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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
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PATRIOT AMERICAN HOSPITALITY, INC.
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(Exact name of registrant as specified in charter)
Delaware 94-8358820
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(State or other jurisdiction (IRS employer
of incorporation) identification no.)
1950 Stemmons Freeway, Suite 6001, Dallas TX 75207
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(Address of principal executive offices) (Zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class is
to be so registered to be registered
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Preferred Stock Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
On December 20 , 1998, the Board of Directors of Patriot American
Hospitality, Inc. (the "Company") adopted a Shareholder Rights Agreement (the
"Rights Agreement"). The following description of the terms of the Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement which is attached hereto as an exhibit and is
incorporated herein by reference.
Pursuant to the terms of the Rights Agreement, the Board of
Directors declared a dividend distribution of one Preferred Stock Purchase
Right (a "Right") for each outstanding share of Common Stock of the Company
(the "Common Stock") and for each outstanding share of Series A Convertible
Preferred Stock of the Company (the "Series A Preferred Stock") to
stockholders of record as of December 20, 1998 (the "Record Date"). In
addition, one Right will automatically attach to each share of Common Stock
and to each share of Series A Preferred Stock issued between the Record Date
and the Distribution Date (as hereinafter defined). Each Right entitles the
registered holder thereof to purchase from the Company a unit consisting of
one one-thousandth of a share (a "Unit") of Series X Junior Participating
Cumulative Preferred Stock, par value $0.01 per share (the "Series X
Preferred Stock"), at a cash exercise price of $35.00 per Unit (the "Exercise
Price"), subject to adjustment.
Initially, the Rights are not exercisable and are attached to and trade
with all outstanding shares of Common Stock and Series A Preferred Stock
outstanding as of, and issued subsequent to, the Record Date. The Rights will
separate from the Common Stock and from the Series A Preferred Stock and will
become exercisable upon the earlier of (i) the close of business on the tenth
calendar day following the first public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 10% or
more of the outstanding shares of Common Stock (an "Acquiring Person") (the date
of said announcement being referred to as the "Stock Acquisition Date") or (ii)
the close of business on the tenth business day (or such later calendar day as
the Board of Directors may determine) following the commencement of a tender
offer or exchange offer that would result upon its consummation in a person or
group becoming the beneficial owner of 10% or more of the outstanding shares of
Common Stock (the earlier of such dates being herein referred to as the
"Distribution Date").
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), (a) the Rights will be evidenced by the Common Stock
and Series A Preferred Stock certificates and will be transferred with and only
with such Common Stock and Series A Preferred Stock certificates, (b) new Common
Stock certificates and Series A Preferred Stock certificates issued after the
Record Date will contain a notation incorporating the Shareholder Rights
Agreement by reference, and (c) the surrender for transfer of any certificates
for Common Stock or Series A Preferred Stock will also constitute the transfer
of the Rights associated with the Common Stock or Series A Preferred Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of
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business on December 20, 2008, unless previously redeemed or exchanged by the
Company as described below.
As soon as practicable after the Distribution Date, Right Certificates
will be mailed to holders of record of Common Stock and Series A Preferred Stock
as of the close of business on the Distribution Date and, thereafter, the
separate Right Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, only shares of Common Stock and Series A
Preferred Stock issued prior to the Distribution Date will be issued with
Rights.
In the event that a Stock Acquisition Date occurs, proper provision
will be made so that each holder of a Right (other than an Acquiring Person
or associates or affiliates thereof, whose Rights shall become null and void)
will thereafter have the right to receive upon exercise that number of Units
of Series X Preferred Stock of the Company having a market value of two times
the exercise price of the Right (such right being referred to as the
"Subscription Right"). In the event that, at any time following the Stock
Acquisition Date, (i) the Company consolidates with, or merges with and into,
any other person, and the Company is not the continuing or surviving
corporation, (ii) any person consolidates with the Company, or merges with
and into the Company and the Company is the continuing or surviving
corporation of such merger and, in connection with such merger, all or part
of the shares of Common Stock are changed into or exchanged for stock or
other securities of any other person or cash or any other property, or (iii)
50% or more of the Company's assets or earning power is sold, mortgaged or
otherwise transferred, each holder of a Right shall thereafter have the right
to receive, upon exercise, common stock of the acquiring company having a
market value equal to two times the exercise price of the Right (such right
being referred to as the "Merger Right"). The holder of a Right will continue
to have the Merger Right whether or not such holder has exercised the
Subscription Right. Rights that are or were beneficially owned by an
Acquiring Person may (under certain circumstances specified in the Rights
Agreement) become null and void.
