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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Crestline Capital Corporation
(Exact Name of Registrant as Specified in Its Charter)
Maryland 52-2039044
(State of Incorporation or Organization) (I.R.S. Employer Identification no.)
10400 Fernwood Road
Bethesda, Maryland 20817
(Address of Principal Executive Offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of registration of a class of
securities pursuant to Section securities pursuant to Section
12(b) of the Exchange Act and 12(g) of the Exchange Act and
is effective pursuant to General is effective pursuant to General
Instruction A.(c), please Instruction A.(d), please
check the following box. [x] check the following box. [_]
Securities Act registration statement file number to which this form
relates:________________
(if applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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Preferred Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered
On December 11, 1998, the Board of Directors of Crestline Capital
Corporation (the "Company") declared, effective December 14, 1998, a dividend
distribution of one right ("Right") for each outstanding share of common stock
(the "Common Stock") of the Company. The distribution is payable to stockholders
of record on December 15, 1998. Each Right, when exercisable, entitles the
registered holder to purchase from the Company one one-thousandth of a share of
Series A Junior Participating Preferred Stock ("Preferred Stock") at a price of
$65.00 per one one-thousandth 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 The Bank of New York,
as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate
certificates evidencing the Rights will be distributed. The Rights will separate
from the Common Stock and a distribution of Rights Certificates (as defined
below) will occur upon the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) 10 business days (or such later date as the Board of
Directors may determine) following the commencement of a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person of 20% or more of the outstanding shares of Common Stock
(the earlier of such dates being called the "Distribution Date"). For purposes
of the Rights Agreement, a person is not deemed to beneficially own "Exempt
Shares," which are defined in the Rights Agreement as (i) shares of Common Stock
that are received pursuant to the distribution (the "Distribution") by Host
Marriott Corporation ("HMC") of the shares of Common Stock to holders of shares
of common stock ("HMC Common Stock") of HMC, which shares of HMC Common Stock
were beneficially owned by such person on February 3, 1989, and owned
continuously thereafter until the Distribution, (ii) shares of Common Stock
which were acquired by a person pursuant to a gift, bequest, inheritance or
distribution from a trust or from a corporation controlled by such person, where
such shares of Common Stock were Exempt Shares prior to such acquisition, and
where such shares were beneficially owned by such person continuously after such
acquisition, (iii) shares of Common Stock acquired by such person as a result of
a stock dividend, stock distribution or other recapitalization, in respect of
Exempt Shares only, whereby any Common Stock received by such person is
substantially proportional to the amount of Common Stock owned by such person
prior to such transaction and where such Common Stock is beneficially owned by
such person continuously thereafter, and (iv) shares of Common Stock acquired by
such person as a result of such person becoming a beneficial owner pursuant
solely to clauses (ii) and (iii) above by any other person.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates, and will be transferred with and only with the Common
Stock certificates, (ii) new Common Stock certificates issued after December 15,
1998 upon transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 13, 2008, unless earlier redeemed or
exchanged by the Company
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as described below. The Rights will not be exercisable by a holder in any
jurisdiction where the requisite qualification to the issuance to such holder,
or the exercise by such holder, of the Rights has not been obtained or is not
obtainable.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will
evidence the Rights. Except as otherwise determined by the Board of Directors,
only shares of Common Stock issued prior to the Distribution Date will be issued
with Rights.
In the event that a person becomes the beneficial owner of 20% or
more of the then outstanding shares of Common Stock (except pursuant to an offer
for all outstanding shares of Common Stock which the Board of Directors
determine to be fair to and otherwise in the best interests of the Company and
its stockholders), each holder of a Right will, after the end of the Redemption
Period (as defined below), have the right (subject to the ownership limit and
the other ownership restrictions contained in the Company's Articles of
Incorporation) to exercise the Right by purchasing, for an amount equal to the
purchase price for the Right set forth in the Rights Certificate (the "Purchase
Price"), Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times such amount.
Notwithstanding any of the foregoing, following the occurrence of the events set
forth in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger which follows an offer described in the preceding paragraph), or (ii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have become null and void as
set forth above) shall, after the expiration of the Redemption Period, have the
right to receive, upon exercise, common stock of the acquiring company having a
value equal to two times the Purchase Price of the Right.
At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which have
become null and void), in whole or in part, at an exchange ratio of one share
of Common Stock per Right (subject to adjustment).
The Purchase Price payable, and the number of one one-thousandths of
a share of Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No
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fractional shares will be issued (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise.
In general, the Board of Directors of the Company, may cause the
Company to redeem the Rights in whole, but not in part, at any time during the
period commencing on December 14, 1998, and ending on the tenth day following
the Stock Acquisition Date, as such period may be extended or shortened by the
Board of Directors (the "Redemption Period") at a price (the "Redemption Price")
of $.005 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors). Under certain circumstances set forth in
the Rights Agreement, the decision to redeem the Rights will require the
concurrence of two-thirds of the Board of Directors. After the Redemption Period
has expired, the Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to 10% or less of the outstanding shares
of Common Stock in a transaction or series of transactions not involving the
Company and there are no other Acquiring Persons. Immediately upon the action
of the Board of Directors of the Company ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be subject to federal taxation to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms
of the Rights (other than an increase in the Purchase Price), any of the
provisions of the Rights Agreement may be amended by the Board of Directors of
the Company prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, defect or inconsistency or to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided however, no amendment to adjust the time period governing
redemption may be made at such time as the Rights are not redeemable.
A total of 60,000 shares of Preferred Stock are reserved for issuance
upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors.
The Rights Agreement, which specifies the terms of the Rights, is
attached hereto as Exhibit 4.1 and is incorporated herein by reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such Exhibit.
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Item 2. Exhibits.
4.1 Rights Agreement, dated as of December 14, 1998, between
the Company and the Rights Agent.
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Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
CRESTLINE CAPITAL CORPORATION
By: /s/ James L. Francis
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Date: December 17, 1998 Name: James L. Francis
Title: Executive Vice President, Chief
Financial Officer and Treasurer
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Exhibits
4.1 Rights Agreement, dated as of December 14, 1998, between the Company and
the Rights Agent.
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EXHIBIT 4.1
CRESTLINE CAPITAL CORPORATION
and
THE BANK OF NEW YORK
as Rights Agent
RIGHTS AGREEMENT
dated as of December 14, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C> <C>
Section 1. Certain Definitions.........................................................1
Section 2. Appointment of Rights Agent.................................................7
Section 3. Issue of Rights Certificates................................................8
Section 4. Form of Rights Certificates.................................................9
Section 5. Countersignature and Registration...........................................10
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.........................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...............12
Section 8. Cancellation and Destruction of Rights Certificates.........................14
Section 9. Reservation and Availability of Capital Stock...............................15
Section 10. Series A Preferred Stock Record Date........................................16
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights...........................................................................17
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..................26
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power........26
Section 14. Fractional Rights and Fractional Shares.....................................29
Section 15. Rights of Action............................................................31
Section 16. Agreement of Rights Holders.................................................31
Section 17. Rights Certificate Holder Not Deemed a Stockholder..........................32
Section 18. Duties of Rights Agent......................................................32
Section 19. Compensation and Indemnification of the Rights Agent........................35
Section 20. Merger or Consolidation or Change of Name of Rights Agent...................36
Section 21. Change of Rights Agent......................................................36
Section 22. Issuance of New Rights Certificates.........................................37
Section 23. Redemption..................................................................38
Section 24. Exchange....................................................................39
Section 25. Notice of Certain Events....................................................40
Section 26. Notices.....................................................................41
Section 27. Supplements and Amendments..................................................42
Section 28. Successors..................................................................43
Section 29. Determinations and Actions by the Board, etc................................43
Section 30. Benefits of this Agreement..................................................43
Section 31. Severability................................................................44
Section 32. Governing Law...............................................................44
Section 33. Counterparts................................................................44
Section 34. Descriptive Headings........................................................44
Section 35. Limitation of Ownership.....................................................45
</TABLE>
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EXHIBIT A - FORM OF ARTICLES SUPPLEMENTARY OF CRESTLINE CAPITAL CORPORATION
CLASSIFYING AND DESIGNATING A SERIES OF SERIES A PREFERRED STOCK
AS SERIES A JUNIOR PARTICIPATING SERIES A PREFERRED STOCK AND
FIXING DISTRIBUTION AND OTHER PREFERENCES AND RIGHTS OF SUCH
SERIES
EXHIBIT B - FORM OF SUMMARY OF RIGHTS
EXHIBIT C - FORM OF RIGHTS CERTIFICATE
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Exhibit 4.1
RIGHTS AGREEMENT
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Rights Agreement, dated as of December 14, 1998 (the "Agreement"),
between CRESTLINE CAPITAL CORPORATION, a Maryland corporation (the "Company"),
and THE BANK OF NEW YORK (the "Rights Agent").
