EXHIBIT 1
RIGHTS AGREEMENT
PRESIDENT CASINOS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
Dated as of November 20, 1997
10
INDEX
Page
Section 1. Certain Definitions............................................1
Section 2. Appointment of Rights Agent....................................5
Section 3. Issue of Right Certificates....................................5
Section 4. Form of Right Certificates.....................................7
Section 5. Countersignature and Registration..............................7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates...................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.........................................................9
Section 8. Cancellation and Destruction of Right Certificates.............10
Section 9. Reservation and Availability of Shares of Preferred Stock......10
Section 10. Preferred Stock Record Date....................................11
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights.........................................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power..................................................19
Section 14. Fractional Rights and Fractional Shares........................21
Section 15. Rights of Action...............................................23
Section 16. Agreement of Right Holders.....................................23
Section 17. Right Certificate Holder Not Deemed a Stockholder..............23
Section 18. Concerning the Rights Agent....................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent......24
Section 20. Duties of Rights Agent.........................................25
Section 21. Change of Rights Agent.........................................27
Section 22. Issuance of New Right Certificates.............................27
Section 23. Redemption and Termination.....................................28
Section 24. Exchange.......................................................29
Section 25. Notice of Proposed Actions.....................................30
Section 26. Notices........................................................31
Section 27. Supplements and Amendments.....................................31
Section 28. Successors.....................................................31
Section 29. Benefits of this Agreement.....................................32
Section 30. Severability...................................................32
Section 31. Governing Law..................................................32
Section 32. Counterparts...................................................33
Section 33. Descriptive Headings...........................................33
EXHIBIT A - Form of Certificate of Designation.............................A-1
EXHIBIT B - Agreement, dated November 20, 1997 by and among the Company,
Xxxx X. Xxxxxxxx, Cruise Lines, Inc. and J. Xxxxxx Xxxxxxxx
Associates, Inc................................................B-1
EXHIBIT C - Form of Right Certificate......................................C-1
EXHIBIT D - Form of Summary of Preferred Stock Purchase Rights.............D-1
11
RIGHTS AGREEMENT
__________________
This Agreement, dated as of November 20, 1997, is entered into between
PRESIDENT CASINOS, INC., a Delaware corporation (the "Company"), and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. (the "Rights Agent").
W I T N E S S E T H
WHEREAS, effective November 20, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one right (hereinafter
referred to as a "Right") for each share of Common Stock, $0.06 par value, of
the Company outstanding at the close of business on December 8, 1997 (the
"Record Date") (other than shares of such Common Stock held in the Company's
treasury on such date) and has authorized the issuance of one Right in respect
of each share of Common Stock of the Company issued between the Record Date
(whether originally issued or issued from the Company's treasury) and the
Distribution Date (as such term is defined in Section 3 hereof), each Right
representing the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designation attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights");
WHEREAS, the Company desires to appoint the Rights Agent to act as provided
herein, and the Rights Agent is willing to so act;
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:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined) who
or which, together with all Affiliates (as hereinafter defined) and Associates
(as hereinafter defined) of such Person, without the prior written approval of
a majority of the Board of Directors, shall be the Beneficial Owner (as
hereinafter defined) of securities of the Company constituting 20% or more of
the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 20% or more of
the Voting Power of the Company, but shall not include the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, any entity holding securities of the Company to the
extent organized, appointed or established by the Company or any Subsidiary of
the Company for or pursuant to the terms of any such employee benefit plan, or
any Exempt Person (as hereinafter defined); provided, however, that if a
Person is the beneficial owner at the close of business on the date of this
Agreement of 20% or more of the Voting Power of the Company, such Person shall
not be deemed an Acquiring Person unless and until such Person acquires any
additional Voting Securities (as hereinafter defined) of the Company in any
manner other than pursuant to a stock dividend, stock split, recapitalization
or similar transaction that does not affect the percentage of outstanding
12
percentage of Voting Securities beneficially owned by such Person.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Voting Securities of the Company from an
Exempt Person in accordance with the provisions of that certain Agreement,
dated November 20, 1997, by and among the Company, Xxxx X. Xxxxxxxx, Cruise
Lines, Inc. and J. Xxxxxx Xxxxxxxx Associates, Inc. (the "Transfer
Agreement"), a copy of which is attached hereto as Exhibit B and incorporated
by reference herein; provided, however, that any such Person purchasing Voting
Securities of the Company pursuant to the Transfer Agreement shall become an
Acquiring Person upon any acquisition of any additional Voting Securities of
the Company in any manner other than pursuant to a stock dividend, stock
split, recapitalization or similar transaction that does not affect the
percentage of outstanding percentage of Voting Securities beneficially owned
by such Person. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of Voting Securities of the
Company by the Company which, by reducing the amount of such securities
outstanding, increases the proportionate Voting Power of such securities
beneficially owned by such Person to 20% or more of the Voting Power;
provided, however, that if a Person becomes the Beneficial Owner of securities
constituting 20% or more of the Voting Power by reason of purchases by the
Company and shall, after such purchases by the Company, become the Beneficial
Owner of any additional Voting Securities by the Company, then such Person
shall be deemed to be an Acquiring Person. Notwithstanding the foregoing, if
a majority of the Continuing Directors then in office determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined
pursuant to this Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares of Voting
Securities of the Company so that such Person would no longer be an Acquiring
Person, then such Person shall not be deemed to be an "Acquiring Person" for
purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule l2b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof.
(c) 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;
(ii) which such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to 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), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise, provided,
however, that a Person shall not be deemed the "Beneficial Owner" of
securities tendered pursuant to a tender or exchange offer made by or on
2
13
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for payment or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or understanding,
provided, however, that a Person shall not be deemed the "Beneficial Owner" of
any security under this clause (B) if the agreement, arrangement or
understanding to vote such securities (1) arises solely from a revocable proxy
or consent given 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 by such person 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 with 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) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or consent as
described in clause (B) of subparagraph (ii) of this paragraph (c)) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the States of Delaware or Missouri are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., St. Louis
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., St. Louis time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, $0.06 par value, of the
Company, except that "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock with the greatest Voting
Power of such Person or the equity securities or other equity interest having
power to control or direct the management of such Person or, if such Person is
a Subsidiary (as hereinafter defined) of another Person, of the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(g) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such person is a member of the Board, who is
not an Acquiring Person or an Affiliate or Associate of an Acquiring Person,
or a representative or nominee of an Acquiring Person or of any such Affiliate
or Associate, and was a member of the Board of Directors prior to the Stock
Acquisition Date, and (ii) any successor of a Continuing Director, while such
successor is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person or of any such Affiliate or
Associate and is recommended or elected to succeed the Continuing Director by
a majority of the Continuing Directors.
(h) "Distribution Date" shall have the meaning defined in Section 3 hereof.
3
14
(i) "Exempt Person" shall mean any of the following: (i) Xxxx X. Xxxxxxxx,
any descendant of Xxxx X. Xxxxxxxx (including descendants by adoption and
their descendants), or any spouse, widow or widower of Xxxx X. Xxxxxxxx (and
their children) or any such descendant (collectively defined as the "Family
Members"); (ii) any trust which is in existence on the date of this Rights
Agreement and which has been established by one or more Family Members and any
estate of a Family Member who died on or before the date of this Rights
Agreement (collectively defined as the "Existing Family Entities"); (iii) any
estate of a Family Member who dies after the date hereof or any trust
established after the date hereof by one or more Family Members or Existing
Family Entities; provided that one or more Family Members, Existing Family
Entities or charitable organizations which qualify as exempt organizations
under Section 501(c) of the Internal Revenue Code of 1986, as amended
("Charitable Organizations"), collectively, are the beneficiaries of at least
50% of the actuarially-determined beneficial interests in such estate or
trust; (iv) any Charitable Organization which is established by one or more
Family Members or Existing Family Entities (a "Family Charitable
Organization"); (v) any corporation of which a majority of the voting power
and a majority of the equity interest is held, directly or indirectly, by or
for the benefit of one or more Family Members, Existing Family Entities,
estates or trusts described in clause (iii) above or Family Charitable
Organizations; and (vi) any partnership or other entity or arrangement of
which a majority of the voting interest and majority of the economic interest
is held, directly or indirectly, by or for the benefit of one or more Family
Members, Existing Family Entities, estates or trusts described in clause (iii)
above or Family Charitable Organizations.
