION 7(e) or SECTION
13(e), will thereafter have the right to receive, upon the exercise
of such Right at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and
issued, fully paid,
26
nonassessable, and freely tradable shares of Common Stock of the
Principal Party (as defined below), not subject to any liens,
encumbrances, preemptive rights, rights of first refusal, or other
adverse claims, as are equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section
13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number
of such one one-thousandths of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior
to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, will be
referred to as the "PURCHASE PRICE" for each Right and for all
purposes of this Agreement) by (2) 50% of the Current Market Price
(determined pursuant to SECTION 11(d)(i)) per share of the Common
Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party will thereafter be
liable for, and will assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "COMPANY" will thereafter be deemed to
refer to such Principal Party, it being specifically intended that
the provisions of SECTION 11 will apply only to such Principal
Party following the first occurrence of a Section 13 Event; (iv)
such Principal Party will take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions of
this Agreement will thereafter be applicable, as nearly as may be,
in relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights; and (v) the provisions of SECTION
11(a)(ii) will be of no effect following the first occurrence of
any Section 13 Event.
(b) "PRINCIPAL PARTY" means
(i) in the case of any transaction described in
CLAUSE (x) or (y) of the first sentence of SECTION 13(a), the
Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
CLAUSE (z) of the first sentence of SECTION 13(a), the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common
Stock of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period
registered under Section 12 of the
27
Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and
has been so registered, "PRINCIPAL PARTY" will refer to such
other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so
registered, "PRINCIPAL PARTY" will refer to whichever of such
Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company will not consummate any such consolidation,
merger, sale, or transfer unless the Principal Party has a
sufficient number of authorized shares of its Common Stock that
have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this SECTION 13
and unless prior thereto the Company and such Principal Party have
executed and delivered to the Rights Agent a supplemental agreement
providing for the Principal Party to assume and perform the terms
set forth in SECTIONS 13(a) and (b) and further providing that, as
soon as practicable after the date of any consolidation, merger, or
transfer mentioned in SECTION 13(a), the Principal Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will cause such registration statement to (A) become
effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this SECTION 13 will similarly apply to successive
mergers, consolidations, and sales or other transfers. In the event that
a Section 13 Event occurs at any time after the occurrence of a Section
11(a)(ii) Event, the Rights that have not theretofore been exercised
will thereafter become exercisable in the manner described in SECTION
13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, SECTION 13 will not be applicable to a transaction
described in CLAUSE (x) and (y) of the first sentence of SECTION
13(a) if (i) such transaction is consummated with a Person or
Persons that acquired shares of Common Stock of the Company
pursuant a tender offer or exchange offer for all outstanding
shares of Common Stock that complies with the provisions of SECTION
11(a)(ii)(B) (or a wholly owned subsidiary of any such Person or
Persons), (ii) the price per share of
28
Common Stock offered in such transaction is not less than the price
per share of Common Stock paid to all holders of shares of Common
Stock whose shares were purchased pursuant to such tender offer or
exchange offer, and (iii) the form of consideration being offered
to the remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant
to such tender offer or exchange offer. Upon consummation of any
such transaction contemplated by this SECTION 13(d), all Rights
under this Agreement will expire.
(e) In the event that the Rights become exercisable under SECTION
13(a), the Company, by action of a Requisite Majority, may agree
with the Principal Party that the Principal Party may permit the
Rights to be exercised for 50% of the Common Shares of the
Principal Party that would otherwise be purchasable under SECTION
13(a), in consideration of the surrender to the Principal Party, as
the successor to the Company under SECTION 13(a)(ii), of the Rights
so exercised and without other payment of the Purchase Price.
Rights exercised under this SECTION 13(e) will be deemed to have
been exercised in full and cancelled.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company will not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in
SECTION 11(p), or to distribute Rights Certificates that evidence
fractional Rights. In lieu of such fractional Rights, there will be
paid to the registered holders of the Rights Certificates with
regard to which such fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this SECTION 14(a), the
current market value of a whole Right will 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 of the Rights for any day will be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or
such other system then in use or, if on any such date the Rights
are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by a Requisite Majority. If
on any such date no such market
29
maker is making a market in the Rights the fair value of the Rights
on such date as conclusively determined in good faith by a
Requisite Majority will be used.
(b) The Company will not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral
multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates that evidence
fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred
Stock). In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of
Preferred Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as
provided in this Agreement an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a
share of Preferred Stock. For purposes of this SECTION 14(b), the
current market value of one one-thousandth of a share of Preferred
Stock will be one one-thousandth of the closing price of a share of
Preferred Stock (as determined pursuant to SECTION 11(d)(ii)) for
the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company will not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates
that evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights
are exercised as provided in this Agreement an amount in cash equal
to the same fraction of the current market value of one share of
Common Stock. For purposes of this SECTION 14(c), the current
market value of one share of Common Stock will be the Current
Market Value of one share of Common Stock (as determined pursuant
to SECTION 11(d)(i)) for the Trading Day immediately prior to the
date of such exercise.