At any time after any person becomes an Acquiring Person, the Board
of Directors may, at its option, exchange all or any part of the then
outstanding and exercisable Rights for shares of Common Stock or paired
shares ("Paired Shares") of Common Stock and common stock of Wyndham
International, Inc. or Units of Preferred Stock at an exchange ratio
specified in the Rights Agreement. Notwithstanding the foregoing, the Board
of Directors generally will not be empowered to effect such exchange at any
time after any person becomes the beneficial owner of 50% or more of the
Common Stock of the Company.
The Exercise Price payable, and the number of Units of Series X
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 Series X Preferred Stock, (ii) if holders of the
Series X Preferred Stock are granted certain rights or warrants to subscribe
for Series X Preferred Stock or convertible securities at less than the
current market price of the Series X Preferred Stock, or (iii) upon the
distribution to holders of the Series X Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
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subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments amount to at least 1% of the Exercise
Price. The Company is not obligated to issue fractional Units. If the Company
elects not to issue fractional Units, in lieu thereof an adjustment in cash
will be made based on the fair market value of the Series X Preferred Stock
on the last trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of
$0.01 per Right (payable in cash, Common Stock, Paired Shares or other
consideration deemed appropriate by the Board of Directors) by the Board of
Directors only until the earlier of (i) the time at which any person becomes
an Acquiring Person or (ii) the expiration date of the Rights Agreement.
Immediately upon the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and thereafter the only right of the
holders of Rights will be to receive the redemption price.
The Rights Agreement may be amended by the Board of Directors in its
sole discretion until the time at which any person becomes an Acquiring Person.
After such time, the Board of Directors may, subject to certain limitations set
forth in the Rights Agreement, amend the Rights Agreement only to cure any
ambiguity, defect or inconsistency, to shorten or lengthen any time period, or
to make changes that do not adversely affect the interests of Rights holders
(excluding the interests of an Acquiring Person or its associates or
affiliates).
Until a Right is exercised, the holder will have no rights as a
stockholder of the Company (beyond those as an existing stockholder), including
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Units, other securities of the Company, other
consideration or for common stock of an acquiring company.
The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the Form of
Rights Certificate, is attached 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 the Rights Agreement
which is incorporated herein by reference.
Item 2 - Exhibits
Exhibit 3.1 Certificate of Designations, Preferences and Rights of a
Series of Preferred Stock of Patriot American Hospitality,
Inc., classifying and designating the Series X Junior
Participating Cumulative Preferred Stock.
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Exhibit 4.1 Shareholder Rights Agreement, dated as of December 20, 1998,
between Patriot American Hospitality Inc. and American Stock
Transfer and Trust Company, as Rights Agent.
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SIGNATURE
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.
PATRIOT AMERICAN HOSPITALITY, INC.
Date: December 20, 1998 By: /s/ William W. Evans III
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Name: William W. Evans III
Title: President and Chief
Operating Officer
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EXHIBIT INDEX
Exhibit No. Description
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3.1 Certificate of Designations, Preferences and Rights of a
Series of Preferred Stock of Patriot American Hospitality,
Inc., classifying and designating the Series X Junior
Participating Cumulative Preferred Stock.
4.1 Shareholder Rights Agreement, dated as of December 20, 1998,
between Patriot American Hospitality Inc. and American Stock
Transfer and Trust Company, as Rights Agent.
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Exhibit 3.1
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CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF A SERIES OF
PREFERRED STOCK
OF
PATRIOT AMERICAN HOSPITALITY, INC.