(j) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of any such entity.
(k) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, $0.01 par value, of the Company.
(l) "Purchase Price" shall have the meaning defined in Section 4 hereof.
(m) "Stock Acquisition Date" shall mean the earlier of (i) the first date
of public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such, or (ii) the date on which the Company first has
notice, direct or indirect, or otherwise determines that a Person has become
an Acquiring Person.
(n) "Subsidiary" shall mean any corporation or other entity of which
securities or other ownership interests having ordinary Voting Power, in the
absence of contingencies, to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by another corporation or other entity and shall include
Subsidiaries of Subsidiaries, except that "Subsidiary" when used with
reference to the Company shall mean any corporation or other entity of which
either a majority of the Voting Power of the voting equity securities or a
majority of the equity interests is owned, directly or indirectly, by the
4
15
Company.
(o) "Voting Power" shall mean the Voting Power of all securities of a
Person then outstanding generally entitled to vote for the election of
directors of the Person (or, where appropriate, for the election of persons
performing similar functions).
(p) "Voting Securities" shall mean any securities of a Person which have
Voting Power.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof shall prior to the Distribution Date
also be the holders of the Common Stock) 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
Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth day after
the Stock Acquisition Date or (ii) the Close of Business on the tenth day (or
such later date as may be determined by action of the Continuing Directors
prior to such time as any Person becomes an Acquiring Person) after the date
of the commencement of, or first public announcement of the intent of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
holding securities of the Company to the extent organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan) to commence (which intention to
commence remains in effect for five Business Days after such announcement),
without the prior written approval of a majority of the Board of Directors, a
tender or exchange offer which would result in any Person becoming the
Beneficial Owner of securities representing 20% or more of the Voting Power of
the Company (including any such date which is after the date of this Agreement
and prior to the issuance of the Rights; the earlier of such dates being
herein referred to as the "Distribution Date"): (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also
to be Right Certificates) and not by separate Right Certificates, as more
fully set forth below, and (y) the Rights (and the right to receive
certificates therefor) will be transferable only in connection with the
transfer of the underlying shares of Common Stock, as more fully set forth
below. As soon as practicable after the Company has notified the Rights Agent
of the occurrence of the Distribution Date, the Company shall prepare and
execute, and the Rights Agent shall countersign and send, by first-class,
insured, postage prepaid mail, to each record holder of the Common Stock as of
the Close of Business on the Distribution Date, at the address of such holder
5
16
shown on the records of the Company, a right certificate, in substantially the
form of Exhibit C hereto (the "Right Certificate"), evidencing one Right for
each share of Common Stock so held. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit D hereto (the "Summary of Rights"), by
first-class postage prepaid mail, to each record holder of the Common Stock as
of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for the
Common Stock outstanding as of the Record Date until the Distribution Date (or
the earlier redemption, exchange, expiration or termination of the Rights),
the Rights will be evidenced by such certificates for the Common Stock
registered in the names of the holders of the Common Stock and the registered
holders of the Common Stock shall also be registered holders of the associated
Rights. Until the Distribution Date (or the earlier redemption, exchange,
expiration or termination of the Rights), the surrender for transfer of any of
the certificates for the Common Stock outstanding in respect of which Rights
have been issued (with or without a copy of the Summary of Rights attached
thereto) shall also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
(c) Certificates for the Common Stock issued after the Record Date but
prior to the earlier of the Distribution Date or the redemption, expiration or
termination of the Rights shall be deemed also to be certificates for Rights
and shall have impressed, printed or written on, or otherwise affixed to them
the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between President Casinos, Inc. (the
"Company") and ChaseMellon Shareholder Services, L.L.C. dated as of November
20, 1997 (the "Rights Agreement"), the terms of which are incorporated herein
by reference and a copy of which is on file at the principal executive offices
of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire, or may be evidenced by
separate certificates and no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the Rights
Agreement without charge within five days after receipt of a written request
therefor. Under certain circumstances, Rights issued to or held by Acquiring
Persons or their Affiliates or Associates (as defined in the Rights Agreement)
and any subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, exchange, expiration or
termination of the Rights), the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
6
17
In the event that the Company purchases or acquires any Common Stock after
the Record Date but prior to the Distribution Date, any Rights associated with
such Common Stock shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Stock
which are no longer outstanding. Upon reissuance of such Common Stock by the
Company prior to the Distribution Date (or earlier redemption, exchange,
expiration or termination of the Rights), the Rights shall again attach to
such Common Stock as set forth in this Section 3(c).
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall be in
substantially the same form as Exhibit C hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to customary usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Right Certificates, whenever issued,
shall be dated as of the Record Date, and on their face shall entitle the
holders thereof to purchase such number of one one-hundredth of a share of
Preferred Stock as shall be set forth therein at the price per one
one-hundredth of a share as set forth therein (the "Purchase Price"), but the
number of such shares and the Purchase Price shall be and remain subject to
adjustment as provided in Sections 11 and 13 hereof.
(b) Any Right Certificate issued pursuant to Section 3(a) hereof that
represents Rights as to which an Acquiring Person or any Associate or
Affiliate thereof is the Beneficial Owner and any Right Certificate issued at
any time upon the transfer of any Rights to an Acquiring Person or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate, and any Right Certificate issued pursuant to Section 6
hereof, Section 11 hereof or Section 22 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate were issued to a Person who
was an Acquiring Person or an Affiliate or an Associate of an Acquiring
Person. This Right Certificate and the Rights represented hereby may become
void in the circumstances specified in Section 7(e) of the Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or
any defect therein shall not affect in any manner whatsoever the application
or interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its President or any Vice President, either manually or by facsimile
7
18
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent or any
registrar for the Common Stock (the "Registrar") and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company whose
manual or facsimile signature is affixed to the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
or the Registrar and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent or the
Registrar, issued and delivered 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. 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 Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, 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 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the Expiration Date (as such term is defined in Section 7(a) hereof), any
Right Certificate or Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 7(e) hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights Agent.
Thereupon, the Rights Agent or the Registrar shall countersign and deliver to
the person entitled thereto a Right Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
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 reimbursement to the Company and
8
19
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 or the Registrar 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.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) 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 on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the Rights Agent
together with payment of the Purchase Price for each one one-hundredth of a
share of Preferred Stock as to which the Rights are exercised, at or prior to
the Close of Business on the earlier of (i) December 7 , 2007 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof, or (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof (such earlier date being herein referred to as
the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $30.00, shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for each
one one-hundredth of a share to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of the Rights
pursuant hereto in accordance with Section 9 hereof in cash, or by certified
check or money order payable to the order of the Company, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) either (A)
requisition from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent), certificates for the
number of shares of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company, in its sole discretion, shall have elected to deposit the
shares of Preferred Stock issuable upon exercise of the Rights hereunder into
a depositary, requisition from the depositary agent depositary receipts
representing such number of one one-hundredth of a share of Preferred Stock as
are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby irrevocably authorizes 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 issuance
of fractional shares in accordance with Section 14 hereof, (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
9
20
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt, promptly deliver such cash
in lieu of issuance of fractional shares to or upon the order of the
registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all of the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of any of the events listed in Section 11(b) or in Section 13(a)
hereof, any Rights that are or were at any time on or after the earlier of the
Stock Acquisition Date or the Distribution Date of which an Acquiring Person
or any Associate or Affiliate of the Acquiring Person is the Beneficial Owner
shall become void with respect to the rights provided under Section 11(b) and
Section 13(a) hereof and any holder of such Rights shall thereafter have no
right to exercise such rights under the provisions of Section 11(b) and
Section 13(a).