(d) The holder of a Right, by the acceptance of the Rights,
expressly waives the right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by
this SECTION 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in its own behalf and for its own benefit, enforce, and may
institute and maintain any suit, action, or proceeding against the
Company to enforce, or otherwise act in respect of, its right to
exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any
30
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 will be entitled to
specific performance of the obligations under this Agreement and
injunctive relief against actual or threatened violations of the
obligations under this Agreement of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the Rights 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer, and with the appropriate forms and
certificates fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f), the Company
and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute
owner of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last
sentence of SECTION 7(e), will be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree, or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory, or administrative
agency or commission, or any statute, rule, regulation, or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company will use its reasonable
best efforts to have any such order, decree, or ruling lifted or
otherwise overturned as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the number
of one one-thousandths of a share of Preferred Stock or any other
securities of the Company that may at any time be
31
issuable on the exercise of the Rights represented thereby, nor will
anything contained in this Agreement or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such,
any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to
stockholders, 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 Rights Certificate have been exercised in accordance with the
provisions of this Agreement.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it under this
Agreement and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties under
this Agreement. 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 to be done by the Rights Agent in connection with the
acceptance and administration of this Agreement, including, without
limitation, the costs and expenses of defending against any claim
of liability. In no case will the Rights Agent be liable for
special, indirect, incidental, or consequential loss or damages of
any kind whatsoever, even if the Rights Agent has been advised or
is otherwise aware of the likelihood of such loss or damage.
(b) The Rights Agent will be protected and will incur no
liability for or in respect of any action taken, suffered, or
omitted by it in connection with its administration of this
Agreement in reliance upon any Rights Certificate or certificate
for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine
and to be signed, executed, and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into or with which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the corporate
trust or shareholder services business of the Rights Agent or any
successor Rights Agent, will be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper
or any further act on the
32
part of any of the parties to this Agreement; provided, however,
that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of SECTION 21. In case
at the time such successor Rights Agent succeeds to the agency
created by this Agreement, any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the
name of the successor Rights Agent; and in all such cases such
Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates have not been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name
or in its changed name, and in all such cases such Rights
Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance of such Rights Certificates,
will be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel will 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.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person or Adverse Person and the determination of
"Current Market Price") be proved or established by the Company
prior to taking or suffering any action under this Agreement, such
fact or matter (unless other evidence in respect of such fact or
matter is specifically prescribed in this Agreement) may be deemed
to be conclusively proved and established by a certificate signed
by the Chairman of the Board, the Chief Executive Officer, the
Chief Operating Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary, or any Assistant
Secretary of the Company and delivered to the Rights Agent; and
such certificate will be full authorization to the Rights Agent for
33
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable under this Agreement
only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of
any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify
the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and will be
deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery of this Agreement (except the due execution of this
Agreement by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature);
nor will it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any adjustment required
under the provisions of SECTION 11 or SECTION 13, 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 Rights Certificates after actual notice of any such adjustment);
nor will it by any act under this Agreement be deemed to make any
representation or warranty as to the authorization or reservation
of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when so
issued, be validly authorized or issued, fully paid, or
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge, and deliver or cause to be performed, executed,
acknowledged, and delivered all such further and other acts,
instruments, and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent
of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
under this Agreement from the Chairman of the Board, the Chief
Executive Officer, the Chief Operating Officer, the President, any
Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its
duties, and it will 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.
34
(h) The Rights Agent and any stockholder, director,
officer, or employee of the Rights Agent may buy, sell, or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may
be interested, 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 in this Agreement will preclude
the Rights Agent from acting in any other capacity for the Company
or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers vested by this Agreement in it or perform any duty
under this Agreement either itself or by or through its attorneys
or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect, or misconduct of any
such attorneys or agents or for any loss to the Company resulting
from any such act, default, neglect, or misconduct; provided,
however, reasonable care was exercised in the selection and
continued employment of such Person.
(j) No provision of this Agreement will require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties under
this Agreement or in the exercise of its rights if there are
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an
affirmative response to clause 1 or 2 of such certificate, the
Rights Agent will not take any further action with respect to such
requested exercise of transfer without first consulting with the
Company.
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 Stock and
Preferred Stock, by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. If the Rights Agent resigns
or is removed or otherwise becomes incapable of acting, the Company will
appoint a successor to the Rights Agent. If the Company fails 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 Rights Certificate (who will, with such notice,
submit such holder's Rights Certificate for inspection by the Company),
then any registered holder of
35
any Rights Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, will be a
corporation organized and doing business under the laws of the United
States or a State of the United States, in good standing, that is
authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state authority and
that has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100,000,000. After appointment, the
successor Rights Agent will be vested with the same powers, rights,
duties, and responsibilities as if it had been originally named as
Rights Agent without further act or deed, except that the predecessor
Rights Agent will deliver and transfer to the successor Rights Agent any
property at the time held by it under this Agreement 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 will file notice of such appointment in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
the Preferred Stock, and mail a notice of such appointment in writing to
the registered holders of the Rights Certificates. Failure to give any
notice provided for in this SECTION 21, however, or any defect in such
notice, will 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 RIGHTS CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, in its discretion, issue new Rights
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with
the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) will, with respect to shares of Common Stock 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 the exercise, conversion, or exchange of securities 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 Rights
Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (y) no such Rights
Certificate will be issued if, and to the extent that, the Company is
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom
such Rights Certificate would be issued, and (z) no such Rights
Certificate will be issued if, and to the extent that, appropriate
adjustment has otherwise been made in lieu of the issuance of such
Rights Certificate.