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PATRIOT AMERICAN HOSPITALITY, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation (as amended) of said
corporation, and pursuant to the provisions of Section 151 of Title 8 of the
Delaware Code of 1953, said Board of Directors, at a meeting duly held on
December 20, 1998, adopted a resolution providing for the designations,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, of a Series of Preferred
Stock, which resolution is as follows:
See attached pages 2A-9A
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VOTE OF DIRECTORS ESTABLISHING
SERIES X JUNIOR PARTICIPATING CUMULATIVE
PREFERRED STOCK
of
PATRIOT AMERICAN HOSPITALITY, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
VOTED, that pursuant to authority conferred upon and vested in the
Board of Directors by the Amended and Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), of Patriot American Hospitality,
Inc. (the "Corporation"), the Board of Directors hereby establishes and
designates a series of Preferred Stock of the Corporation, and hereby fixes and
determines the relative rights and preferences of the shares of such series, in
addition to those set forth in the Certificate of Incorporation, as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series X Junior Participating Cumulative Preferred Stock" (the
"Series X Preferred Stock"), and the number of shares initially constituting
such series shall be 2,500,000; provided, however, that if more than a total of
2,500,000 shares of Series X Preferred Stock shall be issuable upon the exercise
of Rights (the "Rights") issued pursuant to the Shareholder Rights Agreement
dated as of December 20, 1998, between the Corporation and American Stock
Transfer and Trust Company, as Rights Agent (the "Rights Agreement"), the Board
of Directors of the Corporation, pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware, shall direct by resolution or
resolutions that a certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of Section 103 thereof, providing
for the total number of shares of Series X Preferred Stock authorized to be
issued to be increased (to the extent that the Certificate of Incorporation then
permits) to the largest number of whole shares (rounded up to the nearest whole
number) issuable upon exercise of such Rights.
Section 2. Dividends and Distributions.
(A) (i) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and superior to
the Series X Preferred Stock with respect to dividends, the holders of shares of
Series X Preferred Stock, in preference to the holders of shares of common
stock, par value $.01 per share, of the Corporation (the "Common Stock") and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series X Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to
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the provisions for adjustment hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 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 or shares of common stock, par
value $.01 per share, of Wyndham International, Inc. (the "Wyndham Common
Stock") or a subdivision of the outstanding shares of Common Stock or Wyndham
Common Stock (by reclassification or otherwise)), declared on the Paired Shares
(as hereinafter defined) 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 X
Preferred Stock. The multiple of cash and non-cash dividends declared on the
Paired Shares to which holders of the Series X Preferred Stock are entitled,
which shall be 1,000 initially but which shall be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Dividend Multiple." In
the event the Corporation shall at any time after December 20, 1998 (the "Rights
Declaration Date") (i) declare or pay any dividend on Common Stock payable in
shares of Common Stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
Dividend Multiple thereafter applicable to the determination of the amount of
dividends which holders of shares of Series X Preferred Stock shall be entitled
to receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
For purposes of this Certificate of Designations, the term "Paired
Share" shall mean one share of Common Stock and one share of Wyndham Common
Stock, paired and transferable and traded only in combination as a single unit.
For purposes of this Section 2, so long as a share of Common Stock and a share
of Wyndham Common Stock are paired and transferable and traded only in
combination as a single unit, a dividend or distribution paid with respect to a
Paired Share shall include those instances where a dividend or distribution is
paid with respect to a share of Common Stock and/or a share of Wyndham Common
Stock.
(ii) Notwithstanding anything else contained in this paragraph (A), the
Corporation shall, out of funds legally available for that purpose, declare a
dividend or distribution on the Series X Preferred Stock as provided in this
paragraph (A) immediately after a dividend or distribution is declared on the
Paired Shares (other than a dividend payable in shares of Common Stock or
Wyndham Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the Paired Shares during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series X Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series X Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of
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such shares of Series X Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares 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 X 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 X 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 in accordance with applicable law a
record date for the determination of holders of shares of Series X Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than such number of days prior to
the date fixed for the payment thereof as may be allowed by applicable law.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series X Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series X Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
The number of votes which a holder of a share of Series X Preferred Stock is
entitled to cast, which shall initially be 1,000 but which may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple." In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on Common Stock payable in
shares of Common Stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
Vote Multiple thereafter applicable to the determination of the number of votes
per share to which holders of shares of Series X Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series X Preferred Stock and the holders of shares of Common Stock and
the holders of shares of any other capital stock of this Corporation having
general voting rights, shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any shares
of Series X Preferred Stock shall be in arrears in an amount equal to at least
two full quarter dividends (whether or not declared and whether or not
consecutive), the holders of record of the outstanding shares of Series X
Preferred Stock shall have the exclusive right, voting separately as a single
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class, to elect two directors of the Corporation at a special meeting of
shareholders of the Corporation or at the Corporation's next annual meeting
of shareholders, and at each subsequent annual meeting of shareholders, as
provided below. The number of votes that one share of Series X Preferred
Stock shall entitle the holder thereof to cast in elections for such
directors shall be equal to the Vote Multiple.
(ii) Upon the vesting of such right of the holders of shares
of Series X Preferred Stock, the maximum authorized number of members of the
Board of Directors shall automatically be increased by two and the two vacancies
so created shall be filled by vote of the holders of the outstanding shares of
Series X Preferred Stock as hereinafter set forth. A special meeting of the
shareholders of the Corporation then entitled to vote shall be called by the
Chairman of the Board of Directors or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
15% of the shares of Series X Preferred Stock then outstanding. At such special
meeting, or, if no such special meeting shall have been called, then at the next
annual meeting of shareholders of the Corporation, the holders of the shares of
Series X Preferred Stock shall elect, voting as above provided, two directors of
the Corporation to fill the aforesaid vacancies created by the automatic
increase in the number of members of the Board of Directors. At any and all such
meetings for such election, the holders of a majority of the outstanding shares
of Series X Preferred Stock shall be necessary to constitute a quorum for such
election, whether present in person or proxy, and such two directors shall be
elected by the vote of at least a majority of the shares of Series X Preferred
Stock held by such shareholders present or represented at the meeting. Any
director elected by holders of shares of Series X Preferred Stock pursuant to
this Section may be removed at any annual or special meeting, by vote of a
majority of the shareholders voting as a class who elected such director, with
or without cause. In case any vacancy shall occur among the directors elected by
the holders of shares of Series X Preferred Stock pursuant to this Section, such
vacancy may be filled by the remaining director so elected, or his successor
then in office, and the director so elected to fill such vacancy shall serve
until the next meeting of shareholders for the election of directors. After the
holders of shares of Series X Preferred Stock shall have exercised their right
to elect directors in any default period and during the continuance of such
period, the number of directors shall not be further increased or decreased
except by vote of the holders of shares of Series X Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking senior to or
pari passu with the Series X Preferred Stock.
(iii) The right of the holders of shares of Series X Preferred
Stock, voting separately as a class, to elect two members of the Board of
Directors of the Corporation as aforesaid shall continue until, and only until,
such time as all arrears in dividends (whether or not declared) on the Series X
Preferred Stock shall have been paid or declared and set apart for payment, at
which time such right shall terminate, except as herein or by law expressly
provided subject to revesting in the event of each and every subsequent default
of the character above-mentioned. Upon any termination of the right of the
holders of the Series X Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors then in office elected by
the holders of shares of Series X Preferred Stock pursuant to this Section shall
terminate
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immediately. Whenever the term of office of the directors elected by the holders
of shares of Series X Preferred Stock pursuant to this Section shall terminate
and the special voting powers vested in the holders of the Series X Preferred
Stock pursuant to this Section shall have expired, the maximum number of members
of this Board of Directors of the Corporation shall be such number as may be
provided for in the By-laws of the Corporation, irrespective of any increase
made pursuant to the provisions of this Section.
