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RIGHTS AGREEMENT
by and between
LODGIAN, INC.
and
FIRST UNION NATIONAL BANK
as Rights Agent
Dated as of
April 14, 1999
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TABLE OF CONTENTS
Section 1. Certain Definitions.................................................
Section 2. Appointment of Rights Agent.........................................
Section 3. Issuance of Rights Certificates.....................................
Section 4. Form of Rights Certificates.........................................
Section 5. Countersignature and Registration...................................
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates...........
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.......
Section 8. Cancellation and Destruction of Rights Certificates.................
Section 9. Reservation and Availability of Shares of Preferred Stock..........
Section 10. Preferred Stock Record Date.......................................
Section 11. Adjustment of Exercise Price or Number of Shares..................
Section 12. Certification of Adjusted Exercise Price or Number of Shares......
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.....................................................
Section 14. Fractional Rights and Fractional Shares...........................
Section 15. Rights of Action...................................................
Section 16. Agreement of Right Holders........................................
Section 17. Rights Certificate Holder Not Deemed a Stockholder.................
Section 18. Concerning the Rights Agent........................................
Section 19. Merger or Consolidation of, or Change in Name of, the Rights
Agent..
Section 20. Duties of Rights Agent...........................................
Section 21. Change of Rights Agent...........................................
Section 22. Issuance of New Rights Certificates..............................
Section 23. Redemption.......................................................
Section 24. Notice of Proposed Actions.......................................
Section 25. Notices 51
Section 26. Supplements and Amendments.......................................
Section 27. Exchange 53
Section 28. Successors.......................................................
Section 29. Benefits of this Rights Agreement................................
Section 30. [Delaware] Contract..............................................
Section 31. Counterparts.....................................................
Section 32. Descriptive Headings.............................................
Section 33. Severability.....................................................
Section 34. Determinations And Actions By The Board Of Directors, Etc........
Exhibit A Summary of Rights
Exhibit B Form of Rights Certificate
Exhibit C Form of Certificate of Designations Relating to the Terms of the
Participating Preferred Stock
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RIGHTS AGREEMENT
Agreement, dated as of April 14, 1999, by and between Lodgian,
Inc., a Delaware corporation (the "Corporation"), and First Union National Bank
(the "Rights Agent") (the "Rights Agreement").
W I T N E S S E T H:
--------------------
WHEREAS, on March 26, 1999, the Board of Directors of the
Corporation authorized the issuance of, and declared a dividend payable in, one
right (a "Right") for each share of Common Stock, $0.01 par value per share, of
the Corporation outstanding as of the close of business on April 14, 1999 (the
"Record Date"), each such Right representing the right to purchase one
one-hundredth of a share of Participating Preferred Stock of the Corporation
(the "Preferred Stock") having the rights and preferences set forth in the
Certificate of Designations attached hereto as Exhibit C, authorized by the
Board of Directors on March 26, 1999, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Corporation further
authorized the issuance of one Right (subject to adjustment) with respect to
each share of Common Stock which may be issued between the Record Date and the
earlier to occur of the Distribution Date or the Expiration Date (as such terms
are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, is the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Voting Stock (as such term is hereinafter defined) of the
Corporation then outstanding; provided, that, an Acquiring Person shall not
include (i) an Exempt Person (as such term is hereinafter defined) or (ii) any
Person, together with all Affiliates and Associates of such Person, who or which
would be an Acquiring Person solely by reason of (A) being the Beneficial Owner
of shares of Voting Stock of the Corporation, the Beneficial Ownership of which
was acquired by such Person (or his or its predecessor through merger,
consolidation, amalgamation or other similar legal succession) pursuant to any
action or transaction or series of related actions or transactions approved by
the Board of Directors before such Person otherwise became an Acquiring Person
or (B) a reduction in the number of outstanding shares of Voting Stock of the
Corporation pursuant to a transaction or a series of related transactions
approved by the Board of Directors of the Corporation; provided, further, that
in the event such Person described in this clause (ii) does not become an
Acquiring Person by reason of subclause (A) or (B) of this clause (ii), such
Person nonetheless shall become an Acquiring Person in the event such Person
thereafter acquires Beneficial Ownership of an additional 1% or more of the
Voting Stock of the Corporation then outstanding, unless the acquisition of such
additional Voting Stock would not result in such Person becoming an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii). Notwithstanding
the foregoing, if the Board of Directors of the Corporation determines in good
faith that a Person who would otherwise be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a) has become such
inadvertently, and such Person divests as promptly as practicable (as determined
in good faith by the Board of Directors) a sufficient number of shares of Common
Stock so that such Person would no longer be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed an "Acquiring Person" for any purposes of this Rights
Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), as in effect on the date of this
Rights Agreement; provided, however, that for the purpose of this Agreement,
Hotel Capital II LLC shall not be deemed to be an Affiliate of Mr. Xxxx Xxxx (a
member of the Corporation's Board of Directors ("Xx. Xxxx")) or the Affiliates
and Associates of Xx. Xxxx so long as Hotel Capital II LLC does not acquire the
Beneficial Ownership of any Voting Stock after the date hereof (other than as a
result of the acquisition of Beneficial Ownership of Voting Stock by Xx. Xxxx or
any of the Affiliates or Associates of Xx. Xxxx).
(c) "Associate" of a Person (as such term is hereinafter
defined) shall mean (i) with respect to a corporation, any officer or director
thereof or of any Subsidiary (as such term is hereinafter defined) thereof, or
any Beneficial Owner (as such term is hereinafter defined) of 10% or more of any
class of equity security thereof, (ii) with respect to an association, joint
venture or other unincorporated organization, any officer or director thereof or
of a Subsidiary thereof or any Beneficial Owner of 10% or more ownership
interest therein, (iii) with respect to a partnership, any general partner
thereof or any limited partner thereof who is, directly or indirectly, the
Beneficial Owner of a 10% or greater ownership interest therein, (iv) with
respect to a limited liability company, any officer, director or manager thereof
or of a Subsidiary thereof or any member thereof who is, directly or indirectly,
the Beneficial Owner of a 10% or greater ownership interest therein, (v) with
respect to a business trust, any officer or trustee thereof or of any Subsidiary
thereof, (vi) with respect to any other trust or an estate, any trustee,
executor or similar fiduciary or any Person who has a 10% or greater interest as
a beneficiary in the income from or principal of such trust or estate, (vii)
with respect to a natural person, any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person, and (viii) any
Affiliate of such Person; provided, however, that for the purpose of this
Agreement, Hotel Capital II LLC shall not be deemed to be an Associate of Xx.
Xxxx or the Affiliates and Associates of Xx. Xxxx so long as Hotel Capital II
LLC does not acquire the Beneficial Ownership of any Voting Stock after the date
hereof (other than as a result of the acquisition of Beneficial Ownership of
Voting Stock by Xx. Xxxx or any of the Affiliates or Associates of Xx. Xxxx).
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities (and correlative terms shall have correlative
meanings):
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, for purposes of Section 13(d) of the Exchange Act
and Regulations 13D and 13G thereunder, in each case as in
effect on the date hereof; or
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time or the fulfillment of a condition or both)
pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of
conversion rights, exchange rights, other rights (other than
these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," securities tendered
pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange or (B) the right to vote, alone or in concert with
others, pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of,
or to "Beneficially Own," any securities if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under
the Exchange Act and (2) is not at that time reportable by
such Person on a Schedule 13D report under the Exchange Act
(or any comparable or successor report), other than by
reference to a proxy or consent solicitation being conducted
by such Person; or
(iii) which are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except as described
in the proviso in clause (B) of subparagraph (ii) of this
paragraph (d)) or disposing of any securities of the
Corporation; provided, however, that for purposes of
determining Beneficial Ownership of securities under this
Rights Agreement, officers and directors of the Corporation
solely by reason of their status as such shall not constitute
a group (notwithstanding that they may be Associates of one
another or may be deemed to constitute a group for purposes of
Section 13(d) of the Exchange Act) and shall not be deemed to
own shares owned by another officer or director of the
Corporation.
Notwithstanding anything in this paragraph (d) to the
contrary, a Person engaged in the business of underwriting securities shall not
be deemed the "Beneficial Owner" of, or to "Beneficially Own," any securities
acquired in good faith in a firm commitment underwriting, until the expiration
of forty days after the date of such acquisition.
Notwithstanding anything in this paragraph (d) to the
contrary, for the purpose of this Agreement, (i) Xx. Xxxx and the Affiliates and
Associates of Xx. Xxxx shall not be deemed to be the Beneficial Owner of any
Voting Stock owned by Hotel Capital II LLC on the date hereof and (ii) Hotel
Capital II LLC and the Affiliates and Associates of Hotel Capital II LLC who are
not also Affiliates and Associates of Xx. Xxxx or the Affiliates or Associates
of Xx. Xxxx (other than Hotel Capital II LLC) shall not be deemed to be the
Beneficial Owner of any Voting Stock Beneficially Owned by Xx. Xxxx and his
Affiliates and Associates, in each case, only for so long as Hotel Capital II
LLC and/or any of the Affiliates and Associates of Hotel Capital II LLC who are
not also the Affiliates or Associates of Xx. Xxxx or any of the Affiliates or
Associates of Xx. Xxxx does not become the Beneficial Owner of any additional
Voting Stock (other than as a result of the acquisition of the Beneficial
Ownership of Voting Stock by Xx. Xxxx or any of the Affiliates or Associates of
Xx. Xxxx).
(e) "Book-Entry" shall mean an uncertificated book-entry for
the Corporation's Common Stock.