36
Section 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, by action of its Board
of Directors at any time prior to the earlier of (i) the Close of
Business on the tenth day following the Stock Acquisition Date (or,
if the Stock Acquisition Date has occurred prior to the Record
Date, the Close of Business on the tenth day following the Record
Date), or (ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $0.01
per Right, as such amount may be appropriately adjusted to reflect
any stock split, stock dividend, or similar transaction occurring
after the date of this Agreement (such redemption price being
referred to as the "REDEMPTION PRICE"); provided, however, there
must be at least two Continuing Directors then in office and such
authorization will require concurrence of a Requisite Majority if
the Board of Directors authorizes redemption of the Rights in
either of the following circumstances: (i) such authorization
occurs on or after the time any Person becomes an Acquiring Person
or an Adverse Person, or (ii) such authorization occurs on or after
the time of a change (resulting from a proxy or consent
solicitation) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a
participant in such solicitation has stated (or, if on or after the
commencement of such solicitation, a majority of the Board of
Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take,
may consider taking, or reserves any right to take, any action that
would result in such Person becoming an Acquiring Person or that
would cause the occurrence of a Triggering Event; provided,
however, that if, following the occurrence of a Stock Acquisition
Date and following the expiration of the right of redemption under
this SECTION 23 but prior to any Triggering Event, (x) all
Acquiring Persons and Adverse Persons have transferred or otherwise
disposed of a number of Common Shares in one transaction or series
of transactions not directly or indirectly involving the Company or
any of its Subsidiaries that did not result in the occurrence of a
Triggering Event or the Company (with the approval of the Requisite
Majority) has issued additional equity securities, in either
instance such that each Acquiring Person and Adverse Person is
thereafter a Beneficial Owner of less that 10% of the outstanding
shares of Common Stock, and (y) there is no other Acquiring Person
or (in the good faith judgment of a Requisite Majority) Adverse
Person immediately following the occurrence of the event described
in CLAUSE (x), then the right of redemption will be reinstated and
thereafter be subject to the provisions of this SECTION 23.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights will not be exercisable after the first
occurrence of a Section 11(a)(ii) Event except during the period
that the Company's right of redemption under this Agreement has
expired and not been reinstated. The Company may, at its option,
pay the Redemption Price, in cash, shares of Common Stock (based on
the Current Market Price as defined in SECTION 11(d)(i), of the
Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
37
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, evidence of
which has been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights
will terminate and the only right thereafter of the holders of
Rights will be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company will give notice of such
redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any
notice that is mailed in the manner in this Agreement provided will
be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company proposes, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a
regular quarterly cash dividend out of earnings or retained
earnings of the Company); (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights, or options; (iii) to effect
any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Preferred Stock); (iv) to effect any consolidation or
merger from, into, or with any other Person (other than a
Subsidiary of the Company in a transaction that complies with
SECTION 11(o)), 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 transaction or a series of related transactions,
of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with SECTION 11(o)); or (v) to
effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company will give to each holder of a
Rights Certificate, to the extent feasible and in accordance with
SECTION 25, a notice of such proposed action, which will 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 shares of
Preferred Stock, if any such date is to be fixed, and such notice
will be so given in the case of any action covered by CLAUSE (i) or
(ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of Preferred Stock for purposes
38
of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed
action or the date of participation in such proposed action by the
holders of the shares of Preferred Stock, whichever is the earlier.
(b) In case any of the events set forth in SECTION
11(a)(ii) occurs, then, in any such case, (i) the Company will as
soon as practicable give to each holder of a Rights Certificate, to
the extent feasible and in accordance with SECTION 25, a notice of
the occurrence of such event, which will specify the event and the
consequences of the event to holders of Rights under SECTION
11(a)(ii), and (ii) all references in SECTION 24(a) to Preferred
Stock will be deemed thereafter to refer to Common Stock or, if
appropriate, other securities.