(f) 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 upon the occurrence of any purported exercise
as set forth in this Section 7 unless the certification contained in the
appropriate form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise shall have been properly
completed and duly executed 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) of such Rights or Affiliates or
Associates of such Beneficial Owner (or former Beneficial Owner) 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 cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
10
21
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
its authorized and issued shares of Preferred Stock held in treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the occurrence of an
event specified in Section 11 hereof, shall so reserve and keep available a
sufficient number of shares of Preferred Stock, Common Stock and/or other
securities which may be required to permit the exercise in full of the Rights
pursuant to this Agreement.
(b) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares or securities.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of an event which would establish
the Distribution Date, a registration statement on an appropriate form under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act)
until the date of the expiration of the Rights. The Company will also take
such action as may be appropriate under the Blue Sky laws of the various
states.
(d) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock and/or other securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates or
depositary receipts for Preferred Stock and/or other securities in a name
other than that of the registered holder of the Right Certificate evidencing
Rights surrendered for exercise, nor shall the Company be required to issue or
deliver any certificates or depositary receipts for shares of Preferred Stock
and/or other securities upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person (other than the
Company) in whose name any certificate for shares of Preferred Stock (or other
securities) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock (or other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
11
22
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or other securities)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or other
securities) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder as a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of shares covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) In the event the Company shall at any time after the date of this
Agreement (i) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (ii) subdivide the outstanding Preferred Stock, (iii) combine
the outstanding Preferred Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(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, the Purchase Price in effect
at the time of the record date for such dividend or the time of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock, including Preferred Stock, issuable upon
exercise of a Right, shall be proportionately adjusted so that the holder of
any Right exercised after such time, upon payment of the aggregate Purchase
Price such holder would have to pay to exercise such Right prior to such time,
shall be entitled to receive the aggregate number and kind of shares of
capital stock, including Preferred Stock, which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification.
(b) In the event any Person shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right, subject to Section
7(e) and except as provided below, shall after the later of the occurrence of
such event and the effective date of an appropriate registration statement
pursuant to Section 9 hereof, have a right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of shares of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredth
of a share of Preferred Stock for which a Right is then exercisable and
dividing that product by (y) 50% of the Current Market Price per one share of
12
23
Common Stock (determined pursuant to Section 11(f) hereof on the date of the
occurrence of any one of the events listed above in this subparagraph (b))
(such number of shares being referred to as the "Number of Adjustment
Shares").
(c) In the event that there shall not be sufficient shares in treasury or
authorized but unissued shares of Common Stock to permit the exercise in full
of the Rights in accordance with the foregoing Section 11(b) and the Rights
become so exercisable, notwithstanding any other provision of this Agreement,
to the extent necessary and permitted by applicable law and any agreements in
effect on the date hereof to which the Company is a party, each Right shall
thereafter represent the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, a
number of shares, or unit of shares, of (x) Common Stock, and (y) any class or
series of preferred stock (or other equity securities) of the Company,
including, but not limited to Preferred Stock, equal in the aggregate to the
Number of Adjustment Shares where the Board of Directors shall have in good
faith deemed such shares or units, other than the shares of Common Stock, to
have at least the same value and voting rights as the Common Stock (a "Common
Stock Equivalent"); provided however, if there are unavailable sufficient
shares (or fractions of shares) of Common Stock and/or Common Stock
Equivalents, then the Company shall take all such action as may be necessary
to authorize additional shares of Common Stock or Common Stock Equivalents for
issuance upon exercise of the Rights, including the calling of a meeting of
stockholders; and provided, further, that if the Company is unable to cause
sufficient shares of Common Stock and/or Common Stock Equivalents to be
available for issuance upon exercise in full of the Rights, then the Company,
to the extent necessary and permitted by applicable law, and any agreements or
instruments in effect on the date thereof to which it is a party, shall make
provision to pay an amount in cash equal to twice the Purchase Price (as
adjusted pursuant to this Section 11), in lieu of issuing shares of Common
Stock and/or Common Stock Equivalents. To the extent that the Company
determines that some action needs to be taken pursuant to this Section 11(c),
a majority of the Board of Directors may suspend the exercisability of the
Rights for a period of up to sixty (60) days following the date on which the
event described in Section 11(b) hereof shall have occurred, in order to
decide the appropriate form of distribution to be made pursuant to this
Section 11(c) 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. The Board of
Directors may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock and Common Stock Equivalents upon exercise
of the Rights among holders of Rights, which such allocation may be, but is
not required to be, pro-rata.
(d) If the Company shall fix a record date for the issuance of rights or
warrants to all holders of Preferred Stock entitling them (for a period
expiring within 90 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or
13
24
Equivalent Preferred Stock, at a subscription or purchase price per share of
Preferred Stock or per share of Equivalent Preferred Stock or having a
conversion price per share, as the case may be, less than the Current Market
Price per share of Preferred Stock (as defined in Section 11(f) hereof) 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 date by a fraction, the numerator of which shall be the number
of shares of Preferred Stock outstanding on such record date plus the number
of shares of Preferred Stock which the aggregate subscription or purchase
price of the total number of shares of Preferred Stock or Equivalent Preferred
Stock to be offered for subscription or purchase (and/or the aggregate initial
conversion price of the convertible securities so to be offered for
subscription or purchase) would purchase at such Current Market Price, and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription or purchase
price (and/or the conversion price of convertible securities) 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 a majority
of the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment 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.
(e) If the Company shall fix a record date for the making of a distribution
to all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), 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 Market Price for one share of Preferred Stock (as
defined in Section 11(f) hereof) on such record date less the fair market
value (as determined in good faith by a majority of the Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such convertible securities, subscription rights or warrants
applicable to one share of Preferred Stock, and the denominator of which shall
be such Current Market Price for one share of Preferred Stock. 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
14
25
shall again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(f) (i) For the purpose of any computation hereunder, the "Current Market
Price" of any security (a "Security" for purposes of this Section 11(f)(i)) on
any date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Current Market Price per share of such Security is determined during
a period following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such Security
or securities convertible into shares of such Security or (B) any subdivision,
combination or reclassification of such Security, and prior to the expiration
of 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 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 transaction price as reported by the Nasdaq
National Market or, if not so reported, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq Stock
Market or such other system then in use, or, if on any such date the Security
is not reported by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker in the Security
selected by a majority of the Board of Directors. If on any such date no
market maker is making a market in the Security, the fair value of such
Security on such date as determined in good faith by a majority of the Board
of Directors shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Security is not publicly held or not so
listed or traded, "Current Market Price" shall mean the fair value as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent.
(ii) For the purposes of any computation hereunder, the "Current Market
Price" per share (or one one-hundredth of a share) of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock in
clause (i) of this Section 11(f) (other than the last sentence thereof). If
the Current Market Price per share (or one one-hundredth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the
15
26
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(f), the "Current Market Price" per share of
Preferred Stock 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 Stock
occurring after the date of this Agreement) multiplied by the Current Market
Price per share of the Common Stock and the "Current Market Price" per one
one-hundredth of a share of Preferred Stock shall be equal to the Current
Market Price per share of the Common Stock (as appropriately adjusted). If
neither the Common Stock or the Preferred Stock is publicly held or so listed
or traded, "Current Market Price" per share shall mean the fair value per
share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes.
(g) Anything herein to the contrary notwithstanding, 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; provided, however,
that any adjustments which by reason of this Section 11(g) 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 ten-thousandth of a share, as the case may be.
Notwithstanding the first sentence of this Section 11(g), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which mandates such adjustment or
(ii) the Expiration Date.
(h) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of Preferred Stock, 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 shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Section 7, 9, 10,
13 and 14 hereof with respect to the shares of Preferred Stock shall apply on
like terms to any such other shares.
(i) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock or other capital stock of the Company purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment of
the Purchase Price.
(j) Unless the Company shall have exercised its election as provided in
Section 11(k) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Section 11(d) and (e) hereof, 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-hundredth of a share of Preferred Stock (calculated to
16
27
the nearest ten-thousandth) obtained by (i) multiplying (A) the number of one
one-hundredth of a share of Preferred Stock covered by a Right immediately
prior to the adjustment by (B) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(k) 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 shares of Preferred Stock purchasable 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-hundredth
of a share of Preferred Stock for which such 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 ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If the Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(k), the
Company shall, 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 hereof, 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 to be so
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.
(l) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of shares which were expressed in
the initial Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Common Stock
or other securities and below one one-hundredth of the then par value, if any,
of the Preferred 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
17
28
and nonassessable shares of such Preferred Stock, Common Stock or other
securities at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and Common Stock
Equivalents, a portion of the consideration paid upon such exercise, equal to
at least the then par value of a share of Common Stock of the Company, shall
be allocated as the payment for each share of Common Stock of the Company so
received.
(n) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the shares
of Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the shares of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company 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.
(o) 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 in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
Preferred Stock at less than the then Current Market Price, (iii) issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred
Stock, shall not be taxable to such stockholders.
(p) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock)
into a greater or lesser number of Common Stock, then in any such case (i) the
number of one one-hundredth shares of Preferred Stock purchasable after such
event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredth shares of Preferred Stock so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately before such event and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such event, and (ii) each share of Common Stock outstanding
immediately after such event shall have issued with respect to it that number
of Rights which each share of Common Stock outstanding immediately prior to
such event had issued with respect to it. The adjustments provided for in
this Section 11(p) shall be made successively whenever such a dividend is
18
29
declared or paid or such a subdivision, combination or consolidation is
effected.
(q) The Company covenants and agrees that it shall not, at any time after
the Distribution Date and so long as the Rights have not been redeemed
pursuant to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i)
consolidate with, (ii) merge with or into, or (iii) sell or transfer, in one
or more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, if at the time of or immediately after such
consolidation, merger or sale 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.
(r) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 23 hereof or Section 24
hereof, take any action the purpose or effect of which is to diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, 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
Preferred Stock and the Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustments therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, directly or indirectly, following the Distribution
Date, (x) the Company shall consolidate with, or merge with and into, any
other Person, (y) any Person shall consolidate with or merge with and into the
surviving corporation of such merger and, in connection with such merger, all
or part of the Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (z) the
Company shall sell, or otherwise transfer (or one or more of its Subsidiaries
shall sell 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 other than
to the Company or one or more of its wholly-owned Subsidiaries, then, and in
each such case, proper provision shall be made so that (i) each holder of a
Right, subject to Section 7(e), shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of Preferred Stock, such number of
shares of freely tradable Common Stock of the Principal Party (as hereinafter
defined), free and clear of liens, rights of call or first refusal,
19
30
encumbrances or other adverse claims, as shall be equal to the result obtained
by (A) multiplying the then current Purchase Price by the number of one
one-hundredth of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (B) 50% of the Current Market Price
per share of the Common Stock of such Principal Party (determined in the
manner described in Section 11(f) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the 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, it being specifically intended that
the provisions of Section 11 hereof, except for the provisions of 11(b), shall
apply to such Principal Party; and (iv) such Principal Party shall take such
steps (including, but not limited to, the authorization and reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) 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
the shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of the
first sentence of Section 13(a) hereof, the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person,
including the Company, that is the other party to the merger or consolidation;
and
(ii) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a) hereof, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any case described in
clause (i) or (ii) in this Section 13(b), (x) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary or Affiliate of another Person,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest market value, and (z) in case 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 (x) and (y) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties
in each such chain shall bear the obligations set forth in this Section 13 in
the same ratio as their direct or indirect interests in such Person bear to
the total of such interest.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless prior thereto the Company and each Principal Party and each
20
31
other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any consolidation, merger or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement on an appropriate form
under the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights, will use its best efforts to cause
such registration statement to become effective as soon as practicable after
such filing and will 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;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the Blue Sky laws of
such jurisdictions as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. 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(a), 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 transaction price as reported by
the Nasdaq National Market, or, if not so reported, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq Stock Market or such other system then in use or, if on any such date
21
32
the Rights are not reported by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker in
the Rights selected by a majority of the Board of Directors. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by a majority of the Board
of Directors shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock 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 shares of Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of Preferred
Stock, the Company may pay to the registered holders of Right Certificates at
the time such Right Certificates are exercised as herein provided, an amount
in cash equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-hundredth of a share of Preferred
Stock shall be one one-hundredth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(f)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or events specified
in Section 11 hereof giving rise to the right to receive Common Stock, Common
Stock Equivalents or other securities (other than Preferred Stock) upon the
exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such Common Stock, Common Stock Equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of such Common Stock, Common Stock Equivalents or
other securities. In lieu of fractional shares or units of such Common Stock,
Common Stock Equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a share or unit of such Common Stock, Common Stock Equivalent
or other securities. For purposes of this Section 14(c), the current market
value shall be determined in the manner set forth in Section 11(f)(i) hereof
for the Trading Day immediately prior to the date of such exercise and, if
such Common Stock, Common Stock Equivalent or other securities are not traded,
each such share or other unit of Common Stock, Common Stock Equivalent or
other securities shall have the value of one one-hundredth of a share of
Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14, the holder
22
33
of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional share upon exercise of Rights.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except for rights of action given to the Rights Agent under Section
18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder of any Right Certificate (or, prior
to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise 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 will be entitled
to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement. Holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred by them in
any action to enforce the provisions of 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 Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; 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 Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent 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 Preferred Stock, Common Stock 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
23
34
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 25 hereof), 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
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for Preferred Stock, Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person
or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this 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.
24
35
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in
its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any act 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 the President or any Vice President and
by the Chief Financial Officer, the Chief Accounting Officer, Treasurer or any
Assistant Treasurer or the Secretary or any 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.
(c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify
the same, and all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) 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 adjustment required under the provisions of Sections
11 and 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced
25
36
by Right Certificates after actual notice to the Rights Agent of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock, Common Stock or other securities to be issued
pursuant to this Agreement or any Right Certificate or as to whether any
shares of Preferred Stock, Common Stock or other securities will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
President any Vice President, the Chief Financial Officer, the Chief
Accounting Officer, the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it 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.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or have a pecuniary interest 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 the 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.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1, 2 and/or 3
26
37
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer
agent of the Common Stock and Preferred Stock by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock and Preferred Stock 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 Company shall appoint a successor
Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a 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 successor Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be
(a) a corporation organized and doing business under the laws of the United
States or of any state, in good standing, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $25,000,000, or (b) an affiliate of a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed. 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 mail
a written notice thereof in writing with the predecessor Rights Agent by
certified or registered mail and each transfer agent of the Common Stock and
Preferred Stock, and mail a written notice thereof to the registered holders
of the Right Certificates by first class mail. Failure to give any notice
provided for this Section 21, 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 a majority of the Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
27
38
Section 23. Redemption and Termination.
(a) (i) A majority of the Board of Directors of the Company may, at its
option, at any time prior to the earlier of (x) the time that any Person
becomes an Acquiring Person or (y) the Final Expiration Date, elect to redeem
all but not less than all of the then outstanding Rights at a redemption price
of $.001 per Right, as appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Board may be made effective at such time,
on such basis and with such conditions as the Board in its sole discretion may
establish.
(ii) In addition, a majority of the Continuing Directors may redeem all
but not less than all of the then outstanding Rights at the Redemption Price
following the occurrence of a Stock Acquisition Date but prior to any event
described in Section 13(a) either: (x) if each of the following shall have
occurred and remain in effect: (1) a Person who is an Acquiring Person shall
have transferred or otherwise disposed of a number of shares of Voting
Securities of the Company in a manner satisfactory to the Continuing Directors
such that such Person is thereafter a Beneficial Owner of securities having
less than 20% of the Voting Power of the Company, and (2) there is no other
Person, immediately following the occurrence of the event described in (1),
who is an Acquiring Person; or (y) in connection with any transaction not
involving an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
(b) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the action of a majority of the Board of Directors electing
to redeem the Rights, evidence of which shall be promptly filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. In the case of a
redemption permitted under Section 23(a)(ii), evidence of which shall have
been filed with the Rights Agent, the right to exercise the Rights will
terminate and represent only the right to receive the Redemption Price only
after ten (10) business days following the giving of such notice of such
redemption to the holders of such Rights. The Company shall promptly give
public disclosure of any such redemption; provided, however, that the failure
to give, or any defect in, any such disclosure shall not affect the validity
of such redemption. Within 10 days after the action of the Board of Directors
or the Continuing Directors, as the case may be, ordering the redemption of
the Rights, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing by first class mail such notice to all
such holders at their last addresses as they appear upon the registry books of
the transfer agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
(c) Neither the Company nor any of its Affiliates or Associates may redeem,
28
39
acquire or purchase for value any Rights at any time or in any manner other
than that specifically set forth in this Section 23, and other than in
connection with the purchase of shares of Common Stock prior to the
Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common
Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock for Common Stock exchangeable for
Rights, at the initial rate of one one-hundredth of a share of Preferred
Stock, as appropriately adjusted to reflect adjustments in the voting rights
of the Preferred Stock pursuant to the terms thereof, so that the fraction of
a share of Preferred Stock delivered in lieu of each share of Common Stock
shall have the same voting rights as one share of Common Stock.
29
40
(d) In the event that there shall not be sufficient shares of Common Stock
or of Preferred Stock issued but not outstanding, or authorized but unissued,
to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock or of Preferred Stock for issuance
upon exchange of the Rights.
(e) The Company shall not be required to issue fractional shares of Common
Stock or of Preferred Stock (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock) or to distribute
certificates which evidence fractional shares of such Common Stock or of
Preferred Stock. In lieu of such fractional shares, the Company shall pay to
the registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash as determined
by Section 14 hereof.
Section 25. Notice of Proposed Actions. In case the Company shall propose
(a) to pay any dividend payable in stock of any class to the holders of its
Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular periodic cash dividend out of earnings
or retained earnings of the Company), or (b) to offer to the holders of its
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any other class or
any other securities, rights or options, or (c) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), 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 sales 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 (e) to effect the liquidation, dissolution or winding up of
the Company, or (f) to declare or pay any dividend on the Common Stock payable
in Common Stock or to effect a subdivision, combination or consolidation of
the Common Stock (by reclassification or otherwise than by payment of
dividends in Common Stock), then, in each such case, the Company shall mail by
first class mail to each holder of a Right, in accordance with Section 26
hereof, 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 Common Stock and/or
Preferred Stock, if any such date is to be fixed. Such notice shall be so
given in the case of any action covered by clauses (a) or (b) above at least
ten days prior to the record date for determining holders of the Preferred
Stock for purposes of such action, and in the case of any such other action,
at least ten days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of Preferred Stock, whichever
shall be the earlier. The failure to give notice required by this Section 25,
or any defect therein, shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
30
41
In case any of the events set forth in Section 11(b) of this Agreement shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter mail by first class mail to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(b) hereof.
Section 26. 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 (unless another address is filed
in writing with the Rights Agent) as follows:
PRESIDENT CASINOS, INC.
000 Xxxxx Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: President
Subject to the provisions of Section 21 hereof, 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 (unless another address is filed in writing with the Company) as
follows:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
0 Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
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 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 or the Rights Agent.
Section 27. Supplements and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company may deem necessary or
desirable and which shall be consistent with, and for the purpose of
fulfilling, the objectives of the Board of Directors in adopting this
Agreement, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; provided, however, that from and
after such time any Person becomes an Acquiring Person, this Agreement shall
not be amended in any manner which would adversely affect the interests of the
holders of Rights.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure
31
42
to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give 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 Stock) any legal or equitable right, remedy or
claim under this Agreement. 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
Stock).
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. It
is the intent of the parties hereto to enforce the remainder of the terms,
provisions, covenants and restrictions to the maximum extent permitted by law.
Section 31. 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.
[the remainder of this page is left intentionally blank]
32
43
Section 32. 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 33. Descriptive Headings. 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, all as of the day and year first above written.
Attest: PRESIDENT CASINOS, INC.
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxx X. Xxxxxxxxx
----------------------------- -----------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxxx
Title: Secretary Title: President
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxxx Xxxxxx
----------------------------- -----------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxxxx
Title: Asst. Vice President Title: Vice President
33
44
EXHIBIT A
___________
[Form of Certificate of Designation]
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
PRESIDENT CASINOS, INC.
I, Xxxxx X. Xxxxxxx, the Executive Vice President and Chief Financial
Officer of President Casinos, Inc., a corporation organized and existing under
The General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 151 thereof, DO HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of the Company, the said Board of
Directors on November 20, 1997 adopted the following resolution creating a
series of One Hundred Thousand (100,000) shares of voting Preferred Stock
designated as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors of
the Company in accordance with the provisions of its Certificate of
Incorporation, as amended, a series of voting Preferred Stock of the Company
be and it is hereby created, and that the designation and amount thereof and
the powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
There shall be a series of the voting preferred stock of the Company which
shall be designated as the "Series A Junior Participating Preferred Stock,"
$0.01 par value, and the number of shares constituting such series shall be
100,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock to a number
less than that of the shares then outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
preferred stock of the Company ranking prior and superior to the Series A
Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Junior Participating Preferred Stock, in preference to the
holders of shares of Common Stock, $0.06 par value (the "Common Stock"), of
A-1
45
the Company and of any other junior 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
January, April, July and October 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 Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$.01 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 Junior Participating Preferred Stock. In
the event the Company shall at any time after November 20, 1997 (the "Rights
Declaration Date") declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or 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 Junior Participating 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 Company shall declare a dividend or distribution on the Series A
Junior Participating Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided,
however, 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 $.01 per share on the Series A Junior Participating 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 Junior Participating 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 Junior Participating 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
A-2
46
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 Junior Participating Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date 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 Junior Participating Preferred Stock shall
have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to 100 votes on all matters submitted to a vote of
the stockholders of the Company.
(B) Except as otherwise provided herein, in the Company's Certificate of
Incorporation or by law, the holders of shares of Series A Junior
Participating Preferred Stock, the holders of shares of Common Stock, and the
holders of shares of any other capital stock of the Company having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's Certificate of
Incorporation, and except as otherwise provided by law, holders of Series A
Junior Participating 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 dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Junior Participating Preferred
Stock outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, except dividends paid ratably on the Series A Junior
A-3
47
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) except as permitted in Section 4(A)(iv) below, redeem or purchase
or otherwise acquire for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Junior Participating Preferred Stock, provided, however, that the
Company may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Junior Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any shares of Series
A Junior Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company
unless the Company 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 Junior Participating Preferred Stock purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. The Company shall cause
all such shares upon their cancellation to be authorized but unissued shares
of Preferred Stock which may be reissued as part of a new series of Preferred
Stock, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Company, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $.10 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Junior Participating Preferred Stock, unless, prior thereto, the
A-4
48
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series
A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth
in paragraph (C) of this Section 6 to reflect such events as stock dividends,
and subdivisions, combinations and consolidations with respect to the Common
Stock) (such number in clause (ii) being referred to as the "Adjustment
Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series A Junior Participating
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the
event there are not sufficient assets available to permit payment in full of
the Common Adjustment, then such remaining assets shall be distributed ratably
to the holders of Common Stock.
(C) In the event the Company shall at any time after the Rights Declaration
Date declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or 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 Adjustment Number
in effect immediately prior to such event shall be adjusted by multiplying
such Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
In case the Company 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 the shares of Series A Junior Participating Preferred Stock
shall at the same time be similarly exchanged or changed in 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 exchanged or changed. In the event the Company shall
at any time after the Rights Declaration Date declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
A-5
49
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 Junior Participating 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 are outstanding immediately prior to such event.
Section 8. Redemption.
The shares of Series A Junior Participating Preferred Stock shall not be
redeemable.
Section 9. Ranking.
The Series A Junior Participating Preferred Stock shall rank junior to all
other series of the Company's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
Section 10. Fractional Shares.
Series A Junior Participating Preferred Stock may be issued in fractions
which are integral multiples of one one-hundredth of a share. Fractions of
shares of Series A Junior Participating Preferred Stock 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 the
Company. The holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Series A Junior Participating Preferred Stock represented by such
depositary receipts.
A-6
50
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm and acknowledge the foregoing as true under the penalties of perjury
this 25th day of November, 1997.
__________________________________________
Xxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer
State of Missouri )
) SS.
City of St. Louis )
On this 25th day of November, 1997, before me, ____________________________,
a Notary Public in and for the State of Missouri, personally appeared Xxxxx X.
Xxxxxxx, Executive Vice President and Chief Financial Officer of President
Casinos, Inc., known to me to be the person who executed the foregoing
Certificate of Designation and acknowledged to me that he executed the same
pursuant to authority given by the Board of Directors of such corporation as
their free and voluntary act, and as the free and voluntary act and deed of
such corporation, for the uses and purposes therein set forth.
_________________________________
Notary Public
My commission expires:
___________________________
X-0
00
XXXXXXX X
___________
[Form of Transfer Agreement]
AGREEMENT
This Agreement entered into this 20th day of November, 1997 between
President Casinos, Inc. ("President"), a Delaware corporation, Xxxx X.
Xxxxxxxx, an individual, Cruise Lines, Inc., J. Xxxxxx Xxxxxxxx Associates,
Inc. and the Customer Rollover XXX, an Individual Retirement Account for the
benefit of Xxxx X. Xxxxxxxx, together owning a total of 1,764,114 shares of
President all of whom are Exempt Person(s) in that definition of Exempt
Person(s) set forth on Exhibit A hereto (hereinafter collectively the "Exempt
Person(s)").
WHEREAS, President's Board of Directors has determined that it is in the
best interest of the stockholders of President to enter into a Stockholder
Rights Agreement restricting the ability of stockholders to own blocks of
President's shares in an amount equal to or greater than 20% of the
outstanding common stock without the prior consent of the Board of Directors;
and
WHEREAS, the Exempt Person(s) collectively hold shares approximating 35% of
President's outstanding shares; and
WHEREAS, the Exempt Person(s) may, from time to time, wish to sell such
shares; and
WHEREAS, President is desirous of accommodating the needs of the Exempt
Person(s), while at the same time maintaining the integrity of its Stockholder
Rights Plan.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained the parties agree as follows:
1. If and when an Exempt Person(s) (the "Selling Shareholder") determines
to sell twenty percent (20%) or more of the outstanding shares of President's
common stock to a person other than an Exempt Person (such shares being
referred to as the "Offered Shares"), the Selling Shareholder shall provide a
written notice to President (the "Determination Notice") which shall contain
the following information: (a) the number of Offered Shares proposed to be
sold, (b) if one exists, the name, address and telephone number of any person
the Selling Shareholder has identified as a potential purchaser of the Offered
Shares (a "Selling Shareholder Purchaser") and (c) the purchase price that the
Selling Shareholder Purchaser proposes to pay for the Offered Shares. The
Selling Shareholder shall include with the Determination Notice copies of any
offer documents any Selling Shareholder Purchaser has provided to the Selling
Shareholder, unless the transmittal of such documents would violate a
confidentiality agreement or law.
B-1
52
2. In the Determination Notice, the Selling Shareholder shall identify (by
name, address, telephone number and biographical information establishing
credentials, the "Bio-Info") a proposed appraiser of the Offered Shares who
has agreed to perform in accordance with the terms of this Agreement and who
shall be able, by virtue of background and ability, to appraise the value of
the shares of a company engaged in lines of business similar to those of
President (a "Qualified Appraiser"). Within ten (10) days after receipt of
the Determination Notice, President shall provide its own written notice to
the Selling Shareholder naming a second "Qualified Appraiser" accompanied by
Bio-Info as to such person. Each Qualified Appraiser shall independently
appraise the value of the Offered Shares and shall render their decision as to
the value of the Offered Shares within thirty (30) days after the date of
President's notice naming the second Qualified Appraiser.
Each Qualified Appraiser shall deliver his appraisal to the parties hereto
and to the other Qualified Appraiser. If the two appraisals are within ten
percent (10%), in dollar value of one another, the "Appraised Value" of the
Offered Shares shall be the average of the two appraisals. If the two
appraisals differ by more than ten percent (10%) from one another, the two
Qualified Appraisers will, within five (5) days after the time the last of the
two appraisals is rendered, select a third Qualified Appraiser agreeable to
both of them as to qualifications and ability. The third Qualified Appraiser
will deliver an appraisal of the value of the Offered Shares, which value must
fall within the values set by the first two Qualified Appraisers, within
fifteen (15) days of appointment and the Appraised Value shall be the value
set by the third Qualified Appraiser.
Each party shall bear the costs of his or its own appraiser, and the costs
of any third Qualified Appraiser shall be borne equally by the Selling
Shareholder and President.
3. At the conclusion of the appraisal process, the Selling Shareholder
shall have five days to withdraw his determination to sell (the date of such
withdrawal being the "Withdrawal Date"). If the determination to sell is
withdrawn, the Selling Shareholder shall not be able to sell to a single
acquirer or affiliated group of acquirers more shares than an Acquiring
Person, as defined in President's Stockholder Rights Plan, may purchase,
without triggering the subsequent issuance of rights under the Stockholder
Rights Plan, except by following the procedures set forth in this Agreement;
provided, however, that if the Selling Shareholder determines to sell the
Offered Shares within ninety (90) days after the Withdrawal Date, no Qualified
Appraisers shall be appointed and the Appraised Value shall be the Appraised
Value set immediately prior to the Withdrawal Date.
4. From and after the date that the Appraised Value is determined, which
shall be the date the last appraisal necessary pursuant to Paragraph 2 is
delivered to President or, if no appraisals are necessary pursuant to
Paragraph 3, the date that the Selling Shareholder notifies President of his
determination to sell the Offered Shares, President shall have the exclusive
right for a period of (90) days (the "Exclusivity Period") to locate a buyer
for the Offered Shares (which buyer may be President) and cause such buyer to
B-2
53
execute a legally enforceable agreement (a "Purchase Agreement") obligating
the buyer to purchase the Offered Shares at the Offer Price (as defined below)
for cash or immediately available funds and subject to no conditions other
than (a) due performance by the Selling Shareholder and (b) receiving approval
under applicable gaming laws of various states, within one hundred eighty days
(180) after the date of the Purchase Agreement or such shorter period as may
be required by law. The Offer Price shall mean the higher of (a) the
Appraised Value, (b) the purchase price identified in the Determination Notice
or (c) if the buyer located by President made an offer to any Exempt Person(s)
to acquire President Common stock within the twelve months prior to the date
of the Determination Notice, the price such buyer had previously offered to
pay.
Time shall be of the essence with regard to locating a buyer and seeking
approval under applicable gaming laws and the Purchase Agreement shall so
provide and shall further provide that both President and the buyer located by
President shall use their collective and respective best efforts to receive
such approval as soon as possible after a sale agreement has been executed.
5. If President locates a buyer and such buyer executes a Purchase
Agreement within the Exclusivity Period the Selling Shareholder must sell the
Offered Shares to such buyer for the Purchase Price and the Selling
Shareholder shall execute all documents necessary to transfer to the buyer
good title to the Offered Shares, free and clear of all liens and
encumbrances.
6. If (a) a buyer located by President does not execute a Purchase
Agreement within the Exclusivity Period or (b) such buyer is not approved by
any applicable gaming authority or (c) such buyer breaches its obligations
under the Purchase Agreement, including, without limitation, its obligation to
use its best efforts to obtain approval under applicable laws as soon as
possible after the execution of a Purchase Agreement, the Selling Shareholder
shall be able to sell the Offered Shares to any third party at any price
during a period of 365 days following the (a) expiration of the Exclusivity
Period, (b) the date of non-approval or (c) the date of breach or, if an
alleged breach is contested, the date it is determined by a court of final
jurisdiction that a breach occurred.