WHEREAS, on December 11, 1998 effective December 14, 1998 (the "Rights
Dividend Declaration Date"), the Board of Directors of the Company authorized
and declared a dividend of one Right for each share of Common Stock (as defined
herein) of the Company outstanding at the Close of Business (as defined herein)
on the Record Date (as defined herein), and has authorized the issuance of one
Right with respect to each share of Common Stock of the Company issued between
the Record Date (whether originally issued or delivered from the Company's
treasury) and the Distribution Date (as defined herein), each Right initially
representing the right to purchase one one-thousandth of a share of Series A
Junior Participating Series A Preferred Stock of the Company having the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms or conditions of
redemption set forth in the form of Articles Supplementary of Crestline Capital
Corporation Classifying and Designating a Series of Series A Preferred Stock as
Series A Junior Participating Series A Preferred Stock and Fixing Distribution
and Other Preferences and Rights of such Series attached hereto as Exhibit A,
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upon the terms and subject to the conditions hereinafter set forth.
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 defined herein) who
or which, together with all Affiliates and Associates (as such terms
are hereinafter defined) of such Person, shall be the Beneficial Owner
(as defined herein) of 20% or more of the shares of Common Stock then
outstanding, but shall not include (i) Host Marriott Corporation, a
Delaware corporation and the parent of the Company ("Host Marriott"),
(ii) the Company, (iii) any Subsidiary of the Company, or (iv) any
employee benefit plan of the Company or any Subsidiary of the Company,
or any Person holding shares of Common Stock for or
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pursuant to the terms of any such plan to the extent, and only to the
extent, of such shares so held. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by
reducing the number of shares of Common Stock outstanding, increases
the proportionate number of shares of Common Stock beneficially owned
by such Person to 20% or more of the shares of Common Stock of the
Company then outstanding; provided, however, that if a Person shall
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become the Beneficial Owner of 20% or more of the Common Stock of the
Company then outstanding by reason of share purchases by the Company
and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional shares of Common Stock of the
Company, then such Person shall be deemed to be an "Acquiring Person"
if such Person is then the Beneficial Owner of 20% or more of the
Common Stock then outstanding. Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that a
Person who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this paragraph (a), has become
such inadvertently, and such Person divests as promptly as practicable
a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person", then such Person shall not
be deemed an "Acquiring Person" for any purposes of this Agreement
unless and until such Person shall again become an "Acquiring Person".
(b) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act (as defined herein).
(d) "Agreement" shall mean this Rights Agreement as originally
executed or as it may from time to time be supplemented or amended
pursuant to the applicable provisions hereof.
(e) 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, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, other rights (other than
these Rights), warrants or options, or otherwise; provided,
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however,
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that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", (A) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) securities issuable upon
exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise of Rights
from and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall
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not be deemed the "Beneficial Owner" of, or to beneficially own, any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) 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 (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (e)) or disposing of any voting
securities of the Company;
provided, however, that nothing in this paragraph (e) shall cause a Person
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engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment
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underwriting until the expiration of forty days after the date of such
acquisition. Notwithstanding anything contained in this paragraph (e), a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own" any Exempt Shares.
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking or trust institutions in the State of New York are
authorized or obligated by law or executive order to close.
(h) "Close of Business" on any given date shall mean 5:00 P.M., New York
City time, on such date; provided, however, that if such date is not a
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Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(i) "Common Stock" when used with reference to the Company shall mean
the shares of common stock, par value $.01 per share, of the Company.
"Common Stock" when used with reference to any Person other than the
Company shall mean the class of capital stock with the greatest aggregate
voting power, or the class of equity securities or other equity interests
having power to control or direct the management, of such Person
(j) "Company" shall mean Crestline Capital Corporation, a Maryland
corporation.
(k) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day after the Stock Acquisition Date (or, if the
tenth day after the Stock Acquisition Date occurs before the Record Date,
the Close of Business on the Record Date), or (ii) the Close of Business on
the tenth Business Day (or, if such tenth Business Day occurs before the
Record Date, the Close of Business on the Record Date), or such specified
or unspecified later date on or after the Record Date as may be determined
by action of the Board prior to such time as any Person becomes an
Acquiring Person, after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or of any Subsidiary of the Company or
any Person holding shares of Common Stock for or pursuant to the terms of
any such plan) is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act,
if upon consummation thereof, such Person would be the beneficial owner of
20% or more of the outstanding shares of Common Stock.
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(l) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, as in effect on the date of this Agreement.
(n) "Exchange Date" shall have the meaning set forth in Section 7(a)
hereof
(o) "Exempt Shares" shall mean, as to any Person, (i) shares of Common
Stock beneficially owned (without giving effect to the last sentence of
Section 1(e)) by such Person that have been received by such Person
pursuant to the distribution by Host Marriott (the "Distribution") of the
shares of Common Stock of the Company to the holders of shares of common
stock, par value $1.00 per share of Host Marriott ("HM Common Stock"), held
of record on the record date fixed for the Distribution, provided that such
shares of HM Common Stock were beneficially owned by such Person on
February 3, 1989, and owned continuously thereafter until the Distribution,
(ii) shares of Common Stock which were acquired by such Person pursuant to
a gift, bequest, inheritance or distribution from a trust or from a
corporation controlled by such Person, where such shares of Common Stock
were Exempt Shares immediately prior to such acquisition and where such
shares of Common Stock were beneficially owned (without giving effect to
the last sentence of Section 1(e)) by such Person continuously after such
acquisition, (iii) shares of Common Stock acquired by such Person as a
result of a stock dividend, stock distribution or other recapitalization,
in respect to Exempt Shares only, whereby any Common Stock received by such
Person is substantially proportional to the amount of Common Stock owned by
such Person prior to such transaction and where such Common Stock is
beneficially owned (without giving effect to the last sentence of Section
1(e)) by such Person continuously thereafter and (iv) shares of Common
Stock acquired by such Person as a result of such Person becoming a
Beneficial Owner (without giving effect to the last sentence of Section
1(e)) pursuant solely to clauses (ii) or (iii) of Section 1(e) by any other
Person. For purposes of determining whether any shares of Common Stock are
Exempt Shares pursuant to clauses (i), (ii), (iii) or (iv) of this Section
1(o), any share of HM Common Stock that was held in "street" or "nominee"
name at the time of the Distribution shall be presumed to have been
acquired by the beneficial owner subsequent to February 3, 1989. This
presumption shall be rebuttable upon presentation to the Company of
satisfactory evidence that such share of HM Common Stock has had the same
beneficial owner (without giving effect to the last sentence of Section
1(e)) on and continuously after February 3, 1989 until the Distribution.
Any disputes arising pursuant
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to this definition shall be definitively resolved by the Board, in its sole
discretion.
(p) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(q) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(r) "Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
(s) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(t) "Purchase Price" shall have the meaning set forth in Section 4(a) and
11(a)(ii) hereof.
(u) "Record Date" shall mean the close of business on December 15, 1998.
(v) "Redemption Period" shall have the meaning set forth in Section 23(a)
hereof.
(w) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(x) "Rights Agent" shall mean The Bank of New York.
(y) "Rights Certificate" shall have the meaning set forth in Section 3(d)
hereof.
(z) "Rights Dividend Declaration Date" shall mean the close of business
on December 14, 1998.
(aa) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(bb) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(cc) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
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(dd) "Securities Act" shall mean the Securities Act of 1933, as
amended and as in effect on the date of this Agreement.
(ee) "Series A Preferred Stock" shall mean shares of Series A Junior
Participating Series A Preferred Stock of the Company.
(ff) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
(gg) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(hh) "Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ii) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by
such Person, or is otherwise controlled by such Person.
(jj) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(kk) "Summary Rights" shall have the meaning set forth in Section 3(a)
hereof.
(ll) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
(mm) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company 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.
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Section 3. Issue of Rights Certificates.
(a) As promptly as practicable following the Record Date, the Company
will send or deliver a copy of a Summary of Rights to Purchase Series A
Preferred Stock, in substantially the form attached hereto as Exhibit B (the
---------
"Summary of Rights"), to each record holder of 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 shares of Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier Expiration Date
or Final Expiration Date), the transfer of any certificate representing shares
of Common Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with the shares of Common Stock
represented thereby.
(b) Rights shall be issued in respect of all shares of Common Stock
issued (whether originally issued or from the Company's treasury) after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date or the Final Expiration Date. Rights shall also be issued to the extent
provided in Section 22 in respect of all shares of Common Stock which are issued
(whether originally issued or from the Company's treasury) after the
Distribution Date and prior to the Expiration Date. Certificates representing
such shares of Common Stock shall also be deemed to be certificates for Rights,
and shall bear the following legend (in addition to any other legends that may
be required):
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Crestline
Capital Corporation, a Maryland corporation (the "Corporation") and
The Bank of New York (the "Rights Agent"), dated as of December 14,
1998 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this Certificate. The Corporation will mail to the holder of this
Certificate a copy of the Rights Agreement as in effect on the date of
mailing without charge after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may become null and
void. The Rights shall not be exercisable, and shall be null and void
so long as
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held, by a holder in any jurisdiction where the requisite
qualification of the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.
(c) Until the Distribution Date (i) the Rights will be evidenced
(subject to the provisions of paragraph (a) of this Section 3) by the
certificates for Common Stock registered in the names of the holders thereof
(which certificates for Common Stock shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates, and (ii) the Rights will
be transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company).
(d) As soon as practicable after the Distribution Date, the Rights
Agent upon notification thereof will send by first-class, insured, postage
prepaid mail, to each record holder of Common Stock as of the Close of Business
on the Distribution Date, at the address of such holder shown on the records of
the Company, a rights certificate, in substantially the form of Exhibit C hereto
---------
(the "Rights Certificate"), evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11 hereof, at the time of distribution of the Rights
Certificates, the Company shall make necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) shall be substantially
the same 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 or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock
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exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
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-
thousandths of a share of Series A Preferred Stock as shall be set forth therein
at the price set forth therein (such exercise price per one one-thousandth of a
share, the "Purchase Price"), but the amount and type of securities purchasable
upon exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(d) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person; (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such; or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Board has determined is part of
an agreement, arrangement or understanding which has as a primary purpose or
effect avoidance of Section 7(e) hereof and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its President, a Vice President or the Chairman of the Board and
countersigned by the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer, in each case either manually or by facsimile signature, and
have affixed thereto the Company's seal or a facsimile thereof. The Rights
Certificates shall be countersigned, either manually or by facsimile signature,
by the Rights Agent and shall not be valid for any purpose unless so
countersigned
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(but it shall not be necessary for the same signatory to countersign all of the
Rights Certificates hereunder). In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or at offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the Close of Business on the Distribution
Date and at or prior to the Close of Business on the earlier of the Expiration
Date or Final Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a share of Series A Preferred Stock (or following a
Triggering Event, Common Stock, other securities, cash, or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have properly completed and
signed the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall
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<PAGE>
reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or 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 Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly and properly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-thousandth of a
share of Series A Preferred Stock (or other securities, cash or other assets, as
the case may be) as to which the Rights are exercised, at or prior to the
earlier of (i) the close of business on December 13, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which such Rights are exchanged (the "Exchange Date")
as provided in Section 24 hereof, or (iv) the time at which the Rights expire
pursuant to Section 13(d) hereof (the earliest of (i), (ii), (iii) and (iv)
being herein referred to as the "Expiration Date").
(b) Each Right shall entitle the registered holder thereof to
purchase one one-thousandth of a share of Series A Preferred Stock, and the
Purchase Price for each one one-thousandth of a share of Series A Preferred
Stock pursuant to the exercise of a Right shall initially be $65.00, and 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.
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<PAGE>
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly and
properly executed, accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-thousandth of a share of Series A
Preferred Stock (or Common Stock, other securities, cash or other assets, as the
case may be) to be purchased and an amount equal to any applicable transfer tax
or governmental charge in cash, or by certified check, cashier's check or bank
draft payable to the order of the Company, the Rights Agent shall, subject to
Section 18(k) hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the shares of Series A Preferred Stock (or make available, if the
Rights Agent is the transfer agent) certificates for the total number of one
one-thousandths of a share of Series A 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 shall have elected to deposit the total number
of shares of Series A Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a share
of Series A Preferred Stock as are to be purchased (in which case certificates
for the shares of Series A Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company will
direct the depositary to comply with such request, (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of issuance of fractional
shares in accordance with Section 14, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder and (iv) after receipt
thereof, promptly deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who
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<PAGE>
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Board has determined is part of
an agreement, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action, and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(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 such registered holder shall have
(i) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
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<PAGE>
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of Series
A Preferred Stock (and following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares held in its treasury), the number of
shares of Series A Preferred Stock (and, following the occurrence of a
Triggering Event, shares of Common Stock and/or other securities) that, as
provided in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event the shares of Series A Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable upon the exercise of Rights become listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all such shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Securities Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the Expiration Date. The Company
also shall take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Upon any suspension of
exercisability of Rights referred to in this Section 9(c), the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable and shall be null
and void so long as held by a holder in any
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jurisdiction where the requisite qualification to the issuance to such holder,
or the exercise by such holder, of the Rights in such jurisdiction shall not
have been obtained or be obtainable, or the exercise thereof shall not be
permitted under applicable law or a registration statement shall not have been
declared effective.
(d) Subject to Section 11(a)(iii) hereof, the Company covenants and
agrees that it will take all such action as may be necessary to ensure that all
one one-thousandths of a share of Series A Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
or of any certificates for a number of one one-thousandths of a share of Series
A Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax or charge which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance or
delivery of certificates for a number of one one-thousandths of a share of
Series A Preferred Stock (or Common Stock and/or other securities, as the case
may be) in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of one one-thousandths of a share of Series A
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the registered holder upon the exercise of any Rights
until any such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax or
charge is due.