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 Rights Certificate to or on the Company will 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:
Anchor Gaming
000 Xxxxx Xxxx
Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxx
Subject to the provisions of SECTION 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent will 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:
The Chase Manhattan Bank
000 X. 00xx Xxxxxx
Xxx Xxxx XX 00000
Attention: Xxxx Xxxxxx
GTS Controller's Office
15th Floor
39
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock) will 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. SUPPLEMENT AND AMENDMENTS. Prior to the Distribution
Date and subject to the penultimate sentence of this SECTION 26, the
Company and the Rights Agent will, if the Company so directs, supplement
or amend any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock. From and
after the Distribution Date and subject to the penultimate sentence of
this SECTION 26, the Company and the Rights Agent will, if the Company
so directs, supplement or amend this Agreement without the approval of
any holders of Rights Certificates in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained in this Agreement
that may be defective or inconsistent with any other provision in this
Agreement, (iii) to shorten or lengthen any time period under this
Agreement (which lengthening or shortening, following the first
occurrence of an event set forth in CLAUSES (i) and (ii) of the first
proviso to SECTION 23(a), will be effective only if there are at least
two Continuing Directors and will require the concurrence of a Requisite
Majority), or (iv) to change or supplement the provisions under this
Agreement in any manner that the Company may deem necessary or desirable
and that will not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Adverse Person
or an Affiliate or Associate of an Acquiring Person or an Adverse
Person); provided, however, this Agreement may not be supplemented or
amended to lengthen, pursuant to CLAUSE (iii) of this sentence, (A) a
time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing, or
clarifying the rights of, or the benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate officer of the
Company that states that the proposed supplement or amendment is in
compliance with the terms of this SECTION 26, the Rights Agent will
execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary after the occurrence of a Distribution
Date, no supplement or amendment will be made that changes the
Redemption Price, the Final Expiration Date, the Purchase Price or the
number of one one-thousandths of a share of Preferred Stock for which a
Right is exercisable. Prior to the Distribution Date, the interests of
the holders of Rights will be deemed coincident with the interests of
the holders of Common Stock.
Section 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will
bind and inure to the benefit of their respective successors and assigns
under this Agreement.
40
Section 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, will be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement. The Board of Directors
of the Company (with, where specifically provided for in this Agreement,
the concurrence of the Continuing Directors) will have the exclusive
power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board (with, where
specifically provided for in this Agreement, the concurrence of the
Continuing Directors) 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 (a) interpret the provisions of this
Agreement, and (b) 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 to amend the
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of CLAUSE (y) below, all
omissions with respect to the foregoing) that are done or made by the
Board (with, where specifically provided for in this Agreement, the
concurrence of the Continuing Directors) in good faith, will (x) be
final, conclusive, and binding on the Company, the Rights Agent, the
holders of the Rights, and all other Persons, and (y) not subject the
Board or the Continuing Directors to any liability to the holders of the
Rights.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
will be construed to give to any Person other than the Company, the
Rights Agent, and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common
Stock) any legal or equitable right, remedy, or claim under this
Agreement; and this Agreement will be for the sole and exclusive benefit
of the Company, the Rights Agent, and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 30. 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 will remain in full force and effect and will in no way
be affected, impaired, or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant, or restriction is held by such court or
authority to be invalid, void, or unenforceable and the Board of
Directors of the Company determines in good faith that severing the
invalid language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in
SECTION 23 will be reinstated and will not expire until the Close of
Business on the tenth day following the date of such determination by
the Board of Directors. Without limiting the foregoing, if any provision
requiring a majority of the Board of Directors of the Company to be
Continuing Directors to act is held by any
41
court of competent jurisdiction or other authority to be invalid, void,
or unenforceable, such determination will then be made by the Board of
Directors of the Company in accordance with applicable law and the
Company's Certificate of Incorporation and By-Laws.
Section 31. GOVERNING LAW. This Agreement, each Right, and each
Rights Certificate issued under this Agreement will be deemed to be a
contract made under the laws of the State of Nevada and for all purposes
will be governed by and construed in accordance with the laws of such
State applicable to contracts made and to be performed entirely within
such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts will for all
purposes be deemed to be an original, and all such counterparts will
together constitute but one and the same instrument.
Section 33. INTERPRETATION. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will
not control or affect the meaning or construction of any of the
provisions of this Agreement. References in this Agreement to Sections
and Exhibits are references to the Sections of and Exhibits to this
Agreement unless the context requires otherwise. In this Agreement, the
word "or" is not exclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
Attest: /s/ X. X. XXXXXXXX ANCHOR GAMING
-------------------
By: /s/ XXXX ROMBOLZ
------------------
Name: Xxxx Rombolz
------------------
Its:
------------------
Attest: /s/ XXXXXXXX XXXXXX THE CHASE MANHATTAN BANK
-------------------
By: /s/ XXXX XXXXXX
------------------
Name: Xxxx Xxxxxx
------------------
Its:
------------------
42
Exhibit A
to Rights Agreement
CERTIFICATE OF DESIGNATION, PREFERENCES,
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
of
ANCHOR GAMING
Pursuant to Section 78.155 of the General Corporation Law of the State
of Nevada
The undersigned officers of Anchor Gaming (the "CORPORATION"), a
corporation organized and existing under the General Corporation Law of the
State of Nevada, in accordance with the provisions of Section 78.195
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Restated Articles of Incorporation of such Corporation, such Board of
Directors on August 26, 1997, adopted the resolutions set forth below
creating a series of 50,000 shares of Preferred Stock designated as "Series A
Junior Participating Preferred Stock":
That no shares of Series A Junior Participating Preferred Stock have
heretofore been issued.