(D) Except as otherwise required by applicable law or as set forth
herein, holders of Series X 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 X
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series X Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series X
Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series X Preferred Stock, except dividends paid ratably on
the Series X Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) except as permitted in subsection 4(A)(iv) below, redeem,
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 X
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 X
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series X Preferred Stock, or any shares of any stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series X Preferred Stock,
except in accordance with a purchase offer made in writing or
by publication (as
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determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under subsection (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 X 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.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (x) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series X Preferred Stock unless, prior thereto, the holders of shares of Series
X Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus (1) an amount per share equal to the 1,000 times the Wyndham
Liquidation Preference (as hereinafter defined), plus (2) an amount equal to the
greater of (A) $1,000.00 per share or (B) an aggregate amount per share, subject
to the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, or (y)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series X Preferred Stock,
except distributions made ratably on the Series X Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare or pay any dividend on Common Stock payable in shares of Common
Stock, or (ii) effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount per share
to which holders of shares of Series X Preferred Stock were entitled immediately
prior to such event under clause (x) 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.
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For purposes of this Section 6, the term "Wyndham Liquidation
Preference" shall mean, as applicable, (i) in the event that Wyndham
International, Inc. ("Wyndham") has previously been or is simultaneously being
liquidated, dissolved or wound up, an amount per share of Series X Preferred
Stock equal to the amount per share of Wyndham Common Stock which was or will be
received by the holders of Wyndham Common Stock upon such liquidation,
dissolution or winding up of Wyndham, or (ii) if Wyndham has not previously been
or is not simultaneously liquidated, dissolved or wound up, an amount per share
of Series X Preferred Stock equal to the then current value of a share of
Wyndham Common Stock, without regard to the paired share structure of the
Corporation and Wyndham, as such value shall be determined by a nationally
recognized independent investment banker selected by the Board of Directors of
the Corporation. In the event that Wyndham shall have previously been
liquidated, dissolved or wound up, then interest shall accrue and the amount of
any Wyndham Liquidation Preference shall be increased by the amount of such
accrued interest. Such interest shall accrue at the applicable Federal rate
(within the meaning of Section 1274(d) of the Internal Revenue Code of 1986, as
amended, in effect on the date of such liquidation, dissolution or winding up)
from the date or dates on which liquidating distributions on the shares of
Wyndham Common Stock were paid, and such applicable Federal rate (i.e.,
long-term, mid-term or short-term) shall be based upon the length of time
between such date or dates and the date or dates on which liquidating
distributions on the shares of the Series X Preferred Stock are paid in
connection with the liquidation, dissolution and winding up of the Corporation.
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series X Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 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,
plus accrued and unpaid dividends, if any, payable with respect to the Series X
Preferred Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on Common Stock payable in
shares of Common Stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series X Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
8-A
<PAGE>
outstanding immediately prior to such event.
Section 8. Redemption. The shares of Series X Preferred Stock shall not
be redeemable.
Section 9. Ranking. Unless otherwise expressly provided in the
Certificate of Incorporation or a Certificate of Designations relating to any
other series of preferred stock of the Corporation, the Series X Preferred Stock
shall rank junior to every other series of the Corporation's preferred stock
previously or hereafter authorized, as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and shall rank
senior to the Common Stock.
Section 10. Amendment. The Certificate of Incorporation and this
Certificate of Designations shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series X Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series X
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series X Preferred Stock may be issued
in whole shares or in any fraction of a share that is one one-thousandth
(1/1,000th) of a share or any integral multiple of such fraction, which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series X Preferred Stock. In
lieu of fractional shares, the Corporation may elect to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-thousandth (1/1,000th) of a share or any integral multiple thereof.
9-A
<PAGE>
I, William W. Evans, III, President and Chief Operating Officer of the
Corporation, do make this certificate, hereby declaring and certifying that this
is my act and deed on behalf of the Corporation this 21st day of December, 1998.
/s/ William W. Evans, III
--------------------------
By: William W. Evans, III
Title: President and Chief
Operating Officer
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 4.1
PATRIOT AMERICAN HOSPITALITY, INC.