7. If the Offered Shares are acquired, pursuant to paragraphs 4 or 6, the
transaction shall not cause the issuance of Rights pursuant to President's
Stockholder Rights Plan. Any purchaser, pursuant to paragraphs 4 or 6 shall
be permitted to transfer the Offered Shares to entities controlling,
controlled by or under common control with such purchaser without causing the
issuance of Rights pursuant to President's Stockholder Rights Plan, but no
such purchaser or any entities controlling, controlled by or under common
control with it may acquire more shares of President common stock without
causing the issuance of Rights under President's Stockholder Rights Plan
unless (a) the Stockholder Rights Plan has been amended to permit such
acquisition or (b) in a transaction approved by President's board of
directors.
B-3
54
8. During the period President is attempting to find a buyer, and during
any period during which the Selling Shareholder is attempting to find a buyer,
the parties hereto shall regularly communicate information regarding the
identity of any possible buyer who they approach or who approaches them and
shall exchange information as to economic negotiations.
9. This Agreement shall inure to the benefit of and shall be binding on the
parties hereto, their heirs, successors and assigns. The Agreement is not
assignable other than among the parties who are Exempt Person(s) hereunder.
10. This Agreement shall terminate if and when the Exempt Person(s) hold
collectively less than 20% of the outstanding shares of common stock of
President.
11. Each of the parties hereto shall bear its own costs in any action
hereunder.
12. Time shall be of the essence in the parties' performance hereunder.
13. This Agreement shall be governed by Delaware law without reference to
its conflict of law rules.
X-0
00
XXXXXXXXX XXXXXXX, INC.
By:_____________________________________
Xxxxx X. Xxxxxxx, Executive Vice
President and Chief Financial Officer
_____________________________________
Xxxx X. Xxxxxxxx, an individual
CRUISE LINES, INC.
By:_____________________________________
J. XXXXXX XXXXXXXX ASSOCIATES, INC.
By:_____________________________________
CUSTOMER ROLLOVER XXX
By:_____________________________________
Xxxx X. Xxxxxxxx, beneficial owner
B-5
56
EXHIBIT A
"Exempt Person" shall mean any of the following: (i) Xxxx X. Xxxxxxxx, any
descendant of Xxxx X. Xxxxxxxx (including descendants by adoption and their
descendants), or any spouse, widow or widower of Xxxx X. Xxxxxxxx (and their
children) or any such descendant (collectively defined as the "Family
Members"); (ii) any trust which is in existence on the date of the Rights
Agreement of President Casinos, Inc. of even date herewith (the "Rights
Agreement") and which has been established by one or more Family Members and
any estate of a Family Member who died on or before the date of the Rights
Agreement (collectively defined as the "Existing Family Entities"); (iii) any
estate of a Family Member who dies after the date hereof or any trust
established after the date hereof by one or more Family Members or Existing
Family Entities; provided that one or more Family Members, Existing Family
Entities or charitable organizations which qualify as exempt organizations
under Section 501(c) of the Internal Revenue Code of 1986, as amended
("Charitable Organizations"), collectively, are the beneficiaries of at least
50% of the actuarially-determined beneficial interests in such estate or
trust; (iv) any Charitable Organization which is established by one or more
Family Members or Existing Family Entities (a "Family Charitable
Organization"); (v) any corporation of which a majority of the voting power
and a majority of the equity interest is held, directly or indirectly, by or
for the benefit of one or more Family Members, Existing Family Entities,
estates or trusts described in clause (iii) above or Family Charitable
Organizations; and (vi) any partnership or other entity or arrangement of
which a majority of the voting interest and majority of the economic interest
is held, directly or indirectly, by or for the benefit of one or more Family
Members, Existing Family Entities, estates or trusts described in clause (iii)
above or Family Charitable Organizations.
B-6
57
EXHIBIT C
___________
[Form Face of Right Certificate]
Certificate No._________________ ___________________Rights
NOT EXERCISABLE AFTER DECEMBER 7, 2007 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT OR EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A
PERSON WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]
(The portion of the legend in brackets shall be inserted only as applicable.)
RIGHT CERTIFICATE
PRESIDENT CASINOS, INC.
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 20, 1997 (the "Rights Agreement"),
between President Casinos, Inc., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (St. Louis time) on
December 7, 2007 (the "Final Expiration Date") at the principal office of the
Rights Agent, or its successor as Rights Agent, one one-hundredth of a fully
paid, nonassessable share of the Series A Junior Participating Preferred
Stock, $0.01 par value ("Preferred Stock"), of the Company, at a purchase
price of $_________ per one one-hundredth of a share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase on the reverse side hereof duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise of each Right) and the Purchase Price set forth
above, are the number and Purchase Price as of __________________,______,
based on the shares of Preferred Stock of the Company as constituted at such
date.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Preferred Stock which may be purchased upon the exercise of each of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
C-1
58
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, 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
shares of Preferred Stock 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 Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right prior to the earlier of (i) the time that any Person
becomes an Acquiring Person (as defined in the Rights Agreement) or (ii) the
Final Expiration Date. Under certain terms and conditions, the Rights may
also be redeemed following the time that any person becomes an Acquiring
Person but prior to the Final Expiration Date, as more fully described in the
Rights Agreement. In addition, subject to the provisions of the Rights
Agreement, the Rights may be exchanged at the option of the Company at any
time after any person becomes an Acquiring Person at an initial exchange ratio
of one share of Common Stock (or one one-hundredth of a share of Preferred
Stock) for each Right exchanged.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Rights evidenced hereby (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock, which may, at the election
of the Company, be evidenced by depositary receipts). In lieu of fractions of
a share that are not integral multiples of one-hundredth of a share of
Preferred Stock, a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred
Stock, Common Stock 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
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
C-2
59
subscription rights, or otherwise, until the Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
C-3
60
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _________________,______.
Attest PRESIDENT CASINOS, INC.
By________________________________ By________________________________
Name: Name:
Title: Title:
Countersigned:
________________________________
By________________________________
Name:
Title:
C-4
61
[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)
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 must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:_________________________
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
C-5
62
CERTIFICATE
_____________
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was, or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _________________,______
_______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
C-6
63
FORM OF ELECTION TO PURCHASE
______________________________
(To be executed if holder desires to
exercise the Right Certificate)
To ChaseMellon Shareholder Services, L.L.C.:
The undersigned hereby irrevocably elects to exercise _______________ Rights
represented by this Right Certificate to purchase the shares of Preferred
Stock (or other securities) issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
Name: ___________________________
Address: ___________________________
___________________________
Social Security or
Taxpayer I.D. No.: ___________________________
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 an delivered to:
Name: ___________________________
Address: ___________________________
___________________________
Social Security or
Taxpayer I.D. No.: ___________________________
Dated: _________________,______
_______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
C-7
64
CERTIFICATE
_____________
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _________________,______
______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
________
The signature in the foregoing Forms of Assignment and 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
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored.
C-8
65
EXHIBIT D
___________
[Form of Summary of Preferred Stock Purchase Rights]
Summary of Preferred Stock
Purchase Rights
PRESIDENT CASINOS, INC.
Effective November 20, 1997, the Board of Directors of President Casinos,
Inc. (the "Company") declared a dividend distribution of one Preferred Stock
Purchase Right (collectively, the "Rights") for each outstanding share of
common stock, $0.06 par value (the "Common Stock"), of the Company (other than
shares held in the Company's treasury). The dividend distribution is payable
to the stockholders of record at the close of business on December 8, 1997
(the "Record Date"). Except as set forth below, each Right, when exercisable,
entitles the registered holder to purchase from the Company one one-hundredth
of a share of a new series of voting preferred stock, designated as Series A
Junior Participating Preferred Stock, $0.01 par value (the "Preferred Stock"),
at a price of $30.00 per one one-hundredth of a share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights
Agent").
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Right Certificates will
be distributed. Until the earlier of (i) ten days following the first to
occur of (a) a public announcement that, without the prior written consent of
the Board of Directors of the Company, a person or group of affiliated or
associated person other than (1) the Company, a subsidiary of the Company or
any employee benefit plan of the Company or a subsidiary of the Company or (2)
Xxxx X. Xxxxxxxx or certain descendants, family members or affiliates of Xxxx
X. Xxxxxxxx (an "Acquiring Person") has acquired, or obtained the right to
acquire, outstanding shares of Common Stock of the Company representing 20% or
more of the voting power of the Company or (b) the date on which the Company
first has notice or otherwise determines that a person has become an Acquiring
Person (the "Stock Acquisition Date") or (ii) ten days following the
commencement or announcement of an intention to make a tender offer or
exchange offer, without the prior written consent of the Board of Directors of
the Company, for outstanding shares of such Common Stock representing 20% or
more of the voting power of the Company (the earlier of the dates in clause
(i) or (ii) above being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Company's Common Stock certificates
outstanding as of and after the Record Date (other than shares held in the
Company's treasury), by such Common Stock certificates. The Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred
D-1
66
with and only with the Company's Common Stock. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights), new Common
Stock certificates issued after the Record Date, upon transfer, new issuance
or issuance from the Company's treasury of the Company's Common Stock, will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange or expiration of the
Rights), the surrender for transfer of any of the Company's Common Stock
certificates outstanding as of and after the Record Date will also constitute
the transfer of the Rights associated with the Common Stock represented by
such certificates. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Company's Common Stock as of the close of
business on the Distribution Date and such separate certificates alone will
then evidence the Rights.
Notwithstanding the above, a person will not be deemed to be an Acquiring
Person if such person: (x) owns outstanding shares of the Common Stock of the
Company representing 20% or more of the voting power of the Company as of
December 8, 1997 or becomes the owner of such Common Stock representing 20% or
more of the voting power of the Company following an acquisition of the
Company's voting securities by the Company, unless such person subsequently
acquires additional voting securities of the Company (other than by means of a
stock dividend, stock split, recapitalization or similar event); or (y) has
become an Acquiring Person inadvertently and divests promptly a number of
voting securities so as to no longer be an Acquiring Person. In addition,
notwithstanding the foregoing, no person shall become an Acquiring Person as
the result of an acquisition of voting securities of the Company from an
Exempt Person (as defined in the Rights Agreement) in accordance with the
provisions of that certain Agreement, dated November 20, 1997 by and among the
Company, Xxxx X. Xxxxxxxx, Cruise Lines, Inc. and J. Xxxxxx Xxxxxxxx
Associates, Inc. (the "Transfer Agreement"); provided, however, that any such
person purchasing voting securities of the Company pursuant to the Transfer
Agreement shall become an Acquiring Person upon any acquisition of any
additional voting securities of the Company in any manner other than pursuant
to a stock dividend, stock split, recapitalization or similar transaction that
does not affect the percentage of outstanding percentage of voting securities
beneficially owned by such person.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on December 7, 2007, unless earlier redeemed or exchanged by the
Company, as described below.
The Purchase Price payable, the number of shares of Preferred Stock or other
securities or property issuable, upon exercise of the Rights and the number of
Rights outstanding 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 issuance of Common Stock or reclassification of the Preferred
Stock, (ii) upon the distribution to holders of Preferred Stock of rights or
warrants to subscribe for shares of Preferred Stock or securities convertible
into Preferred Stock at less than the then current market price of the
Preferred Stock, or (iii) upon the distribution to holders of Preferred Stock
D-2
67
of evidences of indebtedness, cash or assets (excluding regular periodic cash
dividends out of earnings or retained earnings or dividends payable in
Preferred Stock) or of convertible securities subscription rights or warrants
(other than those referred to above).
In the event that, following the Distribution Date, the Company is acquired
in a merger or other business combination transaction in which the Company is
not the surviving corporation or in which the Common Stock is exchanged or
changed or 50% or more of the Company's assets or earning power is sold (in
one transaction or a series of transactions), proper provision shall be made
so that each holder of a Right shall thereafter have the right to receive, in
lieu of shares of Preferred Stock, upon the exercise of the Right and payment
of the Purchase Price, that number of shares of common stock of the surviving
or purchasing company (or, in certain cases, one of its affiliates) which at
the time of such transaction would have a market value of two times the
Purchase Price (such right being called the "Merger Right").
In the event that any person shall become an Acquiring Person and subject to
the availability of Common Stock, proper provision shall be made so that each
holder of a Right will thereafter have the right to receive, in lieu of shares
of Preferred Stock, upon exercise that number of shares (or fractional shares)
of Common Stock having a market value of two times the Purchase Price, subject
to the availability of a sufficient number of treasury shares or authorized
but unissued shares (such right being called the "Subscription Right"). The
holder of a Right will continue to have the Merger Right unless and until such
holder exercises the Subscription Right.
Any Rights that are beneficially owned by an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person will become null and void
upon the occurrence of any of the events giving rise to the exercisability of
the Merger Right or the Subscription Right and any holder of such Rights will
have no right to exercise such Rights from and after the occurrence of such an
event insofar as they relate to the Merger Right or the Subscription Right.
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued. In lieu of
fractional shares, an adjustment in cash will be made based on the market
price of the Preferred Stock or the Common Stock as the case may be on the
last trading date prior to the date of exercise.
At any time prior to a Person becoming an Acquiring Person or December 7,
2007, the Company's Board of Directors may elect to redeem the Rights in
whole, but not in part, at a price of $.001 per Right. Additionally,
following the Stock Acquisition Date but prior to an event giving rise to the
Merger Right, the directors of the Company who are members of the Board and
who are not Acquiring Persons or affiliates or associates of Acquiring Persons
and who were members of the Company's Board of Directors prior to the Stock
Acquisition Date (the "Continuing Directors") may redeem the then outstanding
Rights in whole, but not in part, at a price of $.001 per Right, provided that
either (a) the Acquiring Person reduces its beneficial ownership to less than
D-3
68
20% of the voting power of the Company in a manner satisfactory to the
Continuing Directors and there are no more Acquiring Persons, or (b) such
redemption is incidental to a merger or other business combination involving
the Company but not involving the Acquiring Person. Immediately upon the
action of the Board of Directors electing to redeem the Rights, the Company
shall make announcement thereof, and the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
redemption price.
At any time after a Person becomes an Acquiring Person but prior to such
time that any Person becomes the beneficial owner of 50% or more of the
outstanding shares of the Company's Common Stock, the Company may elect to
effect a full or partial exchange of Rights for the Company's Common Stock at
an initial exchange ratio of one share of Common Stock for each Right
exchanged. Alternatively, the Company may elect to effect the exchange of
Rights using Preferred Stock at an initial exchange ratio of one one-hundredth
of a share of Preferred Stock for each Right exchanged.
The Preferred Stock purchasable upon exercise of the Rights will be
non-redeemable and junior to any other series of preferred stock the Company
may issue (unless otherwise provided in the terms of such stock). Each share
of Preferred Stock will have a preferential dividend in an amount equal to the
greater of $.01 per share or 100 times any dividend declared on each share of
Common Stock. In the event of liquidation, the holders of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.10 or
100 times the payment made per each share of Common Stock. Each one one-
hundredth of a share of Preferred Stock will have one vote, voting together
with the shares of Common Stock. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 100 times the amount and type of
consideration received per share of Common Stock. The rights of the Preferred
Stock as to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary anti-dilution provisions.
Fractional shares of Preferred Stock in integral multiples of one
one-hundredth of a share of Preferred Stock will be issuable; however, the
Company may elect to distribute depositary receipts in lieu of such fractional
shares. In lieu of fractional shares other than fractions that are multiples
of one one-hundredth of a share, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last trading date prior to the
date of exercise.
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.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights 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 Rights Agreement, which is
incorporated herein by reference.
D-4