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Amended and Restated Certificate of Incorporation, a series of Preferred
Stock of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting powers, preferences, and
relative, participating, optional, and other special rights of the shares of
such series, and the qualifications, limitations, or restrictions thereof are
as follows:
(1) DESIGNATION AND AMOUNT. The shares of such series will be
designated as "Series A Junior Participating Preferred Stock" and the number
of shares constituting such series will be 50,000.
(2) DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series A Junior Participating
Preferred Stock will 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 last day of March,
June, September, and December in each year (each such date being
referred to as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the
first Quarterly Dividend Payment Date after the first
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issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $0.01 or (ii) subject to the
provision for adjustment set forth below, one thousand times the
aggregate per share amount of all cash dividends, and one thousand 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,
par value $.01 per share, of the Corporation (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 Junior
Participating Preferred Stock. In the event the Corporation at any time
after October 20, 1997 (the "RIGHTS DECLARATION DATE") (i) declares any
dividend on Common Stock payable in shares of Common Stock, (ii)
subdivides the outstanding Common Stock, or (iii) combines the
outstanding Common Stock into a smaller number of shares, then in each
such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such
event under CLAUSE (ii) of the preceding sentence will 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 will declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in SECTION
2(a) above 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 has 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 Junior Participating
Preferred Stock will nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends will begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
will 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 Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends will begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends will not bear
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interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares will 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 Junior Participating
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date will be no more than 30
days prior to the date fixed for the payment thereof.
(3) VOTING RIGHTS.
(a) The holders of shares of Series A Junior Participating
Preferred Stock will have the following voting rights:
Subject to the provision for adjustment set forth below, each share
of Series A Junior Participating Preferred Stock will entitled the
holder to a number of votes on all matters submitted to a vote of the
stockholders of the Corporation equal to one thousand times the number
of votes per share to which shares of Common Stock are entitled. In the
event the Corporation at any time after the Rights Declaration Date (i)
declares any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivides the outstanding Common Stock, or (iii) combines the
outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately
prior to such event will 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 in this Agreement or by law, the
holders of shares of Series A Junior Participating Preferred Stock and the
holders of shares of Common Stock will vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(c) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock are in arrears in an amount equal to six
(6) quarterly dividends thereon, the occurrence of such contingency will
xxxx the beginning of a period (a "DEFAULT PERIOD") that will extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period
on all shares of Series A Junior Participating Preferred Stock then
outstanding have been declared and paid or set apart for payment. During
each default period, all holders of preferred stock of the Corporation
(the "PREFERRED STOCK") (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount
equal to six (6) quarterly dividends
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thereon, voting as a class, irrespective of series, will have the right
to elect two (2) Directors.
(ii) During any default period, such voting right of the holders
of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to SECTION 3(c)(iii) or
at any annual meeting of stockholders, and thereafter at annual meetings
of stockholders, provided that such voting right will not be exercised
unless the holders of ten percent (10%) in number of shares of Preferred
Stock outstanding are present in person or by proxy. The absence of a
quorum of the holders of Common Stock will not affect the exercise by
the holders of Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock exercise such voting right
initially during an existing default period, they will have the right,
voting as a class, to elect Directors to fill such vacancies, if any, in
the Board of Directors as may then exist up to two (2) Directors or, if
such right is exercised at an annual meeting, to elect two (2)
Directors. If the number that may be so elected at any special meeting
does not amount to the required number, the holders of the Preferred
Stock will have the right to make such increase in the number of
Directors as is necessary to permit the election by them of the required
number. After the holders of the Preferred Stock have exercised their
right to elect Directors in any default period and during the
continuance of such period, the number of Directors will not be
increased or decreased except by vote of the holders of Preferred Stock
as provided herein or pursuant to the rights of any equity securities
ranking senior to or pari passu with the Series A Junior Participating
Preferred Stock.
(iii) Unless the holders of Preferred Stock, during an existing
default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding, irrespective
of series, may request, the calling of a special meeting of the holders
of Preferred Stock, which meeting will thereupon be called by the Chief
Executive Officer, the Chief Operating Officer, the President, a
Vice-President, or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock
are entitled to vote pursuant to this SECTION 3(c)(iii) will be given to
each holder of record of Preferred Stock by mailing a copy of such
notice such holder at such holder's last address as it appears on the
books of the Corporation. Such meeting will be called for a time not
earlier than 20 days and not later than 60 days after such order or
request or in default of the calling of such meeting within 60 days
after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not
less than ten percent (10%) of the total number of shares of Preferred
Stock
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outstanding. Notwithstanding the provisions of this SECTION 3(c)(iii),
no such special meeting will be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, will continue
to be entitled to elect the whole number of Directors until the holders
of Preferred Stock have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the Directors
so elected by the holders of Preferred Stock will continue in office
until their successors have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in SECTION 3(c)(ii)) be filled by vote
of a majority of the remaining Directors theretofore elected by the
holders of the class of stock that elected the Director whose office has
become vacant. References in this SECTION 3(c) to Directors elected by
the holders of a particular class of stock will include Directors
elected by such Directors to fill vacancies as provided in clause (y) of
the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors
will cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class will terminate, and (z) the number of
Directors will be such number as may be provided for in the articles of
incorporation or by-laws irrespective of any increase made pursuant to
the provisions of SECTION 3(c)(ii) (such number being subject, however,
to change thereafter in any manner provided by law or in the articles of
incorporation or by-laws). Any vacancies in the Board of Directors
effected by the provisions of CLAUSES (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
Except as set forth herein, holders of Series A Junior Participating
Preferred Stock will have no special voting rights and their consent will 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.