(f) "Business Day" shall mean any day other than a Saturday,
Sunday, or day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00
p.m., New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
(h) "Common Stock," when used with reference to the
Corporation, shall mean the common stock, presently $0.01 par value, of the
Corporation. "Common Stock," when used with reference to any Person other than
the Corporation which shall be organized in corporate form, shall mean the
capital stock or other equity security with the greatest voting power of such
Person or, if such other Person is a subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person. "Common Stock,"
when used with reference to any Person other than the Corporation which shall
not be organized in corporate form, shall mean units of beneficial interest
which shall represent the right to participate in profits, losses, deductions
and credits of such Person and which shall be entitled to exercise the greatest
voting power of such Person.
(i) "Continuing Director" shall mean any member of the Board
of Directors, while such person is a member of the Board of Directors, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
a representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors prior to
the time that any Person became an Acquiring Person or (ii) subsequently became
a member of the Board of Directors, and whose nomination for election or
election to the Board of Directors was recommended or approved by at least a
majority of the Continuing Directors then on the Board of Directors or by the
sole remaining Continuing Director then on the Board of Directors.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
(k) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(l) "Exempt Person" shall mean (i) the Corporation, (ii) any
Subsidiary of the Corporation or (iii) any employee benefit plan or employee
stock plan of the Corporation or any Subsidiary of the Corporation, or any trust
or other entity organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan.
(m) "Exercise Price" shall have the meaning set forth in
Sections 4 and 7(b) hereof.
(n) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(o) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with Section 11(b)
hereof.
(p) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotation System or any successor thereto or other
comparable quotation system.
(q) "NYSE" shall mean the New York Stock Exchange .
(r) "Person" shall mean any individual, firm, corporation or
other entity.
(s) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(t) "Record Date" shall have the meaning set forth in the
first Recital.
(u) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(v) "Rights Certificate" shall have the meaning set forth in
Section 3(d) hereof.
(w) "Stock Acquisition Date" shall mean the first date on
which there shall be a public announcement by the Corporation or an Acquiring
Person that an Acquiring Person has become such (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) or such earlier date as a majority of the
Board of Directors shall become aware of the existence of an Acquiring Person.
(x) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having voting
power sufficient to elect a majority of the Board of Directors or other persons
performing similar functions are Beneficially Owned, directly or indirectly, by
such Person or by any corporation or other entity that is otherwise controlled
by such Person.
(y) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(z) "Trading Day" shall have the meaning set forth in Section
11(b) hereof.
(aa) "Transfer Tax" shall mean any tax or charge, including
any documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security, instrument or
right, including Rights, shares of Common Stock and shares of Preferred Stock.
(bb) "Voting Stock" shall mean (i) the Common Stock of the
Corporation and (ii) any other shares of capital stock of the Corporation
entitled to vote generally in the election of directors or entitled to vote
together with the Common Stock in respect of any merger, consolidation, sale of
all or substantially all of the Corporation's assets, liquidation, dissolution
or winding up. For purposes of this Rights Agreement, Voting Stock shall include
securities of the type referred to in clauses (i) and (ii) above that trade on a
"when issued" basis on a national securities exchange or on the NASDAQ. For
purposes of this Rights Agreement, a stated percentage of the Voting Stock shall
mean a number of shares of the Voting Stock as shall equal in voting power that
stated percentage of the total voting power of the then outstanding shares of
Voting Stock in the election of a majority of the Board of Directors or in
respect of any merger, consolidation, sale of all or substantially all of the
Corporation's assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of
Directors of the Corporation for purposes of applying the definitions contained
in this Section 1 shall be made by the Board of Directors in its good faith
judgment, and such determination shall be binding on the Rights Agent and the
holders of the Rights.
Section 2. Appointment of Rights Agent. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation and the holders of
the Rights in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Corporation may from time to time
appoint such Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) On the Record Date (or as soon as practicable thereafter),
the Corporation or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "Summary of Rights"),
by first class mail, postage prepaid, 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 Corporation.
(b) Until the Close of Business on the day which is the
earlier of (i) the tenth day after the Stock Acquisition Date or such earlier or
later date (not beyond the thirtieth day after the Stock Acquisition Date) as
the Board of Directors may from time to time fix by resolution adopted prior to
the Distribution Date that otherwise would have occurred or (ii) the tenth
business day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than an Exempt Person) of, or
the first public announcement of the intent of any Person (other than an Exempt
Person) to commence, a tender or exchange offer upon the successful consummation
of which such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of the then outstanding shares of Voting Stock
of the Corporation (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights shall be evidenced by the
Book-Entries representing, or certificates for, Common Stock registered in the
name of the holders of Common Stock (together with, in the case of Book-Entries
representing, or the certificates for, Common Stock outstanding as of the Record
Date, the Summary of Rights) and not by separate Book-Entries or Rights
Certificates and the record holders of the Common Stock represented by such
Book-Entries or certificates shall be the record holders of the Rights
represented thereby and (y) each Right shall be transferable only simultaneously
and together with the transfer of a share of Common Stock (subject to adjustment
as hereinafter provided). Until the Distribution Date (or, if earlier, the
Expiration Date), transfer on the Corporation's Direct Registration System of
any Common Stock represented by a Book-Entry or the surrender for transfer of
any certificate for Common Stock shall constitute the surrender for transfer of
the Right or Rights associated with the Common Stock evidenced thereby, whether
or not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become outstanding after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date and, in certain circumstances
provided in Section 22 hereof, may be issued in respect of shares of Common
Stock that become outstanding after the Distribution Date. Certificates for
Common Stock (including, without limitation, certificates issued upon original
issuance, dispensation from the Corporation's treasury or transfer or exchange
of Common Stock) after the Record Date but prior to the earliest of the
Distribution Date or the Expiration Date (or, in certain circumstances as
provided in Section 22 hereof, after the Distribution Date) shall have
impressed, printed, written or stamped thereon or otherwise affixed thereto the
following legend:
This certificate also evidences and entitles the
holder hereof to the same number of Rights (subject to adjustment) as
the number of shares of Common Stock represented by this certificate,
such Rights being on the terms provided under the Rights Agreement
between Lodgian, Inc. (the "Corporation") and First Union National Bank
(the "Rights Agent"), dated as of April 14, 1999, as it may be amended
from time to time (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights shall
be evidenced by separate certificates and shall no longer be evidenced
by this certificate. The Corporation shall mail to the registered
holder of this certificate a copy of the Rights Agreement without
charge within five days after receipt of a written request therefor.
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS
OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL
AND VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
(d) As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will countersign, and the
Corporation will send or cause to be sent (and the Rights Agent will, if
requested, send), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Corporation, at the address of such holder shown on such
records, a certificate in the form provided by Section 4 hereof (a "Rights
Certificate"), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by such Rights Certificates and may be
transferred by the transfer of the Rights Certificate as permitted hereby,
separately and apart from any transfer of one or more shares of Common Stock.
(e) In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Corporation (i) shall, with respect to shares of Common
Stock so issued or sold (x) pursuant to the exercise of stock options or under
any employee plan or arrangement or (y) upon the exercise, conversion or
exchange of other securities issued by the Corporation prior to the Distribution
Date and (ii) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Corporation, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided that no such Rights Certificate shall be issued if, and to the extent
that, (i) the Corporation shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Corporation or the Person to whom such Rights Certificate would be issued or
(ii) appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase shares, certificate and assignment to be printed on the reverse
thereof), when, as and if issued, shall be substantially in the form set forth
in Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Common Stock or the
Rights may from time to time be listed or as the Corporation may deem
appropriate to conform to usage or otherwise and as are not inconsistent with
the provisions of this Rights Agreement. Subject to the provisions of Section 22
hereof, Rights Certificates evidencing Rights whenever issued, (i) shall be
dated as of the date of issuance of the Rights they represent and (ii) subject
to adjustment from time to time as provided herein, on their face shall entitle
the holders thereof to purchase such number of shares (including fractional
shares which are integral multiples of one one-hundredth (1/100) of a share) of
Preferred Stock as shall be set forth therein at the price payable upon exercise
of a Right provided by Section 7(b) hereof as the same may from time to time be
adjusted as provided herein (the "Exercise Price").
(b) Notwithstanding any other provision of this Rights
Agreement, any Rights Certificate that represents Rights Beneficially Owned by
an Acquiring Person or any Affiliate or Associate thereof or any other Person
whose Rights shall become void pursuant to Section 7(e) shall have impressed on,
printed on, written on or otherwise affixed to it (if the Corporation or the
Rights Agent has knowledge that such Person is an Acquiring Person or an
Associate or Affiliate or a nominee of any of the foregoing) the following
legend:
The Beneficial Owner of the Rights represented by
this Rights Certificate is an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person. Accordingly, this Rights Certificate
and the Rights represented hereby shall become void in the
circumstances specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Corporation by its Chairman of the Board, any President or any Senior or
Executive Vice President, either manually or by facsimile signature, and have
affixed thereto the Corporation's seal or a facsimile thereof which shall be
attested to by the Secretary or an Assistant Secretary of the Corporation,
either manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or by facsimile signature and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Corporation who shall have signed any Rights Certificate shall cease to
be such officer of the Corporation before countersignature by the Rights Agent
and issuance and delivery of the certificate by the Corporation, such Rights
Certificate, nevertheless, may be countersigned by the Rights Agent and issued
and delivered with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Corporation.
Any Rights Certificate may be signed on behalf of the Corporation by any person
who, on the date of the execution of such Rights Certificate, shall be a proper
officer of the Corporation to sign such Rights Certificate, although at the date
of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or one or more offices
designated as the appropriate place for the surrender of Rights Certificates
upon exercise or transfer, and in such other locations as may be required by
law, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates and any Rights Certificates that have a legend printed thereon
pursuant to Section 4(b).
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f) and 14(b)
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the Expiration Date, any Rights
Certificate, may be (i) transferred or (ii) split up, combined or exchanged for
one or more other Rights Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock as the Rights Certificate or
Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer any Rights Certificate shall surrender
the Rights Certificate at the office of the Rights Agent designated for the
surrender of Rights Certificates with the form of certificate and assignment on
the reverse side thereof duly endorsed (or, enclosed with such Rights
Certificate, a written instrument of transfer in a form satisfactory to the
Corporation and the Rights Agent), duly executed by the registered holder
thereof or his attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or exchange any
Rights Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate to be split up, combined or
exchanged at the office of the Rights Agent. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Corporation may
require payment of a sum sufficient to cover any Transfer Tax that may be
imposed in connection with any transfer, split up, combination or exchange of
any Rights Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14(b)
hereof, upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them and, if requested by the
Corporation, reimbursement to the Corporation and the Rights Agent of all
reasonable expenses incidental thereto, or upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Corporation shall
issue and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights.
(a) The Rights shall not be exercisable until, and shall
become exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e) and 23(a) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in [ ], together with payment of the Exercise Price for each
Right exercised, subject to adjustment as hereinafter provided, at or prior to
the Close of Business on the earlier of (i) April 14, 2009 (or if the
Distribution Date shall have occurred before April 14, 2009, at the Close of
Business on the 90th day following the Distribution Date) or (ii) the date on
which the Rights are redeemed as provided in Section 23 hereof (such earlier
date being herein referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $25.00 for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United States
of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a
Rights Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Corporation or the Rights Agent
of the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Rights
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any registrar or transfer agent (as may
be appropriate) of the Preferred Stock of the Corporation one or more
certificates representing the number of shares of Preferred Stock to be so
purchased, and the Corporation hereby authorizes and directs such registrar or
transfer agent (as may be appropriate) to comply with all such requests, (ii) as
provided in Section 14(b), at the election of the Corporation, cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock, (iii) if
the election provided for in the immediately preceding clause (ii) has not been
made, requisition from the Corporation the amount of cash to be paid in lieu of
the issuance of fractional shares in accordance with Section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Rights Certificate; provided, however, that in the case of a purchase of
securities, other than Preferred Stock, pursuant to Section 13 hereof, the
Rights Agent shall promptly take the appropriate actions corresponding in such
case to that referred to in the foregoing clauses (i) through (v) of this
Section 7(c). Notwithstanding the foregoing provisions of this Section 7(c), the
Corporation may suspend the issuance of shares of Preferred Stock upon exercise
of a Right for a reasonable period, not in excess of 120 days, during which the
Corporation seeks to register under the Securities Act of 1933, as amended (the
"Act"), and any applicable securities law of any other jurisdiction, the shares
of Preferred Stock to be issued pursuant to the Rights; provided, however, that
nothing contained in this Section 7(c) shall relieve the Corporation of its
obligations under Section 9(c) hereof.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or his assignee, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to
the contrary, from and after the time (the "Invalidation Time") when any Person
first becomes an Acquiring Person, any Rights that are Beneficially Owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the Invalidation Time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Invalidation Time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of the Persons referred to in either clause (y) or (z)
above, shall be void without any further action and any holder of such Rights
shall thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Corporation shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of a Rights Certificate or any other
Person as a result of the Corporation's failure to make any determination with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. No Rights Certificate shall be issued pursuant to Section 3 hereof
that represents Rights Beneficially Owned by an Acquiring Person or any other
Person whose Rights would be void pursuant to the provisions of this Section
7(e) or any Associate, Affiliate or nominee thereof; no Rights Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person or
any other Person whose Rights would be void pursuant to the provisions of this
Section 7(e) or any Associate, Affiliate or nominee thereof; and any Rights
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the provisions of this Section 7(e) shall
be canceled.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Corporation shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following 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 or a Person referred to in clause (y) or (z) of Section 7(e)
and such other information as the Corporation shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Corporation or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Rights Agreement.
The Corporation shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall cancel and retire, any Rights Certificate
purchased or acquired by the Corporation otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to the
Corporation, or shall, at the written request of the Corporation, destroy such
canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Corporation.
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Corporation covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock held
in its treasury, such number of shares of Preferred Stock as will from time to
time be sufficient to permit the exercise in full of all outstanding Rights. The
Corporation shall take such action as may be required for it to comply with the
foregoing sentence of this Section 9(a).
(b) The Corporation shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares of Preferred
Stock issued or reserved for issuance in accordance with this Rights Agreement
to be listed, upon official notice of issuance, upon the principal national
securities exchange, if any, upon which the Common Stock is listed or, if the
principal market for the Common Stock is not on any national securities
exchange, to be eligible for quotation on NASDAQ or any successor thereto or
other comparable quotation system.
(c) The Corporation covenants and agrees that it will take all
such actions as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates, for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Corporation shall use its best efforts to (i) file, as
soon as practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock 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 Preferred Stock, or (B) the Expiration
Date. The Corporation may temporarily suspend, for a period of time not to
exceed 120 days, the issuance of shares of Preferred Stock upon exercise of a
Right in order to prepare and file a registration statement under the Act and
permit it to become effective. The Corporation will also take such action as may
be appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Rights Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Act (if required) shall have been declared
effective.
(e) The Corporation covenants and agrees that it will pay when
due and payable any and all federal and state Transfer Taxes which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock issued or delivered upon the exercise of Rights.
The Corporation shall not, however, be required to pay any Transfer Tax which
may be payable in respect of any transfer or delivery of a Rights Certificate to
a Person other than, or the issuance or delivery of certificates for Preferred
Stock upon exercise of Rights in a name other than that of, the registered
holder of the Rights Certificate, and the Corporation shall not be required to
or issue or deliver a Rights Certificate or certificate for Preferred Stock to a
Person other than such registered holder until any such Transfer Tax shall have
been paid (any such Transfer Tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Corporation's satisfaction that no such Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Stock represented thereby on, and such certificate shall be
dated as of, the date upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Exercise Price (and any applicable
Transfer Taxes) was made; provided, however, that, if the date of such surrender
and payment is a date upon which the Preferred Stock transfer books of the
Corporation are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated as of, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Corporation are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate, as such, shall not be entitled to any rights of
a stockholder of the Corporation with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Corporation, except as provided herein.
Section 11. Adjustment of Exercise Price or Number of Shares.
The Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a 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 Corporation shall at any time after
the date of this Rights Agreement (A) declare or pay any
dividend on Common Stock payable in shares of Common Stock,
(B) subdivide or split the outstanding shares of Common Stock
into a greater number of shares or (C) combine or consolidate
the outstanding shares of Common Stock into a smaller number
of shares or effect a reverse split of the outstanding shares
of Common Stock, then and in each such event the number of
shares of Preferred Stock issuable upon the exercise of a
Right after the record date for such event (if one shall have
been established or, if not, after the date of such event)
shall be the number of shares of Preferred Stock issuable
immediately prior to such event multiplied by a fraction the
numerator of which is the number of Rights outstanding
immediately prior to such event and the denominator of which
is the number of Rights outstanding immediately after such
event and the Exercise Price after such event shall be the
Exercise Price in effect immediately prior to such event
multiplied by such fraction. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 27 of this Rights Agreement,
in the event that any Person (other than an Exempt Person),
alone or together with its Affiliates and Associates, shall
become an Acquiring Person, then, subject to the last sentence
of Section 23(a) and except as otherwise provided in this
Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to
receive upon exercise of such Right in accordance with the
terms of this Rights Agreement and payment of the Exercise
Price, the greater of (1) the number of one one-hundredths
(1/100) of a share of Preferred Stock for which such Right was
exercisable immediately prior to the first occurrence of the
event described in this Section 11(a)(ii) or (2) such number
of one one-hundredths (1/100) of a share of Preferred Stock as
shall equal the result obtained by dividing the Exercise Price
by 50% of the Fair Market Value of one one-hundredth (1/100)
of a share of Preferred Stock (determined pursuant to Section
11(b) hereof) on the date of such first occurrence; provided,
however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In the event that the Corporation does not have
available sufficient authorized but unissued Preferred Stock
to permit the adjustments required pursuant to the foregoing
subparagraph (i) or the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the
Corporation shall take all such actions as may be necessary to
authorize and reserve for issuance such number of additional
shares of Preferred Stock as may from time to time be required
to be issued upon the exercise in full of all Rights from time
to time outstanding and, if necessary, shall use its best
efforts to obtain stockholder approval thereof. In lieu of
issuing shares of Preferred Stock in accordance with the
foregoing subparagraphs (i) and (ii), the Corporation may, if
the Board of Directors determines that such action is
necessary or appropriate and not contrary to the interests of
holders of Rights, elect to issue or pay, upon the exercise of
the Rights, (A) cash, (B) other equity securities of the
Corporation, (C) debt securities of the Corporation, (D) other
assets or (E) any combination of the foregoing, in each case,
having an aggregate Fair Market Value equal to the Fair Market
Value of the shares of Preferred Stock which otherwise would
have been issuable pursuant to Section 11(a)(ii), which Fair
Market Value shall be determined by an investment banking firm
selected by the Board of Directors. For purposes of the
preceding sentence, the Fair Market Value of the Preferred
Stock shall be as determined pursuant to Section 11(b).
Subject to Section 23 hereof, any such election by the Board
of Directors of the Corporation must be made and publicly
announced within thirty (30) days after the date on which the
event described in Section 11(a)(ii) occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock or any other stock or any
Right or other security or any other property on any date shall be determined as
provided in this Section 11(b). In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to be the average of
the daily closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Fair Market Value per share of any share of Common Stock is determined
during a period which includes any date that is within 30 Trading Days after (i)
the ex-dividend date for a dividend or distribution on such stock payable in
shares of Common Stock or securities convertible into shares of Common Stock, or
(ii) the effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in each such
case, the Fair Market Value shall be appropriately adjusted by the Board of
Directors of the Corporation to take into account ex-dividend or post-effective
date trading. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way (in either case, as reported in
the applicable transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange), or, if the securities are
not listed or admitted to trading on the New York Stock Exchange, as reported in
the applicable transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if 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 no bids for such security are
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 such security
selected by the Board of Directors of the Corporation. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. If a security is not publicly held
or not so listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of securities
selected in good faith by the Board of Directors of the Corporation, or, if no
such investment banking firm is, in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the Board of
Directors of the Corporation; provided, however, that for purposes of making the
adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a
share of Preferred Stock shall not be less than 100% of the product of the Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock (as defined
in the provisions of the Certificate of Designations relating to the Preferred
Stock) and shall not exceed 105% of the product of the then Fair Market Value of
a share of Common Stock multiplied by the higher of the then Dividend Multiple
or Vote Multiple applicable to the Preferred Stock. In the case of property
other than securities, the "Fair Market Value" thereof shall be determined in
good faith by the Board of Directors of the Corporation based upon such
appraisals or valuation reports of such independent experts as the Board of
Directors of the Corporation shall in good faith determine to be appropriate in
accordance with good business practices and the interests of the holders of
Rights. Any such determination of Fair Market Value shall be described in a
statement filed with the Rights Agent and shall be binding upon the Rights
Agent.
(c) All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-hundredth of a share, as the case may
be.
(d) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of shares to be issued
upon exercise of the Rights as in the initial Rights Certificates issued
hereunder but, nevertheless, shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon exercise of
the Rights below the then par value, if any, of the shares of Preferred Stock,
the Corporation shall use its best efforts to take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and non-assessable shares of such
Preferred Stock at such adjusted purchase price per share.
(f) Anything in this Section 11 to the contrary
notwithstanding, in the event of any reclassification of stock of the
Corporation or any recapitalization, reorganization or partial liquidation of
the Corporation or similar transaction, the Corporation shall be entitled to
make such further adjustments in the number of shares of Preferred Stock which
may be acquired upon exercise of the Rights, and such adjustments in the
Exercise Price therefor, in addition to those adjustments expressly required by
the other paragraphs of this Section 11, as the Board of Directors of the
Corporation shall determine to be necessary or appropriate in order for the
holders of the Rights in such event to be treated equitably and in accordance
with the purpose and intent of this Rights Agreement or in order that any such
event shall not, but for such adjustment, in the opinion of counsel to the
Corporation, result in the stockholders of the Corporation being subject to any
United States federal income tax liability by reason thereof.
(g) In the event the Corporation shall at any time after the
Record Date make any distribution on the shares of Common Stock of the
Corporation, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Corporation or
otherwise, in cash or any debt security, debt instrument, real or personal
property or any other property (other than any shares of Common Stock or other
capital stock of the Corporation and other than any right or warrant to acquire
any such shares, including any debt security convertible into or exchangeable
for any such share, at less than the Fair Market Value of such shares) and the
amount of such cash dividend or the Fair Market Value of such debt security,
debt instrument or property exceeds 150% of the aggregate amount of the cash
dividends declared or paid on the Common Stock of the Corporation in the
15-month period immediately preceding such distribution, then and in each such
event, unless such distribution is part of or is made in connection with a
transaction to which Section 11(a)(ii) or Section 13 hereof applies, the
Exercise Price shall be reduced by an amount equal to the cash or the Fair
Market Value of such distribution, as the case may be, per share of Common Stock
of the Corporation. For purposes hereof, the Fair Market Value of any property
distributed to the holders of shares of Common Stock of the Corporation shall be
the Fair Market Value of such property as determined by an independent
investment banking firm experienced in the valuation of securities or the other
property so distributed, as the case may be, selected in good faith by the Board
of Directors of the Corporation, or, if no such investment banking firm is in
the good faith judgment of the Board of Directors available to make such
determination, in good faith by the Board of Directors of the Corporation, whose
determination shall be final and binding on the Corporation, the Rights Agent
and the holders of Rights.
Section 12. Certification of Adjusted Exercise Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11, 13 or
23(c), the Corporation shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Corporation to make
such certification or give such notice shall not affect the validity of or the
force or effect of the requirement for such adjustment. Any adjustment to be
made pursuant to Section 11, 13 or 23(c) of this Rights Agreement shall be
effective as of the date of the event giving rise to such adjustment. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, at any time after the time that any
Person becomes an Acquiring Person, (x) the Corporation shall, directly or
indirectly, consolidate with, or merge with and into, any other Person or
Persons (other than an Exempt Person or Persons) and the Corporation shall not
be the surviving or continuing corporation of such consolidation or merger, or
(y) any Person or Persons (other than an Exempt Person) shall, directly or
indirectly, consolidate with, or merge with and into, the Corporation, and the
Corporation shall be 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 shall be changed into or
exchanged for stock or other securities of any other Person (other than an
Exempt Person) or of the Corporation or cash or any other property, or (z) the
Corporation or one or more of its Subsidiaries shall, directly or indirectly,
sell or otherwise transfer to any other Person or any Affiliate or Associate of
such Person, in one or more transactions, or the Corporation or one or more of
its Subsidiaries shall sell or otherwise transfer to any Persons in one or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole), then, on the first occurrence of any such event, proper
provision shall be made so that (i) each holder of record of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof and payment of the Exercise Price in accordance with
the terms of this Rights Agreement, such number of shares of validly issued,
fully paid, non-assessable and freely tradable Common Stock of the Principal
Party (as defined herein), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall equal the result obtained by
dividing the Exercise Price by 50% of the Fair Market Value of the Common Stock
of the Principal Party on the date of the consummation of such consolidation,
merger, sale or transfer; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Corporation pursuant to this
Rights Agreement; (iii) the term "Corporation" for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such Principal Party; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in accordance
with the provisions of Section 9 hereof applicable to the reservation of
Preferred Stock) in connection with such consummation as may be necessary to
insure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; provided, however, that, upon the
subsequent occurrence of any merger, consolidation, sale of all or substantially
all of the assets, recapitalization, reclassification of shares, reorganization
or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Exercise Price, such cash, shares, rights, warrants and
other property which such holder would have been entitled to receive had it, at
the time of such transaction, owned the shares of Common Stock of the Principal
Party purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and
other property; and (v) the provisions of Section 11(a)(ii) hereof shall be of
no effect following the occurrence of any event described in clause (x), (y) or
(z) above of this Section 13(a).
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x)
or (y) of the first sentence of Section 13(a) hereof: (A) the
Person that is the issuer of the securities into which shares
of Common Stock of the Corporation are changed or otherwise
exchanged or converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of the Common
Stock of which has the greatest market value or (B) if no
securities are so issued, (x) the Person that is the other
party to the merger or consolidation and that survives such
merger or consolidation, or, if there is more than one such
Person, the Person the Common Stock of which has the greatest
market value or (y) if the Person that is the other party to
the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or
consolidation (including the Corporation if it survives); and
(ii) in the case of any transaction described in (z)
of the first sentence in 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, or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as is the
issuer of Common Stock having the greatest market value of
shares outstanding; provided, however, that in any such case,
if the Common Stock of such Person is not at such time and has
not been continuously over the preceding 12-month period
registered under Section 12 of the 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, the
term "Principal Party" shall refer to such other Person, or if
such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of all of which are and
have been so registered, the term "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common
Stock having the greatest market value of shares outstanding.
(c) The Corporation shall not consummate any consolidation,
merger or sale or transfer of assets or earning power referred to in Section
13(a) unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock that have not been issued or reserved for issuance to
permit exercise in full of all Rights in accordance with this Section 13 and
unless prior thereto the Corporation and the Principal Party involved therein
shall have executed and delivered to the Rights Agent an agreement confirming
that the Principal Party shall, upon consummation of such consolidation, merger
or sale or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, 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, use its best efforts to cause such registration
statement to become effective as soon as practicable after
such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the
date of expiration of the Rights, and similarly comply with
applicable state securities laws;
(ii) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon
exercise of the Rights on a national securities exchange or to
meet the eligibility requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in
all respects with the requirements for registration on Form 10
(or any successor form) under the Exchange Act. In the event
that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have
not theretofore been exercised shall, subject to the
provisions of Section 7(e) hereof, thereafter be exercisable
in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Restated Certificate of Incorporation or
Restated By-Laws or other instrument governing its corporate affairs, which
provision would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then Fair Market Value per share (determined pursuant to
Section 11(b) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Fair Market Value (other
than to holders of Rights pursuant to this Section 13) or (ii) providing for any
special tax or similar payment in connection with the issuance to any holder of
a Right of Common Stock of such Principal Party pursuant to the provisions of
this Section 13, then, in such event, the Corporation shall not consummate any
such transaction unless prior thereto the Corporation and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have been
canceled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue fractions
of Rights or to distribute Rights Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-hundredth of a share of Preferred
Stock), unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) hereof. If the Corporation shall determine not to issue such
fractional Rights, then, in lieu of such fractional Rights, there shall be paid
to the holders of record 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 Fair Market Value of a whole Right.
(b) The Corporation shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral multiples
of one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-hundredth of a share). In lieu of issuing fractions of
shares of Preferred Stock, the Corporation may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an appropriate
agreement between the Corporation and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all of the rights, privileges and preferences to which they would be
entitled as owners of the Preferred Stock. With respect to fractional shares
that are not integral multiples of one-hundredth of a share, if the Corporation
does not issue such fractional shares or depositary receipts in lieu thereof,
there shall be paid to the holders of record of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect
of this Rights Agreement, except the rights of action given to the Rights Agent
in Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the holders of record
of the Common Stock); and any holder of record 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 his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and, in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement.
Section 16. Agreement of Right Holders. Each holder of a
Right, by accepting the same, consents and agrees with the Corporation and the
Rights Agent and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights shall be
evidenced by the Book-Entries representing, or the certificates for, Common
Stock registered in the name of the holders of Common Stock (together, as
applicable, with the Summary of Rights), which Book-Entries representing, or the
certificates for, Common Stock shall also constitute certificates for Rights,
and not by separate Rights Certificates, and each Right shall be transferable
only simultaneously and together with the transfer of shares 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 office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) The Corporation and the Rights Agent may deem and treat
the person in whose name the Rights Certificate (or, prior to the Distribution
Date, the associated Book-Entry representing, or certificate for, Common Stock)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Corporation or the Rights Agent) for all purposes whatsoever, and
neither the Corporation nor the Rights Agent shall be affected by any notice to
the contrary.
(d) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Corporation nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or other Person as
a result of its inability to perform any of its obligations under this Rights
Agreement by reason of any preliminary or 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 Corporation must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible; and
(e) Rights Beneficially Owned by certain persons will under
certain circumstances set forth in this Rights Agreement become null and void
pursuant to Section 7(e) hereof; and
(f) This Rights Agreement may be supplemented or amended from
time to time pursuant to Section 26 hereof.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Preferred
Stock or any other securities which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Corporation or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof (except as provided in Section 7(f) hereof),
or to give or withhold consent to any corporate action (except as provided in
Section 7(f) hereof), or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Corporation agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent, its directors, officers,
employees, and agents for, and to hold each of them harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent or such other indemnified party, for
anything done or failed to be done by the Rights Agent or such other indemnified
party in connection with the acceptance and administration of this Rights
Agreement or the performance of the Rights Agent's duties hereunder, including
the costs and expenses of defending against any claim of liability relating to
the Rights or this Rights Agreement.
(b) The Rights Agent shall be protected against, and shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it in connection with its administration of this Rights Agreement or the
performance of the Rights Agent's duties hereunderin reliance upon any Rights
Certificate or certificate for Preferred Stock or for other securities of the
Corporation, 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.
(c) The indemnity provided in this Section 18 shall survive
the expiration of the Rights and the termination of this Agreement.
Section 19. Merger or Consolidation of, or Change in Name of,
the Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; in case
at that time any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Rights
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Corporation and the holders
of Rights Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Corporation), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
advice or opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, any President or any Senior or Executive Vice President and by the
Treasurer or the Secretary of the Corporation and delivered to the Rights Agent.
Any such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Corporation and any other Person only for its own gross negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Rights Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Corporation of any
covenant or condition contained in this Rights Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate describing any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this Rights Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Corporation 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 the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, any President or any Senior or Executive Vice
President or the Secretary or the Treasurer of the Corporation, and to apply to
such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while awaiting instructions. Any application by the Rights Agent for
written instructions from the Corporation may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Corporation actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become financially interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not the Rights Agent under this Rights Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Corporation or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided the Rights Agent was not
grossly negligent in the selection and continued employment thereof.
(j) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
(k) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits).
(l) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against risk or liability is not reasonably
assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days notice in writing mailed to the Corporation and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Corporation may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Corporation shall appoint a successor
to the Rights Agent. Notwithstanding the foregoing provisions of this Section
21, in no event shall the resignation or removal of a Rights Agent be effective
until a successor Rights Agent shall have been appointed and have accepted such
appointment. If the Corporation shall fail to make such appointment within a
period of 30 days after 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 shall, with such notice, submit his
Rights Certificate for inspection by the Corporation), then the incumbent Rights
Agent or the holder of record of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Corporation or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of any state thereof, in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination in the conduct of its corporate trust or
stock transfer business by federal or state authorities and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (b) an Affiliate controlled by a corporation described in
clause (a) of this sentence. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Corporation shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be. Notwithstanding the foregoing provisions, in the event of resignation,
removal or incapacity of the Rights Agent, the Corporation shall have the
authority to act as the Rights Agent until a successor Rights Agent shall have
assumed the duties of the Rights Agent hereunder.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Exercise Price per share
and the number or kind or class of shares of stock or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Rights Agreement.
Section 23. Redemption.
(a) The Corporation may, at its option, but only by the vote
of a majority of the Board of Directors, redeem all but not less than all of the
then outstanding Rights, at any time prior to the Close of Business on the
earlier of (i) the tenth day following the Stock Acquisition Date (subject to
extension by the Corporation as provided in Section 26 hereof) or (ii) the
Expiration Date, at a redemption price of $0.005 per Right, subject to
adjustments as provided in subsection (c) below (the "Redemption Price").
Notwithstanding anything contained in this Rights Agreement to the contrary, the
Rights shall not be exercisable pursuant to Section 11(a)(ii) prior to the
expiration of the Corporation's right of redemption hereunder.
(b) Without any further action and without any notice, the
right to exercise the Rights will terminate effective at the time so designated
by action of the Board of Directors ordering the redemption of the Rights and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the effective time of the action of the
Board of Directors ordering the redemption of the Rights, the Corporation shall
give notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each notice of redemption will state the
method by which the payment of the Redemption Price will be made. At the option
of the Board of Directors, the Redemption Price may be paid in cash to each
Rights holder or by the issuance of shares (and, at the Corporation's election
pursuant to Section 14(b) hereof, cash or depositary receipts in lieu of
fractions of shares other than fractions which are integral multiples of one
one-hundredth (1/100) of a share) of Preferred Stock or Common Stock having a
Fair Market Value equal to such cash payment.
(c) In the event the Corporation shall at any time after the
date of this Rights Agreement (A) pay any dividend on Common Stock in shares of
Common Stock, (B) subdivide or split the outstanding shares of Common Stock into
a greater number of shares or (C) combine or consolidate the outstanding shares
of Common Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, or (D) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, and in each such
event, the Redemption Price shall be appropriately adjusted to reflect the
foregoing.
Section 24. Notice of Proposed Actions.
(a) In case the Corporation, after the Distribution Date,
shall propose (i) to effect any of the transactions referred to in Section
11(a)(i) or 11(g) or (ii) to offer to the holders of record of its Common Stock
options, warrants, or other rights to subscribe for or to purchase shares of
Common Stock (including any security convertible into or exchangeable for Common
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to
effect any reclassification of its Preferred Stock or Common Stock or any
recapitalization or reorganization of the Corporation, or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Corporation and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Corporation, then, in each such case, the Corporation shall
give to each holder of record of a Rights Certificate, in accordance with
Section 25, notice of such proposed action, which shall specify the record date
for the purposes of such transaction referred to in Section 11(a)(i) or such
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution, or winding up is to take place and the record
date for determining participation therein by the holders of record of Common
Stock or Preferred Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of record of the
Preferred Stock for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of record of Common Stock or
Preferred Stock, whichever shall be the earlier. The failure to give notice
required by this Section 24 or any defect therein shall not affect the legality
or validity of the action taken by the Corporation or the vote upon any such
action.
(b) In case any of the transactions referred to in Section
11(a)(i), 11(g) or 13 of this Rights Agreement are proposed, then, in any such
case, the Corporation shall give to each holder of Rights, in accordance with
Section 25 hereof, notice of the proposal of such transaction at least 10 days
prior to consummating such transaction, which notice shall specify the proposed
event and the consequences of the event to holders of Rights under Section
11(a)(i), 11(g) or 13 hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each holder of Rights.
Section 25. Notices. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder of
record of any Rights Certificate or Right to or on the Corporation shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Lodgian, Inc.
0000 Xxxxxxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Corporation or by the holder of
record of any Rights Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Corporation) as
follows:
First Union National Bank
0000 Xxxx X.X. Xxxxxx Xxxxxxxxx, 0X0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Shareholder Services Group
Notices or demands authorized by this Rights Agreement to be given or made by
the Corporation or the Rights Agent to the holder of record of any Rights
Certificate or Right shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Corporation.
Section 26. Supplements and Amendments. For as long as the
Rights are then redeemable, the Corporation may in its sole and absolute
discretion, and the Rights Agent shall if the Corporation so directs, supplement
or amend any provision of this Rights Agreement without the approval of any
holders of the Rights. At any time when the Rights are not then redeemable, the
Corporation may, and the Rights Agent shall if the Corporation so directs,
supplement or amend this Rights Agreement without the approval of any holders of
Rights Certificates (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein or (iii) to change or supplement the provisions hereunder in
any manner which the Corporation may deem necessary or desirable, provided that
no such supplement or amendment pursuant to this clause (iii) shall materially
adversely affect the interest of the holders of Rights Certificates. Upon the
delivery of a certificate from an appropriate officer of the Corporation which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Rights Agreement to the contrary, (a)
no supplement or amendment that changes the rights or duties of the Rights Agent
under this Agreement shall be effective without the execution of such supplement
on amendment by the Rights Agent, (b) no supplement or amendment shall be made
which changes the Redemption Price or the Expiration Date and (c) supplements or
amendments may be made after the time that any Person becomes an Acquiring
Person only if at the time of the action of the Board of Directors approving
such supplement or amendment there are then in office not less than two
Continuing Directors and such supplement or amendment is approved by a majority
of the Continuing Directors then in office.
Section 27. Exchange.
(a) The Board of Directors of the Corporation may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
for shares of Common Stock at an exchange ratio of one share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Voting Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Corporation ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 27 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Corporation shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Corporation promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 27, the
Corporation shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights.
(d) The Corporation shall not be required to issue fractions
of shares of Common Stock or to distribute certificates which evidence
fractional shares. In lieu of such fractional shares, the Corporation shall pay
to the registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock for the Trading Day immediately prior to the date of exchange pursuant to
this Section 27.
Section 28. Successors. All of the covenants and provisions of
this Rights Agreement by or for the benefit of the Corporation or the Rights
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person or corporation other
than the Corporation, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Corporation, the Rights Agent and the holders
of record of the Rights Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
Section 30. Delaware Contract. This Rights Agreement and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 31. Counterparts. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 33. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 34. Determinations and Actions by the Board Of
Directors, etc.
(a) The Board of Directors of the Corporation shall have the
exclusive power and authority to administer this Rights Agreement and to
exercise all rights and powers specifically granted to the Board of Directors or
to the Corporation, or as may be necessary or advisable in the administration of
this Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including a determination to redeem or not redeem the Rights
or to amend the Rights Agreement and a determination of whether there is an
Acquiring Person). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith shall (x) be final, conclusive and binding on the Corporation, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.
(b) Nothing contained in this Rights Agreement shall be deemed
to be a derogation or abrogation of the obligation of the Board of Directors to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to recommend that holders of
Common Shares reject any tender offer, or to take any other action (including,
without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer that the Board of Directors believes
is necessary or appropriate in the exercise of such fiduciary duty.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
LODGIAN, INC.
By
-------------------------
Name: Xxxxxx X. Xxxx
Title: President and CEO
FIRST UNION NATIONAL BANK
By
-------------------------
Name:
Title:
EXHIBIT A
TO RIGHTS AGREEMENT
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED
TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND
MAY NOT BE TRANSFERRED TO ANY PERSON.
LODGIAN, INC.
SUMMARY OF RIGHTS TO PURCHASE
PARTICIPATING PREFERRED STOCK
On March 26, 1999, the Board of Directors of Lodgian, Inc.
(the "Corporation") declared a dividend distribution of one preferred stock
purchase right (a "Right") for each outstanding share of Common Stock, $0.01 par
value per share (the "Common Stock"), of the Corporation held by stockholders of
record on April 14, 1999 (the "Record Date"). Each Right entitles the registered
holder to purchase from the Corporation one one-hundredth (1/100) of a share of
preferred stock of the Corporation, designated as Participating Preferred Stock
(the "Preferred Stock") at a price of $25.00 per one one-hundredth (1/100) of a
share (the "Exercise Price"). The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement"), dated as of April 14,
1999, between the Corporation and First Union National Bank, as Rights Agent
(the "Rights Agent").
As discussed below, initially the Rights will not be
exercisable, certificates will not be sent to stockholders and the Rights will
automatically trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following the first date (the
"Stock Acquisition Date") on which there is a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person"), with
certain exceptions set forth below, has acquired beneficial ownership of 15% or
more of the outstanding voting stock of the Corporation or such earlier or later
date (not beyond the thirtieth day after the Stock Acquisition Date) as the
Board of Directors may determine or (ii) the tenth business day (or such later
date as may be determined by the Board of Directors prior to such time as any
person or group of affiliated or associated persons becomes an Acquiring Person)
after the date of the commencement or announcement of a person's or group's
intention to commence a tender or exchange offer the consummation of which would
result in the ownership of 15% or more of the Corporation's outstanding voting
stock (even if no shares are actually purchased pursuant to such offer); prior
thereto, the Rights will not be exercisable, will not be represented by a
separate certificate, and will not be transferable apart from the Common Stock,
but will instead be evidenced, (i) with respect to any of the shares of Common
Stock held in uncertificated book-entry form (a "Book-Entry") outstanding as of
the Record Date, by such Book-Entry and (ii) with respect to the shares of
Common Stock evidenced by Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate, together with a copy of this Summary of
Rights. An Acquiring Person does not include (A) the Corporation, (B) any
subsidiary of the Corporation, (C) any employee benefit plan or employee stock
plan of the Corporation or of any subsidiary of the Corporation, or any trust or
other entity organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan or (D) any person or group whose
ownership of 15% or more of the shares of voting stock of the Corporation then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person or (ii) a reduction in the number of outstanding shares of
voting stock of the Corporation pursuant to a transaction or transactions
approved by the Board of Directors (provided that any person or group that does
not become an Acquiring Person by reason of clause (i) or (ii) above shall
become an Acquiring Person upon acquisition of an additional 1% or more of the
Corporation's voting stock then outstanding unless such acquisition of
additional voting stock will not result in such person or group becoming an
Acquiring Person by reason of such clause (i) or (ii). For purposes of the
foregoing, outstanding voting stock of the Corporation includes voting stock
that trades on a "when issued" basis on a national securities exchange or on the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ").
Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after April 14,
1999 will contain a legend incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
transfer on the Corporation's Direct Registration System of any Common Stock
represented by a Book-Entry or a certificate outstanding as of April 14, 1999,
and, in each case, with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such Book-Entry or certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate Rights Certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date.
Unless earlier redeemed by the Corporation as described below, the Rights will
expire at the close of business on April 14, 2009 (the "Expiration Date") (or,
if the Distribution Date shall have occurred before April 14, 2009, at the close
of business on the 90th day following the Distribution Date).
The Preferred Stock is nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock (i) subordinate to any other series of the Corporation's preferred stock
and (ii) senior to the Common Stock. The Preferred Stock may not be issued
except upon exercise of Rights. Each share of Preferred Stock will be entitled
to receive when, as and if declared, a quarterly dividend in an amount equal to
(i) 100 times the cash dividends declared on the Corporation's Common Stock, and
(ii) a preferential cash dividend, if any, in preference to holders of Common
Stock in an amount equal to [$50.00] per share of Preferred Stock less the per
share amount of all cash dividends declared on the Preferred Stock pursuant to
clause (i) since the immediately preceding quarterly dividend payment date. In
addition, Preferred Stock is entitled to 100 times any noncash dividends (other
than dividends payable in equity securities) declared on the Common Stock, in
like kind. In the event of the liquidation of the Corporation, the holders of
Preferred Stock will be entitled to receive, for each share of Preferred Stock,
a payment in an amount equal to the greater of $1.00 per one one-hundredth of a
share plus accrued and unpaid dividends and distributions thereon or 100 times
the payment made per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. The rights of Preferred Stock as to
dividends, liquidation and voting are protected by anti-dilution provisions. If
the dividends accrued on the Preferred Stock for four or more quarterly dividend
periods, whether consecutive or not, shall not have been declared and paid or
irrevocably set aside for payment, the holders of record of the Preferred Stock
of the Corporation of all series (including the Preferred Stock) will have the
right to elect two members to the Corporation's Board of Directors.
The number of shares of Preferred Stock issuable upon exercise
of the Rights is subject to certain adjustments from time to time in the event
of a stock dividend on, or a subdivision or combination of, the Common Stock.
The Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed, in the event that,
after the time that a Person becomes an Acquiring Person, the Corporation were
to be acquired in a merger or other business combination (in which any shares of
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Corporation and its
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision will be made so that each holder of record, other than the Acquiring
Person, of a Right will from and after such date have the right to receive, upon
payment of the Exercise Price, that number of shares of common stock of the
acquiring company having a market value at the time of such transaction equal to
two times the Exercise Price.
In addition, unless the Rights are earlier redeemed, in the
event that a person or group becomes an Acquiring Person, the Rights Agreement
provides that proper provision will be made so that each holder of record of a
Right, other than the Acquiring Person (whose Rights will thereupon become null
and void), will thereafter have the right to receive, upon payment of the
Exercise Price, that number of one one-hundredths of a share of Preferred Stock
having a market value at the time of the transaction equal to two times the
Exercise Price (such market value to be determined with reference to the market
value of the Corporation's Common Stock as provided in the Rights Agreement).
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding voting stock, the Board of Directors of the Corporation may
exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio of one share of
Common Stock per Right (subject to adjustment).
Fractions of shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share) may, at the
election of the Corporation, be evidenced by depositary receipts. The
Corporation may also issue cash in lieu of fractional shares which are not
integral multiples of one one-hundredth of a share.
At any time on or prior to the close of business on the
earlier of (i) the tenth day after the Stock Acquisition Date (or such later
date as a majority of the Board of Directors may determine) or (ii) the
Expiration Date, the Corporation may redeem the Rights in whole, but not in
part, at a price of $0.005 per Right (the "Redemption Price"). Immediately upon
the effective time of the action of the Board of Directors of the Corporation
authorizing redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
For as long as the Rights are then redeemable, the Corporation
may amend the Rights in any manner, including an amendment to extend the time
period in which the Rights may be redeemed. At any time when the Rights are not
then redeemable, the Corporation may amend the Rights in any manner that does
not materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement from and after the time that any Person
becomes an Acquiring Person and amendments to the redemption price or expiration
date of the Rights require the approval of a majority of the Continuing
Directors (as defined and provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to the Corporation's report on
Form 8-K dated March 31, 1999. A copy of the Rights Agreement is available free
of charge from the Corporation. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement which is incorporated in this summary description herein by
reference.
EXHIBIT B
TO RIGHTS AGREEMENT
[Form of Rights Certificate]
Certificate No. W - ________ Rights
NOT EXERCISABLE AFTER (I) APRIL 14, 2009, OR (II) IF THE DISTRIBUTION
DATE (AS DEFINED BELOW) SHALL HAVE OCCURRED BEFORE THE DATE SPECIFIED
IN CLAUSE (I), THE DATE WHICH IS NINETY (90) DAYS AFTER THE
DISTRIBUTION DATE, OR EARLIER IF REDEEMED. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE CORPORATION AND UNDER CERTAIN OTHER
CIRCUMSTANCES, AT $0.005 PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE
TERMS SET FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO
BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
Rights Certificate
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 April 14, 1999 (the "Rights Agreement") between
[Corporation Name] (the "Corporation"), and First Union National Bank, (the
"Rights Agent"), to purchase from the Corporation at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m. (New York City time) on April 14, 2009 (or if the Distribution Date
shall have occurred before April 14, 2009, at the close of business on the 90th
day following the Distribution Date) at the office of the Rights Agent
designated in the Rights Agreement for such purpose, or its successor as Rights
Agent, in [New York, NY], one one-hundredth (1/100) of a fully paid
nonassessable share of Participating Preferred Stock, $0.01 par value per share,
of the Corporation (the "Preferred Stock") at a purchase price of $25.00, as the
same may from time to time be adjusted in accordance with the Rights Agreement
(the "Exercise Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and
the number of shares of Preferred Stock which 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 and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Rights
Certificate, as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Corporation and the holders of record of Rights Certificates. Copies
of the Rights Agreement are on file at the principal executive office of the
Corporation.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated in the
Rights Agreement for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder of record to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof, 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 Corporation at its option
or under certain other circumstances at a redemption price of $0.005 per Right.
No fractional shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth (1/100) of a share) are required to be issued
upon the exercise of any Right or Rights evidenced hereby, and in lieu thereof
the Corporation may cause depositary receipts to be issued and/or a cash payment
may be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Preferred Stock or of any other securities of the Corporation which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to stockholders at
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 shall have been exercised as provided in the Rights Agreement. This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of _____________, ____.
ATTEST:
By:
--------------------------------- ----------------------------------
Secretary Title:
Countersigned:
FIRST UNION NATIONAL BANK
By:
---------------------------------
[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 Certificates.)
FOR VALUE RECEIVED ______________________________________
hereby sells, assigns and transfers unto _______________________________________
_________________________________________ (Please print name and address of
transferee)____________________________________________________________________
_________________________________________________________________________ Rights
evidenced by 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 Corporation, 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 Associate or an Affiliate thereof (as such terms are defined in the
Rights Agreement); and
(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 Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: ________________, __________________________________________
Signature
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.
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Rights Certificate.)
TO:_________________
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 such Rights and requests
that certificates for such share(s) be issued in the following name:
Please insert social security or other identifying number:
________________________________________________________________________________
(Please print name and address)
_______________________________________________________ If such number of Rights
shall not be all the Rights evidenced by this Rights Certificate, a new Rights
Certificate for the balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number:
--------------------------------------------------------------------------------
(Please print name and address)
Dated: ________________, ____
------------------------------------
Signature
(Signature must conform in all respects to name of
holder as specified on the fact of this Rights
Certificate)
Signature Guaranteed
EXHIBIT C
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
PARTICIPATING PREFERRED STOCK
OF
LODGIAN, INC.
Pursuant to Section 151 of the Delaware
General Corporation Law
I, [name] , [office] of Lodgian, Inc., a corporation organized
and existing under the Delaware General Corporation Law (the "Corporation"), in
accordance with the provisions of Section 151 of such law, DO HEREBY CERTIFY
that pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the Corporation, the Board of Directors
on March 26, 1999 adopted the following resolution which creates a series of
[________] shares of Preferred Stock designated as Participating Preferred
Stock, as follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware
General Corporation Law and the authority vested in the Board of Directors of
the Corporation in accordance with the provisions of ARTICLE 4.2 of the Restated
Certificate of Incorporation of the Corporation, a series of Preferred Stock of
the Corporation be, and hereby is, created, and the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof, be, and hereby are, as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Participating Preferred Stock" (the "Participating
Preferred Stock") and the number of shares constituting such series shall be
[______].
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Participating Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, (i) cash dividends in an amount per share
(rounded to the nearest cent) equal to 100 times the aggregate per share amount
of all cash dividends declared or paid on the Common Stock, $0.01 par value per
share, of the Corporation (the "Common Stock") and (ii) a preferential cash
dividend (the "Preferential Dividends"), if any, in preference to the holders of
Common Stock, on the first day of February, May, August and November of each
year (each a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Participating Preferred Stock, payable in an amount (except in the
case of the first Quarterly Dividend Payment if the date of the first issuance
of Participating Preferred Stock is a date other than a Quarterly Dividend
Payment date, in which case such payment shall be a prorated amount of such
amount) equal to [$50] per share of Participating Preferred Stock less the per
share amount of all cash dividends declared on the Participating Preferred Stock
pursuant to clause (i) of this sentence 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
Participating Preferred Stock. In the event the Corporation shall, at any time
after the issuance of any share or fraction of a share of Participating
Preferred Stock, make any distribution on the shares of Common Stock of the
Corporation, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Corporation or
otherwise, which is payable in cash or any debt security, debt instrument, real
or personal property or any other property (other than cash dividends subject to
the immediately preceding sentence, a distribution of shares of Common Stock or
other capital stock of the Corporation or a distribution of rights or warrants
to acquire any such share, including any debt security convertible into or
exchangeable for any such share, at a price less than the Fair Market Value (as
hereinafter defined) of such share), then, and in each such event, the
Corporation shall simultaneously pay on each then outstanding share of
Participating Preferred Stock of the Corporation a distribution, in like kind,
of 100 times such distribution paid on a share of Common Stock (subject to the
provisions for adjustment hereinafter set forth). The dividends and
distributions on the Participating Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to as
"Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Dividends, which shall be 100
initially but shall be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Dividend Multiple." In the event the Corporation
shall at any time after April 14, 1999 (i) declare or pay any dividend or make
any distribution on Common Stock payable in shares of Common Stock, (ii) effect
a subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, or (iii) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), then in each such case the Dividend
Multiple thereafter applicable to the determination of the amount of Dividends
which holders of shares of Participating Preferred Stock shall be entitled to
receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare each Dividend at the same
time it declares any cash or non-cash dividend or distribution on the Common
Stock in respect of which a Dividend is required to be paid. No cash or non-cash
dividend or distribution on the Common Stock in respect of which a Dividend is
required to be paid shall be paid or set aside for payment on the Common Stock
unless a Dividend in respect of such dividend or distribution on the Common
Stock shall be simultaneously paid, or set aside for payment, on the
Participating Preferred Stock.
(C) Preferential Dividends shall begin to accrue on
outstanding shares of Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of any shares of Participating
Preferred Stock. Accrued but unpaid Preferential Dividends shall cumulate but
shall not bear interest. Preferential Dividends paid on the shares of
Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the holders of the
Common Stock. The number of votes which a holder of Participating Preferred
Stock is entitled to cast, as the same may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Vote Multiple." In the
event the Corporation shall at any time after April 14, 1999, (i) declare or pay
any dividend on Common Stock payable in shares of Common Stock, (ii) effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, or (iii) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), then in each such case the Vote Multiple
thereafter applicable to the determination of the number of votes per share to
which holders of shares of Participating Preferred Stock shall be entitled after
such event shall be the Vote Multiple immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation or Restated By-Laws, the holders of shares of
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) In the event that the Preferential Dividends accrued on
the Participating Preferred Stock for four or more consecutive quarterly periods
shall not have been declared and paid or set apart for payment, the holders of
record of the Participating Preferred Stock, voting together with the holders of
record of any other series of preferred stock of the Corporation which shall
then have the right, expressly granted by the Restated Certificate of
Incorporation of the Corporation or in any resolution or resolutions of the
Board of Directors of the Corporation providing for the issue of such shares of
preferred stock, to elect directors upon such a default in the payment of
dividends by the Corporation shall have the right, at the next meeting of
stockholders called for the election of directors, voting together as a class,
to elect two members to the Board of Directors, which directors shall be in
addition to the number provided for pursuant to the Corporation's By laws prior
to such event, to serve until the next Annual Meeting and until their successors
are elected and qualified or their earlier resignation, removal or incapacity or
until such earlier time as all accrued and unpaid Preferential Dividends upon
the outstanding shares of Participating Preferred Stock shall have been paid (or
set aside for payment) in full. The holders of shares of Participating Preferred
Stock shall continue to have the right to elect directors as provided by the
immediately preceding sentence until all accrued and unpaid Preferential
Dividends upon the outstanding shares of Participating Preferred Stock shall
have been paid (or set aside for payment) in full. Such directors may be removed
and replaced by such stockholders, and vacancies in such directorships may be
filled only by such stockholders (or by the remaining director elected by such
stockholders, if there be one) in the manner permitted by law. Subject to the
foregoing, any directors elected pursuant to this paragraph 3(C) shall be
elected annually and shall not constitute members of any Class of directors as
contemplated by Article 4.2 of the Corporation's Restated Certificate of
Incorporation.
(D) Except as otherwise required by the Restated Certificate
of Incorporation or Restated By-Laws or set forth herein, holders of
Participating Preferred Stock shall have no other special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in
arrears or the Corporation shall be in default of payment thereof, thereafter
and until all accrued and unpaid Preferential Dividends and Dividends, whether
or not declared, on shares of Participating Preferred Stock outstanding shall
have been paid or set irrevocably aside for payment in full, and in addition to
any and all other rights which any holder of shares of Participating Preferred
Stock may have in such circumstances, the Corporation shall not
(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 Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Participating Preferred Stock, unless dividends are
paid ratably on the 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
if the full dividends accrued thereon were to be paid;
(iii) except as permitted by subparagraph (iv) of this
paragraph 4(A), 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
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 (both as to dividends and upon liquidation, dissolution or
winding up) to the Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Participating Preferred Stock, or any shares of stock ranking
on a parity with the Participating Preferred Stock (either as to
dividends or upon liquidation, dissolution or winding up), except in
accordance with a purchase offer made to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any Subsidiary (as
hereinafter defined) of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner. A "Subsidiary" of the Corporation shall
mean any corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect a majority of the
board of directors of such corporation or other entity or other persons
performing similar functions are beneficially owned, directly or indirectly, by
the Corporation or by any corporation or other entity that is otherwise
controlled by the Corporation.
(C) The Corporation shall not issue any shares of
Participating Preferred Stock except upon exercise of Rights issued pursuant to
that certain Rights Agreement dated as of April 14, 1999 between the Corporation
and First Union National Bank, as Rights Agent, a copy of which is on file with
the Secretary of the Corporation at its principal executive office and shall be
made available to stockholders of record without charge upon written request
therefor addressed to said Secretary. Notwithstanding the foregoing sentence,
nothing contained in the provisions hereof shall prohibit or restrict the
Corporation from issuing for any purpose any series of Preferred Stock with
rights and privileges similar to, different from, or greater than, those of the
Participating Preferred Stock.
Section 5. Reacquired Shares. Any shares of Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares upon their retirement and cancellation shall become authorized
but unissued shares of Preferred Stock, without designation as to series, and
such shares may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (i) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Participating Preferred Stock unless the holders of shares of
Participating Preferred Stock shall have received, subject to adjustment as
hereinafter provided, (A) $1.00 per one one-hundredth (1/100) of a share plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment or, (B) if greater than the amount
specified in clause (i)(A) of this sentence, an amount equal to 100 times the
aggregate amount to be distributed per share to holders of Common Stock, as the
same may be adjusted as hereinafter provided and (ii) to the holders of stock
ranking on a parity upon liquidation, dissolution or winding up with the
Participating Preferred Stock, unless simultaneously therewith distributions are
made ratably on the Participating Preferred Stock and all other shares of such
parity stock in proportion to the total amounts to which the holders of shares
of Participating Preferred Stock are entitled under clause (i)(A) of this
sentence and to which the holders of such parity shares are entitled, in each
case upon such liquidation, dissolution or winding up. The amount to which
holders of Participating Preferred Stock may be entitled upon liquidation,
dissolution or winding up of the Corporation pursuant to clause (i)(B) of the
foregoing sentence is hereinafter referred to as the "Participating Liquidation
Amount" and the multiple of the amount to be distributed to holders of shares of
Common Stock upon the liquidation, dissolution or winding up of the Corporation
applicable pursuant to said clause to the determination of the Participating
Liquidation Amount, as said multiple may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Liquidation Multiple."
In the event the Corporation shall at any time after April 14, 1999 (i) declare
or pay any dividend on Common Stock payable in shares of Common Stock, (ii)
effect a subdivision or split or a combination, consolidation or reverse split
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, or (iii) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is continuing
or surviving corporation), then, in each such case, the Liquidation Multiple
thereafter applicable to the determination of the Participating Liquidation
Amount to which holders of Participating Preferred Stock shall be entitled after
such event shall be the Liquidation Multiple applicable immediately prior to
such event multiplied by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Certain Reclassification and Other Events.
(A) In the event that holders of shares of Common Stock of the
Corporation receive after April 14, 1999 in respect of their shares of Common
Stock any share of capital stock of the Corporation (other than any share of
Common Stock of the Corporation), whether by way of reclassification,
recapitalization, reorganization, dividend or other distribution or otherwise (a
"Transaction"), then, and in each such event, the dividend rights, voting rights
and rights upon the liquidation, dissolution or winding up of the Corporation of
the shares of Participating Preferred Stock shall be adjusted so that after such
event the holders of Participating Preferred Stock shall be entitled, in respect
of each share of Participating Preferred Stock held, in addition to such rights
in respect thereof to which such holder was entitled immediately prior to such
adjustment, to (i) such additional dividends as equal the Dividend Multiple in
effect immediately prior to such Transaction multiplied by the additional
dividends which the holder of a share of Common Stock shall be entitled to
receive by virtue of the receipt in the Transaction of such capital stock, (ii)
such additional voting rights as equal the Vote Multiple in effect immediately
prior to such Transaction multiplied by the additional voting rights which the
holder of a share of Common Stock shall be entitled to receive by virtue of the
receipt in the Transaction of such capital stock and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Corporation as
equal the Liquidation Multiple in effect immediately prior to such Transaction
multiplied by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or winding up of the
Corporation by virtue of the receipt in the Transaction of such capital stock,
as the case may be, all as provided by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Corporation receive after April 14, 1999 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Common Stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights, voting rights and
rights upon the liquidation, dissolution or winding up of the Corporation of the
shares of Participating Preferred Stock shall each be adjusted so that after
such event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Corporation receive after April 14, 1999 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Corporation (other
than shares of Common Stock), including as such a right, for all purposes of
this paragraph, any security convertible into or exchangeable for capital stock
of the Corporation (other than Common Stock), at a purchase price per share less
than the Fair Market Value of such shares of capital stock on the date of
issuance of such right or warrant, then and in each such event the dividend
rights, voting rights and rights upon liquidation, dissolution or winding up of
the Corporation of the shares of Participating Preferred Stock shall each be
adjusted so that after such event each holder of a share of Participating
Preferred Stock shall be entitled, in respect of each share of Participating
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such event, to receive (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such event multiplied, first, by the additional dividends to which the holder
of a share of Common Stock shall be entitled upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction (as hereinafter defined)
and (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such event multiplied, first, by the additional voting
rights to which the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount Fraction and
(iii) such additional distributions upon liquidation, dissolution or winding up
of the Corporation as equal the Liquidation Multiple in effect immediately prior
to such event multiplied, first, by the additional amount which the holder of a
share of Common Stock shall be entitled to receive upon liquidation, dissolution
or winding up of the Corporation upon exercise of such right or warrant by
virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction. For purposes of this paragraph, the
"Discount Fraction" shall be a fraction the numerator of which shall be the
difference between the Fair Market Value of a share of the capital stock subject
to a right or warrant distributed to holders of shares of Common Stock of the
Corporation as contemplated by this paragraph immediately after the distribution
thereof and the purchase price per share for such share of capital stock
pursuant to such right or warrant and the denominator of which shall be the Fair
Market Value of a share of such capital stock immediately after the distribution
of such right or warrant.
(D) For purposes of this Certificate of Designations, the
"Fair Market Value" of a share of capital stock of the Corporation (including a
share of Common Stock) on any date shall be deemed to be the average of the
daily closing price per share thereof over the 30 consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date; provided,
however, that, in the event that such Fair Market Value of any such share of
capital stock is determined during a period which includes any date that is
within 30 Trading Days after (i) the ex-dividend date for a dividend or
distribution on stock payable in shares of such stock or securities convertible
into shares of such stock, or (ii) the effective date of any subdivision, split,
combination, consolidation, reverse stock split or reclassification of such
stock, then, and in each such case, the Fair Market Value shall be appropriately
adjusted by the Board of Directors of the Corporation to take into account
ex-dividend or post-effective date trading. The closing price for any day shall
be the last sale price, regular way, or, in case, no such sale takes place on
such day, the average of the closing bid and asked prices, regular way (in
either case, as reported in the applicable transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange), or, if the shares are not listed or admitted to trading on the New
York Stock Exchange, as reported in the applicable transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the shares are listed or admitted to trading or, if the shares 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 the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or if on any such date the shares 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 shares selected by the Board of
Directors of the Corporation. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the shares are listed or
admitted to trading is open for the transaction of business or, if the shares
are not listed or admitted to trading on any national securities exchange, on
which the New York Stock Exchange or such other national securities exchange as
may be selected by the Board of Directors of the Corporation is open. If the
shares are not publicly held or not so listed or traded on any day within the
period of 30 Trading Days applicable to the determination of Fair Market Value
thereof as aforesaid, "Fair Market Value" shall mean the fair market value
thereof per share as determined in good faith by the Board of Directors of the
Corporation. In either case referred to in the foregoing sentence, the
determination of Fair Market Value shall be described in a statement filed with
the Secretary of the Corporation.
Section 8. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each
outstanding share of Participating Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Participating Preferred Stock required
by the provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Corporation shall give prompt written notice to each
holder of a share of Participating Preferred Stock of the effect of any
adjustment to the voting rights, dividend rights or rights upon liquidation,
dissolution or winding up of the Corporation of such shares required by the
provisions hereof. Notwithstanding the foregoing sentence, the failure of the
Corporation to give such notice shall not affect the validity of or the force or
effect of or the requirement for such adjustment.
Section 10. No Redemption. The shares of Participating
Preferred Stock shall not be redeemable at the option of the Corporation or any
holder thereof. Notwithstanding the foregoing sentence of this Section, the
Corporation may acquire shares of Participating Preferred Stock in any other
manner permitted by law, the provisions hereof and the Restated Certificate of
Incorporation of the Corporation.
Section 11. Ranking. Unless otherwise provided in the Restated
Certificate of Incorporation of the Corporation or a Certificate of Designations
relating to a subsequent series of preferred stock of the Corporation, the
Participating Preferred Stock shall rank junior to all other series of the
Corporation's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and senior to
the Common Stock.
Section 12. Amendment. The provisions hereof and the Restated
Certificate of Incorporation of the Corporation shall not be amended in any
manner which would adversely affect the rights, privileges or powers of the
Participating Preferred Stock without, in addition to any other vote of
stockholders required by law, the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Participating Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, Lodgian, Inc. has caused this Certificate
of Designations to be signed and attested this ___ day of April, 1999.
LODGIAN, INC.
By:
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Name: Xxxxxx X. Xxxx
Title: President and CEO
ATTEST:
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Name: Xxxxxx Xxxxxxxx
Title: Secretary