Section 10. Series A Preferred Stock Record Date.
Each Person in whose name any certificate for a number of one
one-thousandths of a share of Series A Preferred Stock (or Common Stock and/or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
fractional shares of Series A Preferred Stock (or Common Stock and/or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes and charges) was made; provided, however, that if the
-------- -------
date of such surrender and payment is a date upon which the Series A Preferred
Stock (or Common Stock and/or other securities as the
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case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on
which the Series A Preferred Stock (or Common Stock and/or other securities as
the case may be) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights 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 and Kind of Shares or
Number of Rights.
The Purchase Price, the number and kind of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Series A Preferred Stock payable in
shares of Series A Preferred Stock, (B) subdivide the outstanding Series A
Preferred Stock, (C) combine the outstanding Series A Preferred Stock into a
smaller number of shares or (D) issue any shares of its capital stock in a
reclassification of the Series A 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(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of Series A Preferred Stock or the number and kind of shares of capital
stock issuable on such date, as the case may be, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the aggregate adjusted Purchase Price then
in effect necessary to exercise a Right in full, the aggregate number and kind
of shares of Series A Preferred Stock or the number and kind of shares of
capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Series A Preferred Stock
(or other capital stock, as the case may be) transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, or reclassification. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
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(ii) Subject to Sections 23 and 24 of this Agreement, in the event
that any Person, alone or together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date, become an Acquiring Person,
unless the event causing such Person to become an Acquiring Person is (x) a
Section 13 Event or (y) an acquisition of shares of Common Stock pursuant to a
cash tender offer made pursuant to Section 14(d) of the Exchange Act for all
outstanding shares of Common Stock (other than shares of Common Stock
beneficially owned by the Person making the offer or by its Affiliates or
Associates) at a price and on terms determined by at least two-thirds of the
Board, after receiving advice from one or more investment banking firms, to be
(a) fair to stockholders (taking into account all factors which such members of
the Board deem relevant, including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b) otherwise in the best interests
of the Company and its stockholders, then promptly after the date of occurrence
of a Section 11(a) Event, proper provision shall be made so that each holder of
a Right (except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof and payment of an amount equal
to the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-thousandths of a share of Series A
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 then number of one one-thousandths of a share of Series A Preferred Stock
for which a Right was or would have been exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, whether or not such Right was
then exercisable, and (y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement except to the extent set forth in
Section 13 thereof) by 50% of the current market price per share of Common Stock
(determined pursuant to Section 11(d) hereof) on the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) The Company may at its option substitute for a share of Common
Stock issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) such number or fractions of shares of Series A Preferred Stock
having an aggregate market value equal to the current per share market price of
a share of Common Stock. In the event that the number of shares of Common Stock
which is authorized by the Company's Articles of Incorporation, as amended from
time to time, but not outstanding, or reserved for issuance for purposes other
than upon exercise of the Rights, is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the Board
shall, to the extent permitted by applicable law and any material agreements or
material instruments then in effect to which the Company is a party, (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right (subject to Section
7(e)
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hereof), make adequate provision to substitute for some or all of the Adjustment
Shares, upon exercise of a Right and payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation, shares, or
units of shares, of Series A Preferred Stock which the Board has deemed to have
the same value as shares of Common Stock) (such shares of equity securities
being herein called "Stock Equivalents"), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such aggregate value has been determined
by the Board based upon the advice of an investment banking firm selected by the
Board; provided, however, if the Company shall not have made adequate provision
-------- -------
to deliver value pursuant to clause (B) above within thirty (30) days following
the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon
the surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread.
If, upon the occurrence of a Section 11(a)(ii) Event, the Board
shall determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in full of
the Rights, then if the Board so elects, the thirty (30) day period set forth
above may be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent that
action is to be taken pursuant to the preceding provisions of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the Substitution Period
in order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to the first sentence of
this Section 11(a)(iii) and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the value of any Stock
Equivalent shall be deemed to have the same value as the Common Stock on such
date. The Board may, but shall not be required to, establish procedures to
allocate the right to receive shares of Common Stock upon the exercise of the
Rights among holders of Rights pursuant to this Section 11(a)(iii).
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(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Series A Preferred Stock entitling
them (for a period expiring within forty-five (45) calendar days after such
record date) to subscribe for or purchase Series A Preferred Stock (or shares
having the same preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms or
conditions of redemption as the shares of Series A Preferred Stock ("Equivalent
Preferred Stock") or securities convertible into Series A Preferred Stock at a
price per share of Series A Preferred Stock or per share of Equivalent Preferred
Stock (or having a conversion price per share of Series A Preferred Stock, if a
security convertible into Series A Preferred Stock) less than the current per
share market price of the Series A Preferred Stock (as defined in Section 11(d))
on such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Series A Preferred Stock outstanding on such record date,
plus the number of shares of Series A Preferred Stock which the aggregate
offering price of the total number of shares of Series A Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Series A Preferred Stock outstanding on such record date, plus the
number of additional shares of Series A 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 price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. Shares of Series A 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.
(c) In case the Company shall fix a record date for a distribution
to all holders of Series A 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 quarterly cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Series A Preferred
Stock, but including any dividend payable in stock other than Series A Preferred
Stock), or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current per
share market price of the Series A
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Preferred Stock (as defined in Section 11(d)) on such record date, less the fair
market value (as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Series A Preferred Stock and the denominator of which
shall be such current per share market price of the Series A Preferred Stock.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
market price" of the Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days (as defined herein) immediately prior to but not
including such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
Common Stock for the ten (10) consecutive Trading Days immediately following but
not including such date; provided, however, that in the event that the current
--------- --------
market price of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (i) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into such Common Stock (other than the Rights), or (ii)
any subdivision, combination or reclassification of such Common Stock, and prior
to the expiration of the requisite thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, 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 take into account ex-dividend trading. 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 shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the shares of Common Stock
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<PAGE>
selected by the Board. If on any such date no market maker is making a market in
the Common Stock, the fair value of such shares on such date as determined in
good faith by the Board shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business, or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the term "Trading Day" shall mean a
Monday, Tuesday, Wednesday, Thursday or Friday on which banking or trust
institutions in the State of New York are not authorized or obligated by law or
executive order to close. If the Common Stock is not publicly held or not listed
or traded, "current market price" shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Series A Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current market
price per share of Series A Preferred Stock cannot be determined in the manner
provided above or if the Series A Preferred Stock is not publicly held or listed
or traded in a manner described in clause (i) of this Section 11(d), the
"current market price" per share of Series A Preferred Stock shall be
conclusively deemed to be an amount equal to 1,000 (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. If neither the Common Stock nor the Series A Preferred Stock is publicly
held or so listed or traded, "current market price" per share of the Series A
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the "current market price" of one one-thousandth of a share of
Series A Preferred Stock shall be equal to the "current market price" of one
share of Series A Preferred Stock divided by 1,000.
(e) 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 one percent (1%) in such price; provided,
---------
however, that any adjustments which by reason of this Section 11(e) 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 of Common Stock or
other share or one one-millionth of a share of Series A Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section 11(e), an
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 requires such
adjustment or (ii) the Expiration Date.
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<PAGE>
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Series A Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof 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 Series A
Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j),
(k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Series A Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Series A Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), 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-thousandths of
a share of Series A Preferred Stock (calculated to the nearest one one-
millionth) obtained by (i) multiplying (x) the number of one one-thousandths of
a share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-thousandths of a share of Series A Preferred Stock
issuable upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Series A Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights 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 Rights Certificates have been issued, shall be at
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<PAGE>
least ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14 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 Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-thousandths of a share of Series A Preferred Stock
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per one one-
thousandth of a share and the number of one one-thousandths of a share which
were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then-par value, if any, of the number of
one one-thousandths of a share of Series A 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 and non-assessable such number of one one-
thousandths of a share of Series A Preferred Stock at such adjusted Purchase
Price.
(l) 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 issuance to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Series A Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-thousandths of a share of Series A
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 bill or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
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<PAGE>
(m) 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 the Board in its sole discretion shall determine to be advisable
in order that any (i) consolidation or subdivision of the Series A Preferred
Stock, (ii) issuance wholly for cash of any shares of Series A Preferred Stock
at less than the current market price, (iii) issuance wholly for cash of shares
of Series A Preferred Stock or securities which by their terms are convertible
into or exchangeable for Series A 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 holders of its Series A Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger, sale or transfer there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale or transfer, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27 hereof, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the spin-off of shares of
Common Stock by Host Marriott Corporation, a Delaware corporation, to its
stockholders and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
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<PAGE>
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
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 and computations accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Series A Preferred Stock and the Common Stock a copy of such
certificate and (c) mail or deliver a brief summary thereof to each holder of a
Rights Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of any adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Subject to Section 23 of this Agreement, in the event
that, following the Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person 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 transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary of the
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<PAGE>
Company in one or more transactions each of which complies with Section 11(o)
hereof), then, and in each such case (except as may be contemplated by Section
13(d) hereof), proper provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall, upon the expiration of
the Redemption Period (as defined in Section 23(a)), thereafter have the right
to receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid, non-assessable and freely tradeable shares of Common
Stock of the Principal Party (as defined herein), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Series A Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of one one-thousandths
of a share of Series A Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence), and (2)
dividing that product (which product, following the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by 50% of the current market price per
share of the shares of Common Stock of such Principal Party on the date of
consummation of such Section 13 Event (or the fair market value on such date of
other securities or property of the Principal Party, as provided for herein);
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, 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 (other than Sections 11(a)(ii) and 11(a)(iii))
shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such transaction as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) and Section 11(a)(iii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(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), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
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<PAGE>
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
- --------- --------
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such Principal Party 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 such Section 13 Event, the
Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) 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;
(iii) use its best efforts to obtain any
necessary regulatory approvals in respect of the securities
purchasable upon exercise of outstanding Rights; and
(iv) use its best efforts, if such Common Stock of the
Principal Party shall be listed or admitted to trading on the New
York Stock Exchange or on another national securities exchange, to
list or admit to
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<PAGE>
trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on the New York Stock
Exchange or such securities exchange, or, if the securities of the
Principal Party purchasable upon exercise of the Rights shall not be
listed or admitted to trading on the New York Stock Exchange or a
national securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by such other
system then in use.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a) hereof.
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons (or a wholly owned subsidiary of any such Person or Persons)
who acquired shares of Common Stock pursuant to a cash tender offer for all
outstanding shares of Common Stock which complies with the provisions of
Section 11(a)(ii) hereof, (ii) the price per share of Common Stock offered in
such transaction is not less than the price per share of Common Stock paid to
all holders of Common Stock whose shares were purchased pursuant to such cash
tender offer and (iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such cash tender offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of the 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, or, in case no such sale takes place on such day, the average of the
high bid and low asked prices, in either case as reported by the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported
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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 such other system then in use or,
if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board shall be used. In
the event the Rights are listed or admitted to trading on a national securities
exchange, 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 high
bid and low asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to the national
securities exchange on which the Rights are listed or admitted to trading.
(b) The Company shall not be required to issue fractions of shares
of Series A Preferred Stock (other than fractions which are integral multiples
of one one-thousandth of a share of Series A Preferred Stock) upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Series A Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Series A Preferred Stock). In lieu of
fractional shares of Series A Preferred Stock that are not integral multiples of
one one-thousandth of a share of Series A Preferred Stock, the Company may pay
to the registered holders of Rights 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 one one-thousandth of a share of Series A Preferred
Stock. For purposes of this Section 14(b), the current market value of one one-
thousandth of a share of Series A Preferred Stock shall be one one-thousandth of
the closing price of a share of Series A Preferred Stock (as determined pursuant
to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date
of such exercise.
(c) Following the occurrence of one of the events specified in
Section 11 giving rise to the right to receive Common Stock, Stock Equivalents
or other securities upon the exercise of a Right, the Company shall not be
required to issue fractions of shares of Common Stock, Stock Equivalents or
other securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock, Stock Equivalents or other
securities. In lieu of fractional shares of Common Stock, Stock Equivalents or
other securities the Company may pay to the registered holders of Rights
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 one (1) share
of Common Stock, Stock Equivalents or other securities. For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
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(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, except the
rights of action vested in the Rights Agent pursuant to Section 18 and Section
19 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in 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 Rights Certificate in the manner provided
in such Rights 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 hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form of
assignment and the certificate contained therein duly completed and executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced
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thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any government
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
- -------- -------
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the Series
A Preferred 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 Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders 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 Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Duties of Rights Agent.
The Rights Agent undertakes only the duties and obligations
expressly imposed by this Agreement upon the following terms and conditions, by
all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent, and the
Rights
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Agent shall incur no liability, for or in respect of any action taken or omitted
by it in good faith and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company prior to taking or suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any person believed by the Rights Agent to be any one
of the Chairman of the Board, President, Chief Executive Officer, a Vice
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent, and the Rights Agent shall incur no liability, for or in respect of any
action taken, omitted 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
gross negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except as to its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent is serving as an administrative agent and
shall not be under any responsibility in respect of, the validity of any
provision of this Agreement or the execution and delivery of this Agreement
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 7(e) hereof) or
any adjustment required under any of the provisions hereof or responsible for
the manner, method, or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after actual notice
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 Common Stock or shares of Series A Preferred Stock to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of Common
Stock or shares of Series A Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and non-assessable.
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(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 any
person believed by the Rights Agent to be any one of the Chairman of the Board,
the President, Chief Executive Officer, a Vice President, the Secretary or the
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, omitted to be taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer. Any application by the Rights
Agent for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken, suffered or omitted
by the Rights Agent under this Agreement and the date on or after which such
action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instruction in response to such application specifying the action to be
taken, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person
or 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, however, the Rights Agent was not
-------- -------
grossly negligent in the selection and continued employment thereof.
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(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 Rights 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 properly completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with the
Company.
(l) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
Section 19. Compensation and Indemnification of the Rights Agent.
(a) 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, its officers, employees, agents and
directors for, and to hold each of them harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for any action taken, suffered or omitted by
the Rights Agent or such other indemnified party in connection with the
acceptance and administration of this Agreement and the exercise of its duties
hereunder, including but not limited to the costs and expenses of defending
against any claim of liability in the premises. The indemnity provided for
hereunder shall survive the expiration of the Rights and the termination of this
Agreement.
(b) The Rights Agent shall be authorized and protected and shall
incur no liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement or the exercise of
its duties hereunder in reliance upon any Rights Certificate or certificate for
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
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(c) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of the action unless such loss or
damage results from the gross negligence, bad faith or willful misconduct of the
Rights Agent.
Section 20. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such Person would be eligible for
-------- -------
appointment as a successor Rights Agent under the provisions of Section 21
hereof.
(b) In case at any time the name of the Rights Agent shall be
changed and at any such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 21. Change of Rights Agent.
(a) The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon thirty (30) days'
notice in writing mailed to the Company and to each transfer agent of the Common
Stock and the Series A Preferred Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and Series A
Preferred Stock by registered or certified mail, and to the holders of the
Rights 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 to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
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incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (i) a Person organized and doing business
under the laws of the United States or of the State of New York (or of any other
state of the United States so long as such Person is authorized to do business
in the State of New York), in good standing, having an office in the State of
New York which is authorized under such laws to exercise corporate trust power
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 $100 million or (ii) an Affiliate of such a Person described
in clause (a). After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Series A Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
(b) In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price per share and the number
or
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kind of class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date (other than upon exercise of a Right) and prior
to the redemption or expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
-------- -------
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Board may, at its option, at any time during the period
commencing on the Rights Dividend Declaration Date and ending on the earlier of
(i) the Close of Business on the tenth day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to the Record Date,
the Close of Business on the tenth day following the Record Date), as such
period may be extended or shortened in the discretion of the Board (the
"Redemption Period") or (ii) the Close of Business on the Final Expiration Date,
cause the Company to redeem all but not less than all the then outstanding
Rights at a redemption price of $.005 per Right, as such amount may be
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"); provided, however, that, if
-------- -------
the Board authorizes redemption of the Rights or a change in the Redemption
Period on or after the time a Person becomes an Acquiring Person, then such
authorization shall require the concurrence of two-thirds of the Board. If,
following the occurrence of a Stock Acquisition Date and following the
expiration of the Company's right of redemption hereunder (i) a Person who is an
Acquiring Person shall have transferred or otherwise disposed of a number of
shares of Common Stock in one transaction or series of transactions, not
directly or indirectly involving the Company or any of its Subsidiaries, which
did not result in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of 10% or less of the outstanding shares of Common
Stock, (ii) there are no other Persons, immediately following the occurrence of
the event described in clause (i), who are Acquiring Persons, and (iii) the
Board, by a vote of two-thirds of the Board, shall so approve, then the
Company's right of redemption shall be reinstated and thereafter be subject to
the provisions of this
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Section 23. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event or a Section 13 Event until such time as the Company's
right of redemption hereunder has expired. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the current
market price of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board.
(b) Immediately upon the action of the Board ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. Promptly after the
action of the Board ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the Transfer Agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange.
(a) The Board 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 null and
void pursuant to the provisions of Section 11(a)(ii) or Section 7(e) hereof) for
shares of 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").
(b) Immediately upon the action of the Board 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,
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whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) or Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient Common 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 for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common 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 equal to the
same fraction of the current market value of a whole share of Common Stock. For
the purposes of this paragraph (d), the current market value of a whole share of
Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to the
holders of Series A Preferred Stock or to make any other distribution to the
holders of Series A Preferred Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings) or (ii) to offer to the holders
of Series A Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Series A Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Series A Preferred Stock (other than a reclassification
involving only the subdivision of outstanding Series A Preferred Stock), or (iv)
to effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets
or earning power of the Company and its subsidiaries (taken as a whole) to, any
other Person, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and 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
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reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Series A Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of Series A Preferred Stock
for purposes of such action and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Series A Preferred
Stock whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and 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(a)(ii) hereof, and (ii) all references in the preceding paragraph to Series
A Preferred Stock shall be deemed thereafter to refer to Common Stock and/or,
if appropriate other securities.
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 Rights Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
CRESTLINE CAPITAL CORPORATION
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: General Counsel
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
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by
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first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
THE BANK OF NEW YORK
Stock Transfer Administration Group
101 Barclay Street - 12 West
New York, New York 10286
Attention: Ralph Chianese
Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to any such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date and subject to the penultimate
sentence of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement without
the approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the penultimate sentence of
this Section 27, the Company may, and the Rights Agent shall at any time and
from time to time, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of any such Person); provided, however, that this Agreement may not be
--------- --------
supplemented or amended (A) to lengthen a time period relating to when the
Rights may be redeemed at such time as the Rights are not then redeemable, or
(B) to lengthen any other time period unless such lengthening is for the purpose
of protecting, enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of any such Person). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the number
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of one one-thousandths of a share of Series A Preferred Stock for which a Right
is exercisable or the Purchase Price; provided, however, that at any time prior
--------- --------
to the Distribution Date, the Company may amend this Agreement to increase the
Purchase Price. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of shares of
Common Stock.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board, etc.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board (with, where specifically
provided for herein, the concurrence of two-thirds of the Directors) shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of two-thirds of the
Directors) or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including without limitation a determination to redeem or not redeem
the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
(with, where specifically provided for herein, the concurrence of two-thirds of
the Directors) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other Persons, and
(y) not subject any director to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders
of the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the
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<PAGE>
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of Common Stock).
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
--------- --------
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would materially
and adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth day following the date of such
determination by the Board.
Section 32. Governing Law.
This Agreement, each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Maryland and for all purposes shall be governed by and construed in accordance
with laws of such State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts. It
shall not be necessary that the signature of or on behalf of each party appears
on each counterpart, but it shall be sufficient that the signature of or on
behalf of each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It shall not be
necessary in any proof of this Agreement to produce or account for more than a
number of counterparts containing the respective signatures of or on behalf of
all of the parties.
Section 34. 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.
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<PAGE>
Section 35. Limitation of Ownership.
Notwithstanding anything to the contrary in this Agreement, a
Person's ability to acquire shares of Series A Preferred Stock and/or Common
Stock of the Company under this Agreement shall be limited to only such number
of shares of Series A Preferred Stock and/or Common Stock, as the case may be,
as would not cause any such Person or any other Person (taking into account the
attribution rules of the Internal Revenue Code) to exceed the ownership limits
set forth in the Articles of Incorporation of the Company.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
ATTEST: CRESTLINE CAPITAL CORPORATION
By: /s/ Tracy M.J. Colden By: /s/ Bruce D. Wardinski
--------------------------------- ---------------------------------
Name: Tracy M.J. Colden Name: Bruce D. Wardinski
Title: Secretary Title: President and Chief Executive
Officer
ATTEST: THE BANK OF NEW YORK
By: /s/ John I. Sivertsen By: /s/ Ralph Chianese
--------------------------------- ---------------------------------
Name: John I. Sivertsen Name: Ralph Chianese
Title: Vice President Title: Vice President
-46-
<PAGE>
EXHIBIT A
CRESTLINE CAPITAL CORPORATION
--------------------------------------------------------------
Articles Supplementary of Crestline Capital Corporation
Classifying and Designating a Series of Preferred Stock as
Series A Junior Participating Preferred Stock and
Fixing Distribution and Other Preferences and
Rights of Such Series
--------------------------------------------------------------
Crestline Capital Corporation, a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland pursuant to Section 2-105(9) of the Annotated Code of
Maryland that:
FIRST: Pursuant to authority granted by the Articles of
Incorporation of the Corporation, the Board of Directors on December 11, 1998
adopted a resolution effective on December 14, 1998 designating and classifying
60,000 unissued shares of Preferred Stock as Series A Junior Participating
Preferred Stock.
SECOND: The following is a description of the Series A Junior
Participating Preferred Stock, including the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption thereof:
Section 1. Designation and Amount. The shares of such series of
----------------------
Preferred Stock, par value $.01 per share, shall be designated as "Series A
Junior Participating Preferred Stock" and the number of shares constituting such
series shall be 60,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors and by the filing of articles supplementary
in accordance with the Maryland General Corporation Law; provided, that no
decrease shall reduce the number of shares of Series A Junior Participating
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Junior Participating
Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
<PAGE>
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock (or any similar stock) ranking prior and
superior to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the 15th day of April, July, October and January,
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
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) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, one thousand (1,000) times the aggregate per
share amount of all cash dividends, and one thousand (1,000) 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, par
value $.01 per share, of the Corporation (the "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 Corporation shall at any time
after December 14, 1998 (the "Rights Declaration Date"), other than in
connection with the spin-off of shares of Common Stock by Host Marriott
Corporation, a Delaware corporation, to its stockholders, (i) declare or pay any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution 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 $10.00 per share on
the Series A Junior Participating Preferred
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<PAGE>
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
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date set 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 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 no 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) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to one thousand (1,000) votes on all matters submitted to a vote
of the stockholders of the Corporation. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided by law, the holders of shares of
Series A Junior Participating Preferred Stock and the holders of shares of
Common Stock and any other stock of the Corporation having general voting
-3-
<PAGE>
rights shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, 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 not paid,
thereafter and until such dividends and distributions, whether or not declared,
on shares of Series A Junior Participating Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or 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;
or
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable in proportion to the total amounts to which the holders of
all such shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior Participating
Preferred Stock; or
(iv) redeem or 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
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<PAGE>
respective annual dividend rates and other relative rights and preferences of
the respective Series And classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
-----------------
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein, or reclassified as Common Stock or other stock of the
Corporation as provided in the Corporation's Articles of Incorporation.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, 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 $65,000 per share, plus any
unpaid dividends and distributions payable 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 Series A Junior Participating
Preferred Stock unless, prior thereto, the 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)
1,000 (as appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii) immediately above as so
adjusted 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
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<PAGE>
Adjustment Number to one (1) with respect to such Series A Junior
Participating Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, 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, however, that there are 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 Corporation shall at any time after the
Rights Declaration Date, other than in connection with the spin-off of shares of
Common Stock by Host Marriott Corporation, a Delaware corporation, to its
stockholders, (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event 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
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
---------------------------
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed into such stock or securities, cash and/or any
other property in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to one thousand (1,000) times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock (as previously
adjusted, if any prior adjustment has occurred) shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number
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<PAGE>
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. Redemption. The outstanding shares of Series A
----------
Junior Participating Preferred Stock may be redeemed as a whole, but not in
part, at any time, or from time to time, at the option of the Board, at a cash
price per share equal to 105 percent of (i) the product of the Adjustment Number
times the Average Market Value (as such term is hereinafter defined) of the
Common Stock, plus (ii) all dividends which on the redemption date are payable
on the shares to be redeemed and have not been paid, or declared and a sum
sufficient for the payment thereof set apart, without interest. The "Average
Market Value" is the average of the closing sale prices of the Common Stock
during the 30 day period immediately preceding the date before the redemption
date on the Composite Tape for New York Stock Exchange Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York Stock Exchange,
or, if such stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934, as
amended, on which such stock is listed, or, if such stock is not listed on any
such exchange, the average of the closing sale prices with respect to a share of
Common Stock during such 30 day period, as quoted on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in use,
or if no such quotations are available, the fair market value of the Common
Stock as determined by the Board in good faith.
Section 9. Ranking. Notwithstanding anything contained herein
-------
to the contrary, the Series A Junior Participating Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to voting
rights, the payment of dividends and the distribution of assets in liquidation,
unless the terms of any such series shall provide otherwise.
Section 10. Amendment. The Articles of Incorporation of the
---------
Corporation shall not be further amended, nor shall an Articles Supplementary be
filed or amended, in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least a majority of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
-----------------
Preferred Stock may be issued in fractions of a share which shall entitle the
holders, in proportion to such holders' fractional shares, to exercise voting
rights, receive dividends, participate in distributions and have the benefit of
all other rights of holders of Series A Junior Participating Preferred Stock.
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<PAGE>
IN WITNESS WHEREOF, Crestline Capital Corporation has caused these
Articles Supplementary to be signed in its name and on its behalf by its
Executive Vice President and attested by its Secretary on December ___, 1998.
CRESTLINE CAPITAL
CORPORATION
By:
------------------------------
James L. Francis
Executive Vice President
Attest:
-----------------------------
Tracy M.J. Colden
Secretary
I, James L. Francis, Executive President of Crestline Capital
Corporation hereby acknowledge the foregoing Articles Supplementary of Crestline
Capital Corporation to be the corporate act of Crestline Capital Corporation,
and to the best of my knowledge, information and belief, these matters and facts
are true in all material respects, and my statement is made under penalties of
perjury.
--------------------------------
James L. Francis
Executive Vice President
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<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On December 11, 1998, the Board of Directors of CRESTLINE
CAPITAL CORPORATION (the "Company") declared effective on December 14, 1998 a
dividend distribution of one right ("Right") for each outstanding share of
common stock (the "Common Stock") of the Company. The distribution is payable to
stockholders of record on December 15, 1998. Each Right, when exercisable,
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock ("Preferred Stock")
at a price of $65.00 per one one-thousandth 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 The Bank of
New York, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate
certificates evidencing the Rights will be distributed. The Rights will separate
from the Common Stock and a distribution of Rights Certificates (as defined
below) will occur upon the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date") or (ii) 10 business days (or such later date as the Board of
Directors may determine) following the commencement of a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person of 20% or more of the outstanding shares of Common Stock
(the earlier of such dates being called the "Distribution Date"). For purposes
of the Rights Agreement, a person shall not be deemed to beneficially own
"Exempt Shares" which include (i) shares of Common Stock that are received
pursuant to the distribution by Host Marriott Corporation (the "Distribution")
of the shares of Common Stock of the Company to the holders of shares of common
stock, par value $1.00 per share of Host Marriott Corporation ("HM Common
Stock") held of record on the record date fixed for the distribution, provided
that such shares of HM Common Stock were beneficially owned by such person on
February 3, 1989, and owned continuously thereafter until the Distribution; and
(ii) certain shares of Common Stock which were acquired by a person pursuant to
a gift, bequest, inheritance or distribution from a trust or from a corporation
controlled by such person where such shares of Common Stock were Exempt Shares
immediately prior to such acquisition.
<PAGE>
Until the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates, and will be transferred with and only with the
Common Stock certificates, (ii) new Common Stock certificates issued after
December 15, 1998 upon transfer or new issuance of the Common Stock will contain
a notation incorporating the Rights Agreement by reference, and (iii) the
surrender for transfer of any certificates for Common Stock outstanding will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on December 13, 2008, unless earlier
redeemed or exchanged by the Company as described below. The Rights will not be
exercisable by a holder in any jurisdiction where the requisite qualification to
the issuance to such holder, or the exercise by such holder, of the Rights has
not been obtained or is not obtainable.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Rights Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Rights Certificates alone
will evidence the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that a Person becomes the beneficial owner of
20% or more of the then outstanding shares of Common Stock (except pursuant to
an offer for all outstanding shares of Common Stock which the Board of
Directors determine to be fair to and otherwise in the best interests of the
Company and its stockholders), each holder of a Right will, after the end of a
redemption period referred to below, have the right (subject to the ownership
limit and the other ownership restrictions contained in the Company's Articles
of Incorporation) to exercise the Right by purchasing, for an amount equal to
the Purchase Price, Common Stock (or, in certain circumstances, cash, property
or other securities of the Company) having a value equal to two times such
amount. Notwithstanding any of the foregoing, following the occurrence of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation
(other than a merger which follows an offer described in the second preceding
paragraph), or (ii) 50% or more of
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<PAGE>
the Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above)
shall, after the expiration of the redemption period referred to below, have the
right to receive, upon exercise, common stock of the acquiring company having a
value equal to two times the Purchase Price of the Right.
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or group
which have become void), in whole or in part, at an exchange ratio of one share
of Common Stock per Right (subject to adjustment).
The Purchase Price payable, and the number of one one-
thousandths of a share of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment 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 (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock) and in lieu thereof, an adjustment in cash will be made based
on the market price of the Preferred Stock on the last trading date prior to the
date of exercise.
In general, the Board of Directors of the Company, may cause
the Company to redeem the Rights in whole, but not in part, at any time during
the period commencing on December 14, 1998, and ending on the tenth day
following the Stock Acquisition Date, as such period may be extended or
shortened by the Board of Directors (the "Redemption Period") at a price of
$.005 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors). Under certain circumstances set forth in
the Rights Agreement, the decision to redeem the Rights will require the
concurrence of two-thirds of the Board of Directors. After the Redemption Period
has expired, the Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to 10% or less of the outstanding shares
of Common Stock in a transaction or series of transactions not involving the
Company and there are no other Acquiring Persons. Immediately upon the action of
the Board of Directors of the Company ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $.005 redemption price.
-3-
<PAGE>
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be subject to federal taxation to stockholders or to the Company,
stockholders may, depending upon the circumstances, recognize taxable income in
the event that the Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the acquiring company as
set forth above.
* * *
-4-
<PAGE>
EXHIBIT C
[Form of Rights Certificate]
Certificate No. R-________ ________ Rights
NOT EXERCISABLE AFTER DECEMBER 13, 2008 OR EARLIER IF REDEEMED OR EXCHANGED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.005 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF ANY SUCH PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE
VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR
BE OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.] */
THE SHARES OF CAPITAL STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON BENEFICIAL OWNERSHIP AND CONSTRUCTIVE OWNERSHIP AND
TRANSFER PRIMARILY FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS
STATUS AS A REAL ESTATE INVESTMENT TRUST (A "REIT") UNDER THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUBJECT TO CERTAIN FURTHER
RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION'S CHARTER,
(I) NO PERSON MAY BENEFICIALLY
- --------
*/ The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE>
OWN OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK OF THE CORPORATION IN
EXCESS OF 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING
COMMON SHARES OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED HOLDER
(IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE) OR AN
EXCLUDED HOLDER (IN WHICH CASE THE EXCLUDED HOLDER LIMIT SHALL BE
APPLICABLE); (II) WITH RESPECT TO ANY CLASS OR SERIES OF SHARES OF CAPITAL
STOCK OTHER THAN COMMON STOCK, NO PERSON MAY BENEFICIALLY OWN OR
CONSTRUCTIVELY OWN MORE THAN 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES) OF
THE OUTSTANDING SHARES OF SUCH CLASS OR SERIES OF SUCH STOCK OF THE
CORPORATION, UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE
EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE) OR AN EXCLUDED HOLDER (IN WHICH
CASE THE EXCLUDED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY
BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK THAT WOULD
RESULT IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(H) OF THE
CODE, WOULD CAUSE EITHER THE CORPORATION TO BE CONSIDERED TO CONSTRUCTIVELY
OWN AN INTEREST IN A TENANT THAT IS DESCRIBED IN SECTION 856(D)(2)(B) OF
THE CODE PURPOSES OF APPLYING SECTION 856(C) OF THE CODE OR HOST MARRIOTT,
L.P. TO BE CONSIDERED TO CONSTRUCTIVELY OWN AN INTEREST IN A TENANT THAT IS
DESCRIBED IN SECTION 856(D)(2)(B) OF THE CODE FOR PURPOSES OF APPLYING
SECTION 7704(D) OF THE CODE, OR OTHERWISE WOULD CAUSE THE CORPORATION TO
FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER SHARES OF
CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN SHARES OF CAPITAL STOCK OF
THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO
BENEFICIALLY OWNS OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OWN OR
CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSE OR WILL CAUSE A
PERSON TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN
EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE
VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE
AUTOMATICALLY TRANSFERRED TO A CHARITABLE TRUSTEE OF A CHARITABLE TRUST FOR
THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, UPON THE
OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE
RESTRICTIONS
-2-
<PAGE>
DESCRIBED ABOVE MAY BE VOID AB INITIO. A PERSON WHO ATTEMPTS TO
-- ------
BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN VIOLATION
OF THE OWNERSHIP LIMITATIONS DESCRIBED ABOVE SHALL HAVE NO CLAIM, CAUSE OF
ACTION OR ANY RECOURSE WHATSOEVER AGAINST A TRANSFEROR OF SUCH SHARES OF
CAPITAL STOCK. ALL CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS
DEFINED IN THE CORPORATION'S CHARTER, AS THE SAME MAY BE AMENDED FROM TIME
TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND
OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF SHARES OF CAPITAL STOCK OF
THE CORPORATION ON REQUEST AND WITHOUT CHARGE.
-3-
<PAGE>
Rights Certificate
CRESTLINE CAPITAL CORPORATION
This certifies that _______________________________________, or its registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of December 14, 1998 (the "Rights
Agreement"), between CRESTLINE CAPITAL CORPORATION, a Maryland corporation (the
"Company"), and THE BANK OF NEW YORK (the "Rights Agent"), to purchase from the
Company at any time prior to ____________ __, ____ at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights Agent,
one one-thousandth of a fully paid, non-assessable share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred Stock")
of the Company, at a purchase price of $_____ per one one-thousandth share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the Purchase
Price per share set forth above, are the number and Purchase Price as of
____________ __, ____, based on the Preferred Stock as constituted at such date,
and are subject to adjustment upon the happening of certain events as provided
in the Rights Agreement.
From and after the occurrence of an event described in Section
11(a)(ii) of the Rights Agreement, the Rights evidenced by this Rights
Certificate beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement), which the Board of Directors, in their sole discretion, determine
is or was involved in or caused or facilitated, directly or indirectly
(including through any change in the Board), such Section 11(a)(ii) Event, (ii)
a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of
a person who, concurrently with or after such transfer, became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person shall become null
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
The Rights evidenced by this Rights Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are
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<PAGE>
subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are 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 Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-thousandths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.005 per Right at any time prior to the earlier of the
close of business on (i) the tenth day following the Stock Acquisition Date (as
such time period may be changed in the discretion of the Board of Directors
pursuant to the Rights Agreement), and (ii) the Final Expiration Date (as
defined in the Rights Agreement). Under certain circumstances set forth in the
Rights Agreement, the decision to redeem shall require the concurrence of two-
thirds of the Board of Directors. After the expiration of the redemption
period, the Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to 10% or less of the outstanding
shares of Common Stock in a transaction or series of transactions not involving
the Company, and such reinstatement is approved by the Company's Board of
Directors.
At any time after a person becomes an Acquiring Person, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such Acquiring Person which have become void), in whole or in part, at an
exchange ratio of one share of Common Stock per Right (subject to adjustment).
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral
-5-
<PAGE>
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Preferred 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 subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________ __, ____
ATTEST: CRESTLINE CAPITAL CORPORATION
By: By:
----------------------------------- ------------------------------------
Name: Name:
Title: Title:
COUNTERSIGNED:
THE BANK OF NEW YORK
By:
-----------------------------------
Name:
Title:
-6-
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate.)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint_________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________ __, ____
____________________________________
Signature
Signature Guaranteed:
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights 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 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 Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Person.
Dated: ____________ __, ____ ____________________________________
Signature
Signature Guaranteed:
<PAGE>
NOTICE
------
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: _____________________
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Please insert social security
or other identifying number: _______________________________
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Please insert social security
or other identifying number: __________________________
______________________________
Dated: ____________ __, ____
_________________________________________
Signature
Signature Guaranteed:
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of any such Person.
Dated: ____________ __, ____ ____________________________________
Signature
Signature Guaranteed:
<PAGE>
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