(4) CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating 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 Junior Participating Preferred Stock outstanding
have been paid in full, the Corporation will not
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(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution, or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on 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 Junior Participating Preferred Stock, except dividends
paid ratably on the Series A Junior Participating 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 on a parity (either as to
dividends or upon liquidation, dissolution, or winding up) with the
Series A Junior Participating Preferred Stock, provided that the
Corporation may at any time redeem, purchase, or otherwise acquire
shares of any such parity 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 Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series A Junior
Participating 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, determines in good faith will result
in fair and equitable treatment among the respective series or
classes.
(b) The Corporation will 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
SECTION 4(a), purchase or otherwise acquire such shares at such time and
in such manner.
(5) REACQUIRED SHARES. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever will be retired and cancelled promptly after the
acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution
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or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
(6) LIQUIDATION, DISSOLUTION, OR WINDING UP.
(a) Upon any liquidation (voluntary or otherwise), dissolution,
or winding up of the Corporation, no distribution will be made to the
holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution, or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series A Junior Participating Preferred Stock have received an
amount equal to $400,000.00, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the
date of such payment (the "SERIES A LIQUIDATION PREFERENCE"). Following
the payment of the full amount of the Series A Liquidation Preference,
no additional distributions will be made to the holders of shares of
Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock have received an amount per share (the
"COMMON ADJUSTMENT") equal to the quotient obtained by dividing (i) the
Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted
as set forth in SECTION 6(c) to reflect such events as stock splits,
stock dividends, and recapitalizations with respect to the Common Stock)
(such number in CLAUSE (ii), the "ADJUSTMENT NUMBER"). Following the
payment of the full amount of the Series A Liquidation Preference and
the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of
shares of Common Stock will receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(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 series of
preferred stock, if any, that rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets will be
distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event, however, that
there are not sufficient assets available to permit payment in full of
the Common Adjustment, then such remaining assets will be distributed
ratably to the holders of Common Stock.
(c) In the event the Corporation at any time after October 20,
1997 (i) declares any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivides the outstanding Common Stock, or (iii)
combines the outstanding Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior
to such event will be adjusted by multiplying such Adjustment 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
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number of shares of Common Stock that were outstanding immediately prior
to such event.
(7) CONSOLIDATION, MERGER, ETC. In case the Corporation enters into
any consolidation, merger, combination, or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash, and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock will at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment set forth below) equal to one thousand 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 at any
time after October 20, 1997 (i) declares any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivides the outstanding Common Stock, or
(iii) combines the outstanding Common Stock into a smaller number of shares,
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 Junior Participating
Preferred Stock will 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.
(8) NO REDEMPTION. The shares of Series A Junior Participating
Preferred Stock will not be redeemable.
(9) AMENDMENT. The Restated Articles of Incorporation of the
Corporation will not be further amended in any manner that would materially
alter or change the powers, preferences, or special rights of the Series A
Junior Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of a majority or more of the outstanding
shares of Series A Junior Participating Preferred Stock, voting separately as
a class.
(10) FRACTIONAL SHARES. Series A Junior Participating Preferred Stock
may be issued in fractions of a share that entitle the holder, in proportion
to such holders 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 Junior Participating Preferred Stock.
A-8
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this __ day of
October, 1997.
ANCHOR GAMING
By: ___________________________________
Name: _________________________________
Title: ________________________________
By: ___________________________________
Name: _________________________________
Title: ________________________________
The foregoing instrument was acknowledged before me by
____________________ and ____________________ on the ___ day of October 1997,
in the capacities indicated.
_______________________________________
(Notary)
A-9
Exhibit B
to Rights Agreement
Form of Rights Certificate
Certificate No. R-________ Rights
NOT EXERCISABLE AFTER OCTOBER 17, 2007 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO IS, WAS, OR
BECAME AN ACQUIRING PERSON OR AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SUCH AGREEMENT.]
Rights Certificate
ANCHOR GAMING
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 October 17, 1997 (as amended from time
to time, the "RIGHTS AGREEMENT"), between Anchor Gaming, a Nevada corporation
(the "COMPANY"), and The Chase Manhattan Bank, (the "RIGHTS AGENT"), to
purchase from the Company at any time prior to 5:00 p.m. (Las Vegas, Nevada
time) on October 17, 2007 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, nonassessable share of Series A Junior
Participating Preferred Stock (the "PREFERRED STOCK") of the Company, at a
purchase price of $400.00 per one one-thousandth of a share (the "PURCHASE
PRICE"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of
shares that may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price
as of October 20, 1997 based on the Preferred Stock as constituted at such
date. The Company reserves the right to require prior to the occurrence of a
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Triggering Event (as such term is defined in the Rights Agreement) that a
number of Rights be exercised so that only whole shares of Preferred Stock
will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Adverse
Person or an Affiliate or Associate of any such Acquiring Person or Adverse
Person (as such terms are defined in the Rights Agreement), (ii) a transferee
of any such Acquiring Person, Adverse Person, Associate, or Affiliate, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a Person who, after such transfer, became an Acquiring Person
or an Adverse Person, or an Affiliate or Associate of an Acquiring Person or
an Adverse Person, such Rights will become null and void and no holder of
this certificate will have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, that may be
purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions
are hereby incorporated in this Rights Certificate by reference and made a
part of this certificate and to which Rights 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 Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights
under the certain circumstances set forth in the Rights Agreement. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered have entitled such holder to purchase. If this
Rights Certificate is exercised in part, the holder will be entitled to
receive upon surrender of this Rights Certificate another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right at any time prior to the earlier of the
Close of Business on (i) the tenth day following the Stock Acquisition Date
(as such time period may be extended
B-2
pursuant to the Rights Agreement), and (ii) the Final Expiration Date. In
addition, in certain circumstances the Rights may be exchanged, in whole or
in part, for shares of the Common Stock, or shares of preferred stock of the
Company having essentially the same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any notice,
the Rights (other than Rights that are not subject to such exchange) will
terminate and the Rights will only enable holders to receive the shares
issuable upon such exchange. Under certain circumstances set forth in the
Rights Agreement, the decision to redeem the Rights will require the
concurrence of a majority of the Continuing Directors.
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, 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 Rights
Agreement.
No holder of this Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor will anything contained in the Rights
Agreement or herein be construed to confer upon the holder of this
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 the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate have been exercised as provided
in the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose
until it has 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: ANCHOR GAMING
___________________ By: ___________________________________
Title: ________________________________
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Countersigned:
THE CHASE MANHATTAN BANK
By ___________________________________
Authorized Signature
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED hereby sells, assigns, and transfer unto
(Please print name and address of transferee)
This Rights Certificate, together with all right, title, and interest
therein, and does hereby irrevocably constitute and appoint _________________
attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:__________________, ____ _______________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned, or
transferred by or on behalf of a Person who is or was an Acquiring Person or
an Adverse Person or an Affiliate or Associate of any such Acquiring Person
or Adverse Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was, or subsequently became an Acquiring Person or an
Adverse Person or an Affiliate or Associate of an Acquiring Person or an
Adverse Person.
Dated:__________________, ____ _______________________________________
Signature
Signature Guaranteed:
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NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
To: ANCHOR GAMING:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of
the Company or of any other Person that may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the
name of and delivered to:
Please insert social security or other identifying number
(please print name and address)
If such number of Rights are not all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights will 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:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Adverse Person or an Affiliate or Associate of any such Acquiring
Person or an Adverse Person (as such terms are defined in the Rights
Agreement);
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(2) after due inquiry and to the best knowledge of the undersigned, it
[ ]did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or Adverse Person
or an Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated:__________________, ____ _______________________________________
Signature
Signature Guaranteed:
B-7
Exhibit C
to Rights Agreement
DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On August 26, 1997, the Board of Directors of Anchor Gaming (the
"COMPANY") adopted a Stockholder Rights Plan, providing that one right (a
"RIGHT") will be attached to each share of common stock, par value $.01 per
share, of the Company (the "COMMON STOCK") as of October 20, 1997 (the
"RECORD DATE"). Each Right entitles the registered holder to purchase from
the Company a unit (a "UNIT") consisting of one one-thousandth of a share of
Series A Junior Participating Preferred Stock, par value $20.00 per share
(the "PREFERRED STOCK"), at a Purchase Price of $400.00 per Unit (the
"PURCHASE PRICE"), subject to adjustment. The description and terms of the
Rights are set forth in the Rights Agreement (the "RIGHTS AGREEMENT"), dated
as of October 17, 1997, between the Company and The Chase Manhattan Bank, as
Rights Agent (the "RIGHTS AGENT").
Initially, the Rights will be attached to all Common Stock certificates
representing shares outstanding as of the Record Date, and no separate Rights
Certificate will be distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "ACQUIRING PERSON") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding
shares of Common Stock (the "STOCK ACQUISITION DATE"), (ii) 10 business days
following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 15% or more of such
outstanding shares of Common Stock or (iii) 10 business days after the Board
of Directors of the Company determines that any Person or Persons have become
the Beneficial Owner of an amount of Common Stock that the Board of Directors
determines to be substantial (which amount will in no event be less than 10%
of the shares of Common Stock outstanding) and that (a) such Person or
Persons intend to cause the Company to repurchase the Common Stock
beneficially owned by such Person or Persons or to exert pressure against the
Company to take any action or enter into any transaction or series of
transactions with the intent or the effect of providing such Person or
Persons with short-term gains or profits under circumstances in which the
Board of Directors determines that the long-term interests of the Company and
its stockholders would not be served by taking such action or entering into
such transactions or series of transactions or (b) beneficial ownership by
such Person or Persons is reasonably likely to have a material adverse effect
on the business, competitive position, prospects, or financial condition of
the Company and its subsidiaries (an "ADVERSE PERSON"). Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with
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and only with such Common Stock certificates, (ii) new Common Stock
certificates will contain a notation incorporating the Rights Agreement by
reference; and (iii) the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights Agreement provides that Xxxxxxx X. Xxxxxx, and certain of his
transferees, donees or successors, who together will be beneficial owners of
more than 39.2% of the Common Stock of the Company outstanding on October 17,
1997, are excluded from the definition of "Acquiring Person." Xx. Xxxxxx is
also excluded from the definition of "Adverse Person."
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on October 20, 2007, unless earlier redeemed
by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined
by the Board of Directors, only shares of Common Stock outstanding prior to
the Distribution Date will be issued with Rights.
In the event that (i) the Company is the surviving corporation in a
merger or combination with any Acquiring Person or any Adverse Person, or any
Associate or Affiliate of any Acquiring Person or Adverse Person, and its
Common Stock remains outstanding, (ii) any Acquiring Person or any Adverse
Person, or any Associate or Affiliate of any Acquiring Person or Adverse
Person, engages in one or more "self-dealing" transactions as set forth in
the Rights Agreement, (iii) an Acquiring Person becomes the beneficial owner
of 15% or more of the then outstanding shares of Common Stock (unless such
acquisition is made pursuant to a tender or exchange offer for all
outstanding shares of the Company, at a price determined by a majority of the
Continuing Directors of the Company who are not representatives, nominees,
Affiliates, or Associates of an Acquiring Person to be fair and otherwise in
the best interest of the Company and its stockholders), (iv) during such time
as there is an Acquiring Person or Adverse Person an event occurs that
results in such Acquiring Person's or Adverse Person's ownership interest
being increased by more than 1% (E.G., a reverse stock split or
recapitalization), or (v) the Board of Directors determines that a person is
an Adverse Person, each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property, or other securities of the Company), having a value equal to two
times the Exercise Price of the Right. The Exercise Price is the Purchase
Price times the number of shares of Common Stock associated with each Right
(initially, one). Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph (the "Flip-In
Events"), all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person or any
Adverse
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Person, or an Associate or Affiliate of any Acquiring Person or Adverse
Person, will be null and void. However, Rights are not exercisable following
the occurrence of any of the Flip-In Events set forth above until such time
as the Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $400 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following an event set forth in the preceding paragraph would
entitle its holder to purchase Common Stock with a value of $800 (or other
consideration, as noted above) for $400. Assuming that the Common Stock had
a per share value of $400 at such time, the holder of each valid Right would
be entitled to purchase 2.0 shares of Common Stock for $400. Alternatively,
the Company could permit the holder to surrender each Right in exchange for
stock or cash equivalent to one share of Common Stock (with a value of $400)
without the payment of any consideration other than the surrender of the
Right.
In the event that following the Stock Acquisition Date, (i) the Company
is acquired in a merger or consolidation in which the Company is not the
surviving corporation (other than a merger that follows a tender offer that
the Board of Directors has found to be fair to the stockholders of the
Company, as described above) or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights
which have previously been voided as set forth above) will thereafter have
the right (a flip-over right) to receive, upon exercise of the Right, Common
Stock of the acquiring company having a value equal to two times the Exercise
Price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock
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 Stock, (ii) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise.
At any time until 10 days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right. The ten day redemption period may be extended by the Board of
Directors so long as the Rights are still redeemable. Under certain
circumstances, the decision to redeem will require the
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concurrence of a majority of the Continuing Directors referred to below.
Immediately upon the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $.01 redemption price.
The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the adoption
of the Rights Plan and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Continuing
Directors, but will not include an Acquiring Person or any Adverse Person, or
an Affiliate or Associate of an Acquiring Person or Adverse Person, or any
representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of
the Company as set forth above.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by
the Board (in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interest
of any Acquiring Person or any Adverse Person), or to shorten or lengthen any
time period under the Rights Agreement; provided that no amendment to adjust
the time period governing redemption will be made at such time as the Rights
are not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company in certain circumstances. Accordingly, the existence of the Rights
may deter certain acquirors from making takeover proposals or tender offers.
However, the Rights are not intended to prevent a takeover, but rather are
designed to enhance the ability of the Board of Directors to negotiate with
an acquiror on behalf of all of the shareholders.
[The Rights Agreement between the Company and the Rights Agent specifying
the terms of the Rights, which includes as Exhibit B the Form of Rights
Certificate, is attached as an exhibit and incorporated by reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.]*
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* This paragraph to be included only in the Form 8-A to be filed with
the Commission.
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