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
as Rights Agent
---------------
Shareholder Rights Agreement
Dated as of December 20, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 1. Certain Definitions.............................................................................2
Section 2. Appointment of Rights Agent.....................................................................9
Section 3. Issue of Right Certificates.....................................................................9
Section 4. Form of Right Certificates.....................................................................12
Section 5. Countersignature and Registration..............................................................13
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates........................................14
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights..................................14
Section 8. Cancellation and Destruction of Right Certificates.............................................17
Section 9. Reservation and Availability of Preferred Stock................................................17
Section 10. Preferred Stock Record Date....................................................................18
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of
Rights.........................................................................................19
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.....................................27
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................28
Section 14. Fractional Rights and Fractional Shares........................................................31
Section 15. Rights of Action...............................................................................31
Section 16. Agreement of Right Holders.....................................................................32
Section 17. Right Certificate Holder Not Deemed a Shareholder..............................................33
Section 18. Concerning the Rights Agent....................................................................33
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................33
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Section 20. Duties of Rights Agent.........................................................................34
Section 21. Change of Rights Agent.........................................................................36
Section 22. Issuance of New Right Certificates.............................................................37
Section 23. Redemption.....................................................................................38
Section 24. Exchange.......................................................................................39
Section 25. Notice of Certain Events.......................................................................41
Section 26. Notices........................................................................................42
Section 27. Supplements and Amendments.....................................................................42
Section 28. Successors.....................................................................................43
Section 29. Determinations and Actions by the Board of Directors...........................................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
Exhibit A - Certificate of Designation of Series X Junior Participating Cumulative Preferred
Stock
Exhibit B - Form of Right Certificate
</TABLE>
(ii)
<PAGE>
SHAREHOLDER RIGHTS AGREEMENT
----------------------------
Agreement, dated as of December 20, 1998, between Patriot American
Hospitality, Inc., a Delaware corporation (the "Company"), and American Stock
Transfer and Trust Company, a New York corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and
WHEREAS, on December 20, 1998, the Board of Directors of the Company
(i) authorized and declared a dividend distribution of one Right (as such
term is hereinafter defined) for each share of Common Stock, par value $0.01
per share, of the Company (the "Common Stock") outstanding as of December 20,
1998 (the "Record Date"), (ii) authorized and declared a dividend
distribution of one Right for each share of Series A Convertible Preferred
Stock, par value $.01 per share, of the Company (the "Series A Preferred
Stock") outstanding as of the Record Date, in accordance with the provisions
of Section 2 of the Certificate of Designation for the Series A Preferred
Stock, (iii) authorized the issuance of one Right for each share of Common
Stock of the Company issued (whether originally issued (including upon the
conversion of Excess Stock (as such term is defined in the Company's Amended
and Restated Certificate of Incorporation, as amended) or Series A Preferred
Stock into Common Stock) or sold from the Company's treasury, except in the
case of treasury shares having associated Rights) between the Record Date and
the earlier of the Distribution Date or the Expiration Date (as such terms
are hereinafter defined), and (iv) authorized the issuance of one Right for
each share of Series A Preferred Stock issued (whether originally issued
(including upon conversion of Excess Stock into Series A Preferred Stock) or
sold from the Company's treasury, except in the case of treasury shares
having associated Rights) between the Record Date and the earlier of the
Distribution Date or the Expiration Date, each Right initially representing
the right to purchase one one-thousandth of a share of Series X Junior
Participating Cumulative Preferred Stock of the Company having the rights,
powers and preferences set forth in the form of Certificate of Designation
attached as Exhibit A hereto, upon the terms and subject to the conditions
hereinafter set forth (the "Rights"); and
WHEREAS, each share of Common Stock is paired and transferable and
traded only in combination as a single unit with a share of Common Stock, par
value $.01 per share, of Wyndham International, Inc.; and
WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof;
<PAGE>
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 such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 10% or more of the shares of Common Stock of the Company then outstanding,
but shall not include (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit plan or
compensation arrangement of the Company or any Subsidiary of the Company or (iv)
any Person holding shares of Common Stock of the Company organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan or compensation arrangