HILTON HOTELS CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
Rights Agreement
Dated as of November 29, 1999
RIGHTS AGREEMENT
Rights Agreement, dated as of November 29, 1999, between Hilton
Hotels Corporation, a Delaware corporation (the "COMPANY"), and ChaseMellon
Shareholder Services L.L.C., as Rights Agent (the "RIGHTS AGENT").
RECITALS
WHEREAS, on November 24, 1999, the Board of Directors of the Company
adopted this Agreement, and has authorized and declared a dividend of one
preferred share purchase right (a "RIGHT") for each Common Share (as defined
in Section 1.6) of the Company outstanding at the close of business on
November 30, 1999 (the "RECORD DATE") and authorized and directed the
issuance of one Right (subject to adjustment as provided herein) with respect
to each Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date and the Expiration Date (as such
terms are defined in Sections 3.1 and 7.1), each Right initially representing
the right to purchase one one-hundredth (subject to adjustment) of a share of
Series A Junior Participating Preferred Stock (the "PREFERRED SHARES") of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth PROVIDED, HOWEVER, that
Rights may be issued with respect to Common Shares that shall become
outstanding after the Distribution Date and prior to the Expiration Date in
accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
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1.1. "ACQUIRING PERSON", except as provided herein, shall
mean any Person who or which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 20% or more of the Common
Shares of the Company then outstanding but shall not include an Exempt Person
(as such term is hereinafter defined). Notwithstanding the foregoing, no
Person shall become an "Acquiring Person": (a) as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 20% or more of the Common Shares of the Company then
outstanding; or (b) as the result of the receipt of Common Shares of the
Company in exchange for common stock of Promus Hotel Corporation pursuant to
the Agreement and Plan of Merger dated as of September 3, 1999 by and among
the Company, Promus Hotel Corporation and Chicago Hilton, Inc., as amended,
provided (in the case of this clause (b)) that such Person does not
Beneficially Own 23% or more of the Common Shares of the Company then
outstanding. If a Person shall become the Beneficial Owner of 20% or more of
the Common Shares of the Company then outstanding solely by reason of a
transaction, or transactions, referred to in the preceding clauses (a) and
(b) and shall thereafter become the Beneficial Owner of additional Common
Shares of the Company (other than pursuant to a dividend or distribution of
Common Shares paid or made by the Company or pursuant to a split or
subdivision of the outstanding Common Shares), then the exception provided in
such sentence shall no longer be applicable to such Person. Further
notwithstanding the foregoing, at any time prior to the Distribution Date the
Board of Directors may determine that any Person who would otherwise be an
"Acquiring Person," as defined pursuant to this Section 1.1 is not an
Acquiring Person for the Purposes of this Agreement if (A) the Board of
Directors of the Company determines that such Person (i) has become such
inadvertently, or (ii) has become such solely as the result of an agreement,
arrangement or understanding among two or more Persons, none of whom is
individually an Acquiring Person other than by reason of paragraph (iii) of
the definition of the term Beneficial Owner herein; and (B) such Person
ceases to be an Acquiring Person or enters into such agreement , arrangement
or understanding as the Board of Directors of the Company may approve, or the
Board of Directors is otherwise satisfied that the best interests of the
Company and its stockholders are served if such Person is not deemed an
Acquiring Person. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), as in effect on the date of this Agreement.
1.2. "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations, under the Exchange Act, as in effect on the date of this
Agreement.
1.3. A Person shall be deemed the "BENEFICIAL OWNER" of and
shall be deemed to "BENEFICIALLY OWN" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (as
determined pursuant to
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Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately, or
only after the passage of time, compliance with regulatory
requirements, fulfillment of a condition or otherwise)
pursuant to any agreement, arrangement or understanding,
whether or not in writing (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the Beneficial Owner of,
or to Beneficially Own, (w) securities tendered pursuant to
a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange, (x) securities which such Person has a right to
acquire upon the exercise of Rights at any time prior to the
time that any Person becomes an Acquiring Person or (y)
securities issuable upon the exercise of Rights from and
after the time that any Person becomes an Acquiring Person
if such Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution
Date or pursuant to Section 3.1 or Section 22 ("ORIGINAL
RIGHTS") or pursuant to Section 11.9 or Section 11.15 with
respect to an adjustment to Original Rights; or (B) the
right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); PROVIDED, HOWEVER,
that a Person shall not be deemed the Beneficial Owner of,
or to Beneficially Own, any security under this clause (B)
if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor
report); or
(iii) which are Beneficially Owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof)
and with respect to which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect
to a bona fide public offering of securities), whether or
not in writing, for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy or consent as described
in the proviso to Section 1.3(ii)(B)) or disposing of any
securities of the Company;
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PROVIDED, HOWEVER, that no Person who is an officer, director or employee of
an Exempt Person shall be deemed, solely by reason of such Person's status or
authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" (as defined in this Section 1.3), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer,
director or employee of an Exempt Person.
1.4. "BUSINESS DAY" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
1.5. "CLOSE OF BUSINESS" on any given date shall mean 5:00
p.m., California time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 p.m., California time, on the next
succeeding Business Day.
1.6. "COMMON SHARES" when used with reference to the
Company shall mean the shares of common stock, par value $2.50 per share, of
the Company. "Common Shares" when used with reference to any Person other
than the Company shall mean the class of capital stock with the greatest
aggregate voting power, or the equity securities or other equity interest
having power to control or direct the management, of such other Person or, if
such Person is a Subsidiary (as such term is hereinafter defined) of another
Person, the Person or Persons which ultimately control such first-mentioned
Person, and which has issued and outstanding such capital stock, equity
securities or equity interest.
1.7. "EXEMPT PERSON" shall mean: (i) the Company or any
Subsidiary of the Company, in each case including, without limitation, its
fiduciary capacity, (ii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iii) any entity or trustee holding shares of
capital stock of the Company for or pursuant to the terms of any such plan,
or for the purpose of funding other employee benefits for employees of the
Company or any Subsidiary of the Company, or (iv) the Hilton Interests.
1.8. "HILTON INTERESTS" shall mean Xxxxxx Xxxxxx or the
Xxxxxx X. Xxxxxx Fund.
1.9. "PERSON" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, unincorporated
association, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
1.10. "SHARES ACQUISITION DATE" shall mean the first date
of public announcement (which, for purposes of this definition, shall
include, without limitation, the filing of a report pursuant to Section 13(d)
of the Exchange Act or pursuant to a comparable successor statute) by the
Company or an Acquiring Person that an Acquiring Person has become such.
1.11. "SUBSIDIARY" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, of record or beneficially, directly
or indirectly, by such Person.
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1.12. The following terms shall have the meanings defined
for such terms in the Sections set forth below:
TERM SECTION
Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.1
Exchange Consideration 27
Existing Holder 1.1
Expiration Date 7.1
Final Expiration Date 7.1
Nasdaq 9
Original Rights 1.3
Preferred Shares Recitals
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Section 11.1.2 Event 11.1.2
Security 11.4.1
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4.1
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents as it may
deem necessary or desirable. In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agent shall be as the Company shall determine. Contemporaneously with such
appointment, if any, the Company shall notify the Rights Agent thereof.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
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3.1. RIGHTS EVIDENCED BY SHARE CERTIFICATES. Until the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth Business Day after the date of the commencement of, or first public
announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer the consummation of which would result
in any Person (other than an Exempt Person) becoming the Beneficial Owner of
Common Shares aggregating 20% or more of the then outstanding Common Shares
of the Company (the earlier of (i) and (ii) being herein referred to as the
"DISTRIBUTION DATE"), (x) the Rights (unless earlier expired, redeemed or
terminated) will be evidenced (subject to the provisions of Section 3.2) by
the certificates for Common Shares registered in the names of the holders
thereof (which certificates for Common Shares shall also be deemed to be
Right Certificates) and not by separate certificates, and (y) the Rights (and
the right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying Common Shares. The preceding
sentence notwithstanding, prior to the occurrence of a Distribution Date
specified as a result of an event described in clause (ii) (or such later
Distribution Date as the Board of Directors of the Company may select
pursuant to this sentence), the Board of Directors may postpone, one or more
times, the Distribution Date which would occur as a result of an event
described in clause (ii) beyond the date set forth in such clause (ii). As
soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign and the Company (or, if requested,
the Rights Agent upon its receipt of all necessary information) will send, by
first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Distribution Date (other than any Acquiring
Person or any Associate or Affiliate of an Acquiring Person), at the address
of such holder shown on the records of the Company, one or more certificates
for Rights, in substantially the form of Exhibit B hereto (a "RIGHT
CERTIFICATE"), evidencing one Right (subject to adjustment as provided
herein) for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
3.2. SUMMARY OF RIGHTS. Following the Record Date, the
Company caused a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "SUMMARY OF
RIGHTS"), to be sent by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Record Date at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Close of Business on the
Record Date, until the Distribution Date (or the earlier Expiration Date),
the Rights will be evidenced by such certificates for Common Shares
registered in the names of the holders thereof together with a copy of the
Summary of Rights and the registered holders of the Common Shares shall also
be registered holders of the associated Rights. Until the Distribution Date
(or the earlier Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding at the Close of Business on the
Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
3.3. NEW CERTIFICATES AFTER RECORD DATE. Certificates for
Common Shares which become outstanding (whether upon issuance out of
authorized but unissued Common Shares, disposition out of treasury or
transfer or exchange of outstanding Common Shares) after the Record Date but
prior to the earliest of the Distribution Date or the
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Expiration Date, shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in an Agreement between
Hilton Hotels Corporation (the "Company") and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, dated as of
November 29, 1999, as the same may be amended from time to
time (the "Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Agreement,
such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the
Agreement without charge after receipt of a written request
therefor. AS DESCRIBED IN THE AGREEMENT, RIGHTS WHICH ARE
OWNED BY, TRANSFERRED TO OR HAVE BEEN OWNED BY ACQUIRING
PERSONS OR ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED IN
THE AGREEMENT) SHALL BECOME NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend,
until the Distribution Date (or the earlier Expiration Date), the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any
such certificates, except as otherwise provided herein, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby. In the event that the Company purchases or acquires any Common
Shares after the Record Date but prior to the Distribution Date (or the
earlier Expiration Date), any Rights associated with such Common Shares shall
be deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are no longer
outstanding.
Notwithstanding this Section 3.3, the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase shares, certification and assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate (but which do not materially affect the duties or
responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or trading system on which the
Rights may from time to time be listed or quoted, or to conform to usage.
Subject to the terms and conditions hereof, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and shall show the date of
countersignature by the Rights Agent, and on their face shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein
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(the "PURCHASE PRICE"), but the number of such one one-hundredths of a
Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board of
Directors, the Chief Executive Officer, President, any Vice President or its
Treasurer, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by
the Secretary or any Assistant Secretary of the Company, either manually or
by facsimile signature. The Right Certificates shall be countersigned, either
manually or by facsimile signature, by an authorized signatory of the Rights
Agent, but it shall not be necessary for the same signatory to countersign
all of the Right Certificates hereunder. No Right Certificate shall be valid
for any purpose unless so countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Agreement any such person was not such an
officer.
Following the Distribution Date and receipt by the Rights Agent of
all relevant information, the Rights Agent will keep or cause to be kept, at
its office designated for such purpose, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates, the
certificate number of each of the Right Certificates and the date of each of
the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
Subject to the provisions of Section 7.5, Section 11.1.2 and Section 14, at
any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing Rights that
have become void pursuant to Section 11.1.2 or that have been exchanged
pursuant to Section 27) may be transferred, split up or combined or exchanged
for another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a Preferred Share
as the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up or
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender, together with any
required form of assignment and certificate duly completed, the Right
Certificate or Right Certificates to be transferred, split up or combined or
exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate or Right Certificates until the
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registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Right Certificate or
Right Certificates and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment from the holders of Right Certificates of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up or combination or exchange of such
Right Certificates.
Subject to the provisions of Section 11.1.2 , at any time after the
Distribution Date and prior to the Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
7.1. EXERCISE OF RIGHTS. Subject to Section 11.1.2 and
except as otherwise provided herein, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase and certification on the reverse side
thereof duly and properly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the
aggregate Purchase Price for the total number of one one-hundredths of a
Preferred Share (or other securities, cash or other assets) as to which the
Rights are exercised, at or prior to the time (the "EXPIRATION DATE") that is
the earliest of (i) the Close of Business on November 29, 2009 (the "FINAL
EXPIRATION DATE"), (ii) the time at which the Rights are redeemed as provided
in Section 23 (the "REDEMPTION DATE"), or (iii) the time at which the Rights
are exchanged as provided in Section 27.
7.2. PURCHASE. The Purchase Price for each one
one-hundredth of a Preferred Share pursuant to the exercise of a Right shall
be initially $80, shall be subject to adjustment from time to time as
provided in Sections 11, 13 and 26 and shall be payable in lawful money of
the United States of America in accordance with Section 7.3.
7.3. PAYMENT PROCEDURES. Upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase and certification duly and properly executed, accompanied by payment
of the aggregate Purchase Price for the total number of one one-hundredths of
a Preferred Share to be purchased and an amount equal to any
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applicable tax or charge required to be paid by the holder of such Right
Certificate in accordance with Section 9, in cash or by certified or
cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i)(A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing interests in such number of one
one-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with all such requests, (ii)
when appropriate, requisition from the Company the amount of cash to be paid
in lieu of the issuance of fractional shares in accordance with Section 14 or
otherwise in accordance with Section 11.1.3, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder and (iv)
when appropriate, after receipt, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. In the event that
the Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11.1.3, the Company will
make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and
when appropriate pursuant to the terms of this Agreement.
7.4. PARTIAL EXERCISE. In case the registered holder of any
Right Certificate shall exercise less than all the Rights evidenced thereby,
a new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Sections 6 and 14.
7.5. FULL INFORMATION CONCERNING OWNERSHIP. Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a
registered holder of Rights upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise shall have been duly and properly completed and
signed by the registered holder thereof and the Company shall have been
provided with such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights
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Agent for cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. The
Company covenants and agrees that from and after the Distribution Date it
will cause to be reserved and kept available out of its authorized and
unissued capital stock the number of Preferred Shares, Common Shares and/or
other securities that will be sufficient to permit the exercise in full of
all outstanding Rights.
So long as the Preferred Shares, Common Shares and/or other
securities issuable upon the exercise of Rights may be listed on any national
securities exchange or traded in the over-the-counter market and quoted on
the National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") (including the National Market or Small Cap Market), the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed
or admitted to trading on such exchange or quoted on Nasdaq upon official
notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares, Common Shares and/or
other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance
of Preferred Shares upon the exercise of Rights, to register and qualify such
Preferred Shares under the Securities Act and any applicable state securities
or "Blue Sky" laws (to the extent exemptions therefrom are not available),
cause such registration statement and qualifications to become effective as
soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days,
the exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in
effect, in each case with prompt notice to the Rights Agent of such
announcement. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and
until a registration statement under the Securities Act (if required) shall
have been declared effective.
The Company further covenants and agrees that it will pay when due
and payable any and all taxes and charges which may be payable in respect of
the issuance or delivery of the Right
11
Certificates or of any Preferred Shares, Common Shares and/or other
securities, as the case may be, upon the exercise of Rights. The Company
shall not, however, be required to pay any tax or charge which may be payable
in respect of any transfer or delivery of Right Certificates to a Person
other than, or the issuance or delivery of certificates for the Preferred
Shares, Common Shares and/or other securities, as the case may be, in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates for
Preferred Shares, Common Shares and/or other securities, as the case may be,
in a name other than that of the registered holder upon the exercise of any
Rights until any such tax or charge shall have been paid (any such tax or
charge being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction
that no such tax or charge is due.
Section 10. PREFERRED SHARES RECORD DATE. Each Person in whose name
any certificate for Preferred Shares, Common Shares and/or other securities,
as the case may be, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Preferred
Shares, Common Shares and/or other securities, as the case may be,
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes or charges) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date
upon which the Preferred Shares, Common Shares and/or other securities, as
the case may be, transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares, Common Shares and/or other
securities, as the case may be, transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF RIGHTS. The Purchase Price, the number of Preferred Shares or other
securities or property purchasable upon exercise of each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided
in this Section 11.
11.1. POST-EXECUTION EVENTS.
11.1.1. CORPORATE DIVIDENDS, RECLASSIFICATIONS,
ETC. In the event the Company shall at any time after the date of this
Agreement (A) declare and pay a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11.1, the Purchase
Price in effect at the time of the record date for such dividend or of the
12
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Shares transfer books of the
Company were open, he would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification; PROVIDED, HOWEVER, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require an adjustment under both
Section 11.1.1 and Section 11.1.2, the adjustment provided for in this
Section 11.1.1 shall be in addition to, and shall be made prior to, the
adjustment required pursuant to, Section 11.1.2.
11.1.2. ACQUIRING PERSON EVENTS. In the event that
a Shares Acquisition Date shall have occurred at any time after the date
hereof (including any such date prior to the Distribution Date) and neither
the Redemption Date nor the Expiration Date shall have occurred prior to the
tenth Business Day following the Shares Acquisition Date (a "Section 11.1.2
Event") then, from and after such Section 11.1.2 Event, each holder of a
Right, except as provided below, shall thereafter have a right to receive,
upon exercise thereof at a price per Right equal to the then current Purchase
Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable (without giving effect to this Section
11.1.2), in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable (without giving effect to this Section 11.1.2) and (y) dividing
that product by 50% of the current per share market price of the Common
Shares (determined pursuant to Section 11.4) on the first of the date of the
occurrence of, or the date of the first public announcement of, such Section
11.1.2 Event (the "ADJUSTMENT SHARES"); PROVIDED, HOWEVER, that the Purchase
Price and the number of Adjustment Shares shall thereafter be subject to
further adjustment as appropriate in accordance with Section 11.6.
Notwithstanding the foregoing, upon the occurrence of a Section 11.1.2 Event,
any Rights that are or were acquired or Beneficially Owned by (1) any
Acquiring Person or any Associate or Affiliate thereof, (2) a transferee of
any Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (3) a transferee of
any Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect avoidance of this Section 11.1.2, and
subsequent transferees, shall become void without any further action, and any
holder (whether or not such holder is an Acquiring Person or an Associate or
Affiliate of an Acquiring Person) of such Rights shall thereafter have no
right to exercise such Rights under any provision of this Agreement or
otherwise. From and after the date on which an Acquiring Person
13
becomes such, no Right Certificate shall be issued pursuant to Section 3 or
Section 6 that represents Rights that are or have become void pursuant to the
provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become void pursuant to
the provisions of this paragraph shall be canceled.
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11.1.2 are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to any Acquiring Person
or its Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event specified in Section 13.1,
any Rights that theretofore have not been exercised pursuant to this Section
11.1.2 shall thereafter be exercisable only in accordance with Section 13 and
not pursuant to this Section 11.1.2.
11.1.3. INSUFFICIENT SHARES. The Company may at
its option substitute for a Common Share issuable upon the exercise of Rights
in accordance with Section 11.1.2 a number of Preferred Shares or fraction
thereof such that the current per share market price of one Preferred Share
multiplied by such number or fraction is equal to the current per share
market price of one Common Share. In the event that upon the occurrence of a
Section 11.1.2 Event, there shall not be sufficient Common Shares authorized
but unissued, or held by the Company as treasury shares, to permit the
exercise in full of the Rights in accordance with Section 11.1.2, the Company
shall take all such action as may be necessary to authorize additional Common
Shares for issuance upon exercise of the Rights, PROVIDED, HOWEVER, that if
the Company determines that it is unable to cause the authorization of a
sufficient number of additional Common Shares, then, in the event the Rights
become exercisable, the Company, with respect to each Right and to the extent
necessary and permitted by applicable law and any agreements or instruments
in effect on the date hereof to which it is a party, shall: (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the exercise
of a Right (the "CURRENT VALUE"), over (2) the Purchase Price (such excess,
the "SPREAD") and (B) with respect to each Right (other than Rights which
have become void pursuant to Section 11.1.2), make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Preferred Shares
or other equity securities of the Company (including, without limitation,
shares, or fractions of shares, of preferred stock which, by virtue of having
dividend, voting and liquidation rights substantially comparable to those of
the Common Shares, the Board of Directors of the Company has deemed in good
faith to have substantially the same value as Common Shares) (each such share
of preferred stock or fractions of shares of preferred stock constituting a
"COMMON STOCK EQUIVALENT")), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors of the Company; PROVIDED, HOWEVER, that if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the first occurrence of a Section 11.1.2
Event, then the Company shall be obligated to deliver, to the extent
necessary and permitted by applicable law and any agreements or instruments
in effect on
14
the date hereof to which it is a party, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Common Shares (to
the extent available) and then, if necessary, such number or fractions of
Preferred Shares (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread. If the
Board of Directors of the Company shall determine in good faith that it is
unlikely that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended and re-extended to the extent necessary, but not
more than ninety (90) days following the first occurrence of a Section 11.1.2
Event, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period as may be extended, the
"SUBSTITUTION PERIOD"). To the extent that the Company determines that some
action need be taken pursuant to the second and/or third sentences of this
Section 11.1.3, the Company (x) shall provide that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to the first sentence of this
Section 11.1.3 and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended as well as a
public announcement at such time as the suspension is no longer in effect
(with prompt written notice of such announcements to the Rights Agent). For
purposes of this Section 11.1.3, the value of a Common Share shall be the
current per share market price (as determined pursuant to Section 11.4) on
the Shares Acquisition Date and the value of any "common stock equivalent"
shall be deemed to have the same value as the Common Shares on such date. The
Board of Directors of the Company may, but shall not be required to,
establish procedures to allocate the right to receive Common Shares upon the
exercise of the Rights among holders of Rights pursuant to this Section
11.1.3. Actions of the Company pursuant to this Section 11.1.3 shall require
the vote of a majority of the Board of Directors.
11.2. DILUTIVE RIGHTS OFFERING. In case the Company shall
fix a record date for the issuance of rights, options or warrants to all
holders of Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Shares (or securities having the same rights, privileges and preferences as
the Preferred Shares ("EQUIVALENT PREFERRED STOCK")) or securities
convertible into Preferred Shares or equivalent preferred stock at a price
per Preferred Share or per share of equivalent preferred stock (or having a
conversion or exercise price per share, if a security convertible into or
exercisable for Preferred Shares or equivalent preferred stock) less than the
current per share market price of the Preferred Shares (as determined
pursuant to Section 11.4) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares and shares of
equivalent preferred stock outstanding on such record date plus the number of
Preferred Shares and shares of equivalent preferred stock which the aggregate
offering price of the total number of Preferred Shares and/or shares of
equivalent preferred stock to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current per share market price and the denominator of which
shall be the number of Preferred Shares and shares of equivalent preferred
stock outstanding on such record date plus the number of
15
additional Preferred Shares and/or shares of equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Preferred Shares
and shares of equivalent preferred stock owned by or held for the account of
the Company or any Subsidiary of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
rights or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had
not been fixed.
11.3. DISTRIBUTIONS. In case the Company shall fix a record
date for the making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash, securities or assets (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of the
last regular periodic cash dividend theretofore paid or, in case regular
periodic cash dividends have not theretofore been paid, at a rate not in
excess of 50% of the average net income per share of the Company for the four
quarters ended immediately prior to the payment of such dividend, or a
dividend payable in Preferred Shares (which dividend, for purposes of this
Agreement, shall be subject to the provisions of Section 11.1.1(A))) or
convertible securities, or subscription rights or warrants (excluding those
referred to in Section 11.2), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current per share market price of the Preferred Shares (as
determined pursuant to Section 11.4) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets, securities or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares (as determined
pursuant to Section 11.4); PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
11.4. CURRENT PER SHARE MARKET VALUE.
11.4.1. GENERAL. For the purpose of any computation hereunder, the
"CURRENT PER SHARE MARKET PRICE" of any security (a "SECURITY" for the
purpose of this
16
Section 11.4.1) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; PROVIDED, HOWEVER, that in the event that the current per share market
price of the Security is determined during any period following the
announcement by the issuer of such Security of (i) a dividend or distribution
on such Security payable in shares of such Security or securities convertible
into such shares or (ii) any subdivision, combination or reclassification of
such Security, and prior to the expiration of thirty (30) Trading Days after
the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the "current per share market price" shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Security is
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed
or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by Nasdaq or such other system
then in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Security selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Security, the fair value of the Security on such
date as determined in good faith by the Board of Directors of the Company
shall be used. The term "TRADING DAY" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business
Day. If the Security is not publicly held or not so listed or traded, or if
on any such date the Security is not so quoted and no such market maker is
making a market in the Security, "current per share market price" shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company or, if at the time of such determination there is an
Acquiring Person, by a nationally recognized investment banking firm selected
by the Board of Directors, which shall have the duty to make such
determination in a reasonable and objective manner, whose determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
11.4.2. PREFERRED SHARES. Notwithstanding Section
11.4.1, for the purpose of any computation hereunder, the "current per share
market price" of the Preferred Shares shall be determined in the same manner
as set forth above in Section 11.4.1 (other than the last sentence thereof).
If the current per share market price of the Preferred Shares cannot be
determined in the manner described in Section 11.4.1, the "current per share
market price" of the Preferred Shares shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Shares occurring after the date of this Agreement)
17
multiplied by the current per share market price of the Common Shares (as
determined pursuant to Section 11.4.1). If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, (as determined
pursuant to Section 11.4.1), or if on any such date neither the Common Shares
nor the Preferred Shares are so quoted and no such market maker is making a
market in either the Common Shares or the Preferred Shares, "current per
share market price" of the Preferred Shares shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
or, if at the time of such determination there is an Acquiring Person, by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company, which shall have the duty to make such
determination in a reasonable and objective manner, which determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For purposes of this Agreement, the "current per
share market price" of one one-hundredth of a Preferred Share shall be equal
to the "current per share market price" of one Preferred Share divided by 100.
11.5. INSIGNIFICANT CHANGES. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price. Any adjustments which by
reason of this Section 11.5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
one-hundred thousandth of a Preferred Share or the nearest one-hundredth of a
Common Share or other share or security, as the case may be.
11.6. SHARES OTHER THAN PREFERRED SHARES. If as a result of
an adjustment made pursuant to Section 11.1, the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital
stock of the Company other than Preferred Shares, thereafter the number of
such other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Preferred Shares
contained in Sections 11.1, 11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
11.7. RIGHTS ISSUED PRIOR TO ADJUSTMENT. All Rights
originally issued by the Company prior to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-hundredths of a Preferred Share
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
11.8. EFFECT OF ADJUSTMENTS. Unless the Company shall have
exercised its election as provided in Section 11.9, upon each adjustment of
the Purchase Price as a result of the calculations made in Sections 11.2 and
11.3, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one-hundred thousandth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a
Preferred Share covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and
18
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
11.9. ADJUSTMENT IN NUMBER OF RIGHTS. The Company may elect
on or after the date of any adjustment of the Purchase Price to adjust the
number of Rights, in substitution for any adjustment in the number of one
one-hundredths of a Preferred Share issuable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one-hundredth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement (with prompt written notice thereof to the Rights Agent) of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11.9, the Company may, as
promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject
to Section 14, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause
to be distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
11.10. RIGHT CERTIFICATES UNCHANGED. Irrespective of any
adjustment or change in the Purchase Price or the number of one
one-hundredths of a Preferred Share issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share and the number of one one-hundredths of
a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
11.11. PAR VALUE LIMITATIONS. Before taking any action that
would cause an adjustment reducing the Purchase Price below one one-hundredth
of the then par value, if any, of the Preferred Shares or other shares of
capital stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares or other such shares at such adjusted Purchase
Price.
19
11.12. DEFERRED ISSUANCE. In any case in which this Section
11 shall require that an adjustment in the Purchase Price be made effective
as of a record date for a specified event, the Company may elect (with prompt
written notice to the Rights Agent) to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date of that number of Preferred Shares and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the Preferred Shares and shares of other capital stock or other securities,
assets or cash of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
11.13. REDUCTION IN PURCHASE PRICE. Anything in this
Section 11 to the contrary notwithstanding, the Company shall be entitled to
make such reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in its
sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Shares, issuance wholly for
cash of any of the Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options
or warrants referred to hereinabove in this Section 11, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
11.14. COMPANY NOT TO DIMINISH BENEFITS OF RIGHTS. The
Company covenants and agrees that after the earlier of the Shares Acquisition
Date or Distribution Date it will not, except as permitted by Section 23,
Section 26 or Section 27, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that such
action will substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
11.15. ADJUSTMENT OF RIGHTS ASSOCIATED WITH COMMON SHARES.
Notwithstanding anything contained in this Agreement to the
contrary, in the event that the Company shall at any time after the date
hereof and prior to the Distribution Date (i) declare or pay any dividend on
the outstanding Common Shares payable in Common Shares, (ii) effect a
subdivision or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by the payment of dividends payable in
Common Shares), or (iii) combine the outstanding Common Shares into a greater
or lesser number of Common Shares, then in any such case, the number of
Rights associated with each Common Share then outstanding, or issued or
delivered thereafter but prior to the Distribution Date or in accordance with
Section 22 shall be proportionately adjusted so that the number of Rights
thereafter associated with each Common Share following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction, the
numerator of which shall be the total number of Common Shares outstanding
immediately prior
20
to the occurrence of the event and the denominator of which shall be the
total number of Common Shares outstanding immediately following the
occurrence of such event. The adjustments provided for in this Section 11.15
shall be made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 or 13, the
Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Shares or the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
13.1. CERTAIN TRANSACTIONS. In the event that, after a
Shares Acquisition Date, directly or indirectly, (A) the Company shall
consolidate with, or merge with and into, any other Person and the Company
shall not be the continuing or surviving corporation, (B) any Person shall
consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and,
in connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of the Company or any
other Person or cash or any other property, or (C) the Company shall sell,
exchange, mortgage or otherwise transfer (or one or more of its Subsidiaries
shall sell, exchange, mortgage or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or more
wholly-owned Subsidiaries of the Company or any of the Hilton Interests in
one or more transactions each of which complies with Section 11.14), then,
and in each such case, proper provision shall be made so that (i) each holder
of a Right (other than Rights which have become void pursuant to Section
11.1.2) shall thereafter have the right to receive, upon the exercise thereof
at a price per Right equal to the then current Purchase Price multiplied by
the number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the Shares Acquisition Date (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12), in
accordance with the terms of this Agreement and in lieu of Preferred Shares
or Common Shares, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable Common Shares of the Principal Party (as
such term is hereinafter defined) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (x) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the Shares Acquisition Date (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and
(y) dividing that product by 50% of the then current per share market price
of the Common Shares of such Principal Party (determined
21
pursuant to Section 11.4) on the date of consummation of such consolidation,
merger, sale or transfer; PROVIDED, that the price per Right so payable and
the number of Common Shares of such Principal Party so receivable upon
exercise of a Right shall thereafter be subject to further adjustment as
appropriate in accordance with Section 11.6 to reflect any events covered
thereby occurring in respect of the Common Shares of such Principal Party
after the occurrence of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and
(iv) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares in accordance
with Section 9) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to its Common Shares thereafter deliverable
upon the exercise of the Rights; PROVIDED that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of
a Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13.1, such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned
the Common Shares of the Principal Party receivable upon the exercise of a
Right pursuant to this Section 13.1, and such Principal Party shall take such
steps (including, but not limited to, reservation of shares of stock) as may
be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property. The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental
agreement confirming that the requirements of this Section 13.1 and Section
13.2 shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a
default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to this Section 13.1 and Section
13.2 and providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party, at its own
expense, shall
(1) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date and
similarly comply with applicable state securities laws;
(2) use its best efforts, if the Common Shares of the
Principal Party shall be listed or admitted to trading on the New York Stock
Exchange or on another national securities exchange, to list or admit to
trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on the New York Stock Exchange or
such securities exchange, or, if the Common Shares of the Principal Party
shall not be listed or admitted to
22
trading on the New York Stock Exchange or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the Rights to
be authorized for quotation on Nasdaq or on such other system then in use;
(3) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(4) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the Principal Party
subject to purchase upon exercise of outstanding Rights.
In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, Common
Shares or common stock equivalents of such Principal Party at less than the
then current market price per share thereof (determined pursuant to Section
11.4) or securities exercisable for, or convertible into, Common Shares or
common stock equivalents of such Principal Party at less than such then
current market price (other than to holders of Rights pursuant to this
Section 13), or (ii) providing for any special payment, taxes or similar
provision in connection with the issuance of the Common Shares of such
Principal Party pursuant to the provision of Section 13, then, in such event,
the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
The Company covenants and agrees that it shall not, at any time
after a Shares Acquisition Date, enter into any transaction of the type
described in clauses (A) through (C) of this Section 13.1 if (i) at the time
of or immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation,
merger, sale, transfer or other transaction, the stockholders of the Person
who constitutes, or would constitute, the Principal Party for purposes of
Section 13.2 shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or
nature of organization of the Principal Party would preclude or limit the
exercisability of the Rights. The provisions of this Section 13 shall
similarly apply to successive transactions of the type described in clauses
(A) through (C) of this Section 13.1.
13.2. PRINCIPAL PARTY. "Principal Party" shall mean:
23
(i) in the case of any transaction described in (A) or (B) of
the first sentence of Section 13.1: (i) the Person that is
the issuer of the securities into which the Common Shares are
converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the Common Shares of
which have the greatest aggregate market value of shares
outstanding, or (ii) if no securities are so issued, (x) the
Person that is the other party to the merger, if such Person
survives said merger, or, if there is more than one such
Person, the Person the Common Shares of which have the
greatest aggregate market value of shares outstanding or (y)
if the Person that is the other party to the merger does not
survive the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person
resulting from the consolidation; and
(ii) in the case of any transaction described in (C) of the
first sentence in Section 13.1, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or,
if each Person that is a party to such transaction or
transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be
determined, whichever of such Persons is the issuer of Common
Shares having the greatest aggregate market value of shares
outstanding; PROVIDED, HOWEVER, that in any such case
described in the foregoing clause (A) or (B) of this Section
13.2, if the Common Shares of such Person are not at such
time or have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange
Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are
and have been so registered, the term "Principal Party"
shall refer to such other Person, or (2) if such Person is a
Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of all of which are and have been so
registered, the term "Principal Party" shall refer to
whichever of such Persons is the issuer of Common Shares
having the greatest aggregate market value of shares
outstanding, or (3) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same
Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its
interest in such Person bears to the total of such interests.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
24
14.1. CASH IN LIEU OF FRACTIONAL RIGHTS. The Company shall
not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights (except prior to the
Distribution Date in accordance with Section 11.15). In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14.1, the current
market value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the current market value of the Rights on
such date shall be the fair value of the Rights as determined in good faith
by the Board of Directors of the Company, or, if at the time of such
determination there is an Acquiring Person, by a nationally recognized
investment banking firm selected by the Board of Directors of the Company,
which shall have the duty to make such determination in a reasonable and
objective manner, which determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
14.2. CASH IN LIEU OF FRACTIONAL PREFERRED SHARES. The
Company shall not be required to issue fractions of Preferred Shares (other
than fractions which are integral multiples of one one-hundredth of a
Preferred Share) upon exercise or exchange of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Interests in fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it; PROVIDED, that such
agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the Company shall pay to
the registered holders of Right Certificates at the time such Rights are
exercised or exchanged as herein provided an amount in cash equal to the same
fraction of the current per share market price of one Preferred Share (as
determined in accordance with Section 14.1) for the Trading Day immediately
prior to the date of such exercise or exchange.
25
14.3. CASH IN LIEU OF FRACTIONAL COMMON SHARES. The Company
shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares upon the exercise or
exchange of Rights. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional Common Shares would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole Common
Share (as determined in accordance with Section 14.1) for the Trading Day
immediately prior to the date of such exercise or exchange.
14.4. WAIVER OF RIGHT TO RECEIVE FRACTIONAL RIGHTS OR SHARES.
The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior
to the Distribution Date, of the Common Shares), may, in his own behalf and
for his own benefit, enforce this Agreement, and may institute and maintain
any suit, action or proceeding against the Company to enforce this Agreement,
or otherwise enforce or act in respect of his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person (including, without limitation,
the Company) subject to this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) as of and after the Distribution Date, the Right
Certificates are transferable only on the registry books of the Rights Agent
if surrendered at the office of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer with all
required certifications completed; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby
26
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed upon and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom,
directly or indirectly. The indemnity provided herein shall survive the
termination of this Agreement and termination and expiration of the Rights.
The costs and expenses incurred enforcing this right of indemnification shall
be paid by the Company.
The Rights Agent shall be authorized and protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it
in connection with its acceptance and administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred Shares
or the Common Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper Person or
Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any
27
Person succeeding to the shareholder services business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, PROVIDED that such Person would
be eligible for appointment as a successor Rights Agent under the provisions
of Section 21. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been countersigned,
the Rights Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
20.1. LEGAL COUNSEL. The Rights Agent may consult with
legal counsel selected by it (who may be legal counsel for the Company), and
the 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.
20.2. CERTIFICATES AS TO FACTS OR MATTERS. Whenever in the
performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
28
20.3. STANDARD OF CARE. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful misconduct.
Anything to the contrary notwithstanding, in no event shall the Rights Agent
be liable for special or punitive damages, even if the Rights Agent has been
advised of the likelihood of such loss or damage.
20.4. RELIANCE ON AGREEMENT AND RIGHT CERTIFICATES. The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Right Certificates
(except as to its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have
been made by the Company only.
20.5. NO RESPONSIBILITY AS TO CERTAIN MATTERS. The Rights
Agent shall not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11.1.2) or any adjustment required
under the provisions of Sections 3, 11, 13, 23 or 27 or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
actual notice of any such change or adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or other securities to
be issued pursuant to this Agreement or any Right Certificate or as to
whether any Preferred Shares will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
20.6. FURTHER ASSURANCE BY COMPANY. The Company agrees that
it will perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent
for the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
20.7. AUTHORIZED COMPANY OFFICERS. The Rights Agent is
hereby authorized and directed to accept instructions with respect to the
performance of its duties hereunder from any one of the Chairman of the Board
of Directors, the Chief Executive Officer, the President, the Chief Financial
Officer, any Vice President, the Treasurer, the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties under this
Agreement, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for these instructions. Any
application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent with respect to its
duties or obligations under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights
29
Agent shall not be liable to the Company for any action taken by, or omission
of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not be
less than three business days after the date any such officer actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking of any such action (or
the effective date in the case of omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
20.8. FREEDOM TO TRADE IN COMPANY SECURITIES. The Rights
Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or otherwise act
as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
20.9. RELIANCE ON ATTORNEYS AND AGENTS. The Rights Agent
may execute and exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or accountable for any
act, omission, default, neglect or misconduct of any such attorneys or agents
or for any loss to the Company resulting from any such act, omission,
default, neglect or misconduct (absent negligence, bad faith or willful
misconduct) in the selection and continued employment thereof.
20.10. INCOMPLETE CERTIFICATE. If, with respect to any
Rights Certificate surrendered to the Rights Agent for exercise or transfer,
the certificate contained in the form of assignment or the form of election
to purchase set forth on the reverse thereof, as the case may be, has not
been completed to certify the holder is not an Acquiring Person (or an
Affiliate or Associate thereof), the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
20.11. RIGHTS HOLDERS LIST. At any time and from time to
time after the Distribution Date, upon the request of the Company, the Rights
Agent shall promptly deliver to the Company a list, as of the most recent
practicable date (or as of such earlier date as may be specified by the
Company), of the holders of record of Rights.
20.12. OWN FUNDS. No provision of this Agreement shall
require the Rights Agent to expend its own funds in the performance of any of
its duties hereunder or in the exercise of its rights if it believes that
repayment of such funds 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 Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares and/or Preferred Shares, as
applicable, by registered or certified mail. Following the Distribution Date,
the Company shall promptly notify the holders of the Right Certificates by
first-class mail of any such resignation. The Company may remove the Rights
Agent or any successor Rights
30
Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and/or Preferred Shares, as applicable, by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the resigning, removed, or incapacitated Rights
Agent shall remit to the Company, or to any successor Rights Agent designated
by the Company, all books, records, funds, certificates or other documents or
instruments of any kind then in its possession which were acquired by such
resigning, removed or incapacitated Rights Agent in connection with its
services as Rights Agent hereunder, and shall thereafter be discharged from
all duties and obligations hereunder. Following notice of such removal,
resignation or incapacity, the Company shall appoint a successor to such
Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a Person organized and
doing business under the laws of the United States or of the State of New
York or the State of California (or any other state of the United States so
long as such Person is authorized to do business in the State of New York or
California) in good standing, having an office in the State of New York or
the State of California, which is subject to supervision or examination by
Federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $10 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and/or Preferred Shares, as applicable, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the Expiration Date, the Company shall,
with respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, granted or awarded
as of the Distribution Date, or upon exercise, conversion or exchange of
securities hereinafter issued by
31
the Company, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; PROVIDED, HOWEVER, that (i)
no such Right Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. REDEMPTION.
Section 23.1. RIGHT TO REDEEM. The Board of Directors of
the Company may, at its option, at any time prior to a Distribution Date,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $.001 per Right, appropriately adjusted to reflect any
stock split, stock dividend, recapitalization or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "REDEMPTION PRICE"), and the Company may, at its option,
pay the Redemption Price in Common Shares (based on the "current per share
market price," determined pursuant to Section 11.4, of the Common Shares at
the time of redemption), cash or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights by the
Board of Directors may be made effective at such time, on such basis and
subject to such conditions as the Board of Directors in its sole discretion
may establish.
Section 23.2. REDEMPTION PROCEDURES. Immediately upon the
action of the Board of Directors of the Company ordering the redemption of
the Rights (or at such later time as the Board of Directors may establish for
the effectiveness of such redemption), and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall promptly give
public notice of such redemption (with prompt written notice thereof to the
Rights Agent); PROVIDED, HOWEVER, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption. The Company
shall promptly give, or cause the Rights Agent to give, notice of such
redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates (other than Hilton
Interests) may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 or in
Section 27, and other than in connection with the purchase, acquisition or
redemption of Common Shares prior to the Distribution Date.
Section 24. NOTICE OF CERTAIN EVENTS. In case the Company shall
propose at any time after the earlier of the Shares Acquisition Date and the
Distribution Date (a) to pay any dividend payable in stock of any class to
the holders of Preferred Shares or to make any other
32
distribution to the holders of Preferred Shares (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of the
last regular periodic cash dividend theretofore paid or, in case regular
periodic cash dividends have not theretofore been paid, at a rate not in
excess of 50% of the average net income per share of the Company for the four
quarters ended immediately prior to the payment of such dividends, or a stock
dividend on, or a subdivision, combination or reclassification of the Common
Shares), or (b) to offer to the holders of Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options, or
(c) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, or (f) to
declare or pay any dividend on the Common Shares payable in Common Shares or
to effect a subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to the Rights Agent
and to each holder of a Right Certificate, in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares and/or Common
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least ten (10)
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action, at
least ten (10) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Preferred Shares
and/or Common Shares, whichever shall be the earlier.
In case any event set forth in Section 11.1.2 or Section 13 shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25, a notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11.1.2 and Section 13, and (ii) all
references in this Section 24 to Preferred Shares shall be deemed thereafter
to refer to Common Shares and/or, if appropriate, other securities.
Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this
Agreement and no other notice need be given.
Section 25. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
33
Hilton Hotels Corporation
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 and Section 24, any notice
or demand authorized by this Agreement to be given or made by the Company or
by the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
ChaseMellon Shareholder Services, L.L.C.
000 X. Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate
(or, prior to the Distribution Date, to the holder of any certificate
representing Common Shares) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. For so long as the Rights
are then redeemable, the Company may in its sole and absolute discretion, and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any
holders of Rights or Common Shares. From and after the time that the Rights
are no longer redeemable, the Company may, and the Rights Agent shall, if the
Company so directs, from time to time supplement or amend this Agreement
without the approval of any holders of Rights (i) to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein or (ii) to make any other
changes or provisions in regard to matters or questions arising hereunder
which the Company may deem necessary or desirable, including but not limited
to extending the Final Expiration Date, PROVIDED, HOWEVER, that no such
supplement or amendment shall adversely affect the interests of the holders
of Rights as such (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), no such supplement or amendment shall
change or increase the Rights Agent's duties, liabilities, or obligations,
and no such supplement or amendment may cause the Rights again to become
redeemable or cause this Agreement again to become amendable other than in
accordance with this sentence; PROVIDED FURTHER, that the right of the Board
of Directors to extend the Distribution Date shall not require any amendment
or supplement hereunder. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or amendment. Without limiting the
foregoing, at any time prior to such time as any Person becomes an Acquiring
Person, the Company and the Rights Agent may amend this Agreement to lower
the thresholds set forth in Sections 1.1 and 3.1 to not less than the greater
of (i) any
34
percentage greater than the largest percentage of the outstanding Common
Shares then known by the Company to be beneficially owned by any Person
(other than an Exempt Person) and (ii) 10%.
Section 27. EXCHANGE.
27.1. EXCHANGE OF COMMON SHARES FOR RIGHTS. The Board of
Directors of the Company may, at its option, at any time after a Shares
Acquisition Date, exchange Common Shares for all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11.1.2) by exchanging at an
exchange ratio of that number of Common Shares having an aggregate value
equal to the Spread (with such value being based on the current per share
market price (as determined pursuant to Section 11.4) on the Shares
Acquisition Date) per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such amount per Right being hereinafter referred to as the "EXCHANGE
CONSIDERATION"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Acquiring
Person shall have become the Beneficial Owner of 50% or more of the Common
Shares then outstanding. From and after the occurrence of an event specified
in Section 13.1, any Rights that theretofore have not been exchanged pursuant
to this Section 27.1 shall thereafter be exercisable only in accordance with
Section 13 and may not be exchanged pursuant to this Section 27.1. The
exchange of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors
in its sole discretion may establish.
27.2. EXCHANGE PROCEDURES. Immediately upon the action of
the Board of Directors of the Company ordering the exchange for any Rights
pursuant to Section 27.1 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive the Exchange
Consideration. The Company shall promptly give public notice of any such
exchange (with prompt written notice thereof to the Rights Agent); PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange shall state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than the Rights that
have become void pursuant to the provisions of Section 11.1.2) held by each
holder of Rights.
27.3. INSUFFICIENT SHARES. The Company may at its option
substitute, and, in the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit an
exchange of Rights for Common Shares as contemplated in accordance with this
Section 27, the Company shall substitute to the extent of such insufficiency,
for each Common Share that would otherwise be issuable upon exchange of a
Right, a number of
35
Preferred Shares or fraction thereof (or equivalent preferred stock, as such
term is defined in Section 11.2) such that the current per share market price
(determined pursuant to Section 11.4) of one Preferred Share (or equivalent
preferred share) multiplied by such number or fraction is equal to the
current per share market price of one Common Share (determined pursuant to
Section 11.4) as of the date of such exchange.
Section 28. CERTAIN COVENANTS. Subject to Section 26 hereof and the
other provisions of this Agreement, from and after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first event referenced
in Section 13.1 and prior to the earlier of the Redemption Date or the
Expiration Date, the Company shall not (a) issue or sell, or permit any
Subsidiary to issue or sell, to an Acquiring Person, or any Affiliate or
Associate of an Acquiring Person, or any Person holding Voting Shares of the
Company that are Beneficially Owned by an Acquiring Person, (i) any rights,
options, warrants or convertible securities on terms similar to, or that
materially adversely affect the value of, the Rights or (ii) Preferred
Shares, Common Shares or shares of any other class of capital stock, if such
sale is intended to or would materially adversely affect the value of the
Rights, or (b) take any other action that is intended to or would materially
adversely affect the value of the Rights.
Section 29. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Shares).
Section 31. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS. The
Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors of the Company in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 32. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or
36
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
Section 33. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 34. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 35. DESCRIPTIVE HEADING. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
HILTON HOTELS CORPORATION
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President
and General Counsel
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By /s/ Xxxxxx Xxxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxxx
Title Assistant Vice President
37
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HILTON HOTELS CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Hilton Hotels Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter
called the "CORPORATION"), hereby certifies that the following resolution was
adopted by the Board of Directors of the Corporation as required by Section
151 of the General Corporation Law by Unanimous Written Consent on November
24, 1999.
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation (hereinafter called the "BOARD OF
DIRECTORS" or the "BOARD") in accordance with the provisions of the
Certificate of Incorporation of this Corporation, the Board of Directors
hereby creates a series of Preferred Stock, par value $1.00 per share (the
"PREFERRED STOCK"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, powers and preferences, and
qualifications, limitations and restrictions thereof as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the "SERIES
A PREFERRED STOCK") and the number of shares constituting the Series A
Preferred Stock shall be 4,000,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; PROVIDED, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number
less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders
of any shares of any class or series of stock of this Corporation ranking
prior and superior to the Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $2.50 per share (the "COMMON STOCK"), of
the Corporation, and of any other stock ranking junior to the Series A
Preferred Stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
A-1
September and December in each year (each such date being referred to herein
as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph (A) of
this Section 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
A-2
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision, combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section
2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (both
as to dividends and upon dissolution, liquidation or winding
up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A
Preferred
A-3
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the
holders of shares of Series A Preferred Stock shall have received an amount
per share (the "Series A Liquidation Preference") equal to $100 per share,
plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, provided that
the holders of shares of Series A Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and
all such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other classes and series of
stock of the Corporation, if any, that rank on a parity with the Series A
Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of the Series A
Preferred Stock and the holders of such parity shares in proportion to their
respective liquidation preferences.
A-4
(C) Neither the merger or consolidation of the Corporation
into or with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this
Section 6.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
each share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable by the Company.
Section 9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, junior to all series of any other
class of the Corporation's Preferred Stock, except to the extent that any
such other series specifically provides that it shall rank on a parity with
or junior to the Series A Preferred Stock.
Section 10. AMENDMENT. At any time any shares of Series A Preferred
Stock are outstanding, the Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as
to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock,
voting separately as a single class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Executive Vice President, Chief
Administrative Officer and General Counselon this 24th day of November, 1999.
Executive Vice President, Chief Administrative Officer and
General Counsel
A-5
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER NOVEMBER 29, 2009 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED
PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(ii)(A)(z) OF
THE AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT, AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
OR TRANSFERRED TO AN ACQUIRING PERSON (AS DEFINED IN THE AGREEMENT), OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
Right Certificate
HILTON HOTELS CORPORATION
This certifies that __________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of November 29, 1999, as the same may be
amended from time to time (the "Agreement"), between Hilton Hotels
Corporation, a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C ., as Rights Agent (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date and prior
to 5:00 P.M. (California time) on November 29, 2009 at the offices of the
Rights Agent, or its successors as Rights Agent, designated for such purpose,
one one-hundredth of a fully paid, nonassessable share of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Shares") of the Company, at a purchase price of $80 per one one-hundredth of
a Preferred Share, subject to adjustment (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase and certification duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of
a Preferred Share which may be purchased upon exercise thereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase
Price as of ________, ____ based on the Preferred Shares as constituted at
such date. Capitalized terms used in this Right Certificate without
definition shall have the meanings ascribed to them in the Agreement. As
provided in the Agreement, the Purchase Price and the number of Preferred
Shares which may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Agreement are on file at the principal offices of the Company and the
Rights Agent.
B-1
This Right Certificate, with or without other Right Certificates,
upon surrender at the offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate number of one one-hundredths of a Preferred Share as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Agreement, the Board of Directors
may, at its option, (i) redeem the Rights evidenced by this Right Certificate
at a redemption price of $.001 per Right at any time prior to the
Distribution Date or (ii) exchange Common Shares for the Rights evidenced by
this Certificate, in whole or in part.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions of Preferred
Shares which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu there of a cash payment will be made, as provided in
the Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Agreement or he rein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Agreement.
If any term, provision, covenant or restriction of the Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of the Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
B-2
This Right Certificate shall not be valid or binding for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________.
Attest:
By:
--------------------------------------------
Title:
-----------------------------------------
HILTON HOTELS CORPORATION
By:
--------------------------------------------
Title:
-----------------------------------------
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Rights Agent
By:
--------------------------------------------
Authorized Signature
B-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED HEREBY SELLS, ASSIGNS AND TRANSFERS UNTO
(Please print name and address
of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_________________________ Attorney, to transfer the within Right Certificate on
the books of the within-named Company, with full power of substitution.
Dated:
---------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended.
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person or an
Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:
---------------------------------
Signature
B-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: HILTON HOTELS CORPORATION
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities or
property of the Company or of any other Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be
issued in the name of:
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
(Please print name and address)
Dated:
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended.
The undersigned hereby certifies that:
(1) Rights evidenced by this Right Certificate are not beneficially
owned by and are not being assigned to an Acquiring Person or an Affiliate or
an Associate thereof; and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:
------------------------------
Signature
B-5
NOTICE
The signature in the foregoing Form of Assignment and Form of
Election to Purchase must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or Form of Election to Purchase is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Right Certificate
to be an Acquiring Person or an Affiliate or Associate hereof and such
Assignment or Election to Purchase will not be honored.
B-6
EXHIBIT C
AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS WHICH ARE HELD BY OR HAVE BEEN
HELD BY AN ACQUIRING PERSON OR ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED
IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF SHALL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On November 24, 1999 the Board of Directors of HILTON HOTELS
CORPORATION (the "COMPANY") declared a dividend of one preferred share
purchase right (a "Right") for each share of common stock, $2.50 par value
(the "COMMON SHARES"), of the Company outstanding at the close of business on
November 30, 1999 (the "RECORD DATE"). As long as the Rights are attached to
the Common Shares, the Company will issue one Right (subject to adjustment)
with each new Common Share so that all such shares will have attached Rights.
When exercisable, each Right will entitle the registered holder to purchase
from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock (the "PREFERRED SHARES") at a price of $80 per
one one-hundredth of a Preferred Share, subject to adjustment (the "PURCHASE
PRICE"). The description and terms of the Rights are set forth in a Rights
Agreement, dated as of November 29, 1999, as the same may be amended from
time to time (the "AGREEMENT"), between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "RIGHTS AGENT").
Until the earlier to occur of (i) ten (10) days following a public
announcement that a person (subject to certain exceptions) has acquired
beneficial ownership of 20% or more of the Common Shares (the "Shares
Acquisition Date") or (ii) ten (10) business days (or such later date as may
be determined by action of the Board of Directors) following the commencement
or announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the Common Shares (the earlier of (i) and (ii) being
called the "DISTRIBUTION DATE"), the Rights will be evidenced, with respect
to any of the Common Share certificates outstanding as of the Record Date, by
such Common Share certificate together with a copy of this Summary of Rights.
The Agreement provides that until the Distribution Date (or earlier
redemption exchange, termination, or expiration of the Rights), the Rights
will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the close of business on the Record
Date upon transfer or new issuance of the Common Shares will contain a
notation incorporating the Agreement by reference. Until the Distribution
Date (or earlier redemption, exchange, termination or expiration of the
Rights), the surrender for transfer of any certificates for Common Shares,
with or without such notation or a copy of this Summary of Rights, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("RIGHT
CERTIFICATES") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
C-1
The Rights are not exercisable until the Distribution Date. The
Rights will expire on November 29, 2009, subject to the Company's right to
extend such date (the "FINAL EXPIRATION DATE"), unless earlier redeemed or
exchanged by the Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled, when, as and if declared, to a minimum preferential quarterly
dividend payment of $1.00 per share but will be entitled to an aggregate
dividend of 100 times the dividend, if any, declared per Common Share. In the
event of liquidation, dissolution or winding up of the Company, the holders
of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100 per share (plus any accrued but unpaid dividends)
but will be entitled to an aggregate payment of 100 times the payment made
per Common Share. Each Preferred Share will have 100 votes and will vote
together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
Common Share. Preferred Shares will not be redeemable. These rights are
protected by customary antidilution provisions. Because of the nature of the
Preferred Share's dividend, liquidation and voting rights, the value of one
one-hundredth of a Preferred Share purchasable upon exercise of each Right
should approximate the value of one Common Share.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of
the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares
of certain rights or warrants to subscribe for or purchase Preferred Shares
or convertible securities at less than the current market price of the
Preferred Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness, cash, securities or assets (excluding
regular periodic cash dividends at a rate not in excess of 125% of the rate
of the last regular periodic cash dividend theretofore paid or, in case
regular periodic cash dividends have not theretofore been paid, at a rate not
in excess of 50% of the average net income per share of the Company for the
four quarters ended immediately prior to the payment of such dividend, or
dividends payable in Preferred Shares (which dividends will be subject to the
adjustment described in clause (i) above)) or of subscription rights or
warrants (other than those referred to above).
In the event that a Person becomes an Acquiring Person, each holder
of a Right, other than Rights that are or were acquired or beneficially owned
by the Acquiring Person (such Rights being void), will thereafter have the
right to receive, upon exercise of such Right, that number of Common Shares
having a market value of two times the then current Purchase Price of the
Right. In the event that, after a person has become an Acquiring Person, the
Company is acquired in a merger or other business combination transaction or
more than 50% of its assets or earning powers are sold, proper provision
shall be made so that each holder of a Right shall thereafter have the right
to receive, upon the exercise the Right at the then current Purchase Price,
that number of shares of common stock of the acquiring company which at the
time of such transaction have a market value of two times the then current
Purchase Price of the Right.
Once a Person has become an Acquiring Person and prior to the
acquisition by such Acquiring Person of 50% or more of the outstanding Common
Shares, the Board of Directors may cause the Company to exchange the Rights
(other than Rights owned by an Acquiring Person which will have become void),
in whole or in part, for Common Shares at an exchange rate based on the value
of the Common Shares at that time (subject to adjustment).
C-2
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares or Common Shares will be issued (other
than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts), and in lieu thereof, a payment
in cash will be made based on the market price of the Preferred Shares or
Common Shares on the last trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of
$.001 per Right (the "REDEMPTION PRICE") by the Board of Directors at any
time on such basis as the Board of Directors in its sole discretion may
establish, prior to the tenth day following the public announcement that a
Person has become an Acquiring Person, provided, that the Board of Directors,
with the concurrence of a majority of the Continuing Directors (as defined),
may extend the period during which the Rights are redeemable beyond such
time. Under certain circumstances set forth in the Rights Agreement, the
decision to redeem shall require the concurrence of a majority of the
Continuing Directors. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Any of the provisions of the Agreement may be amended by the Board
of Directors of the Company for so long as the Rights are then redeemable,
and after the Rights are no longer redeemable, the Company may amend or
supplement the Agreement in any manner that does not adversely affect the
interests of the holders of the Rights.
A copy of the Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of
the Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Agreement, which is incorporated herein by
reference.
C-3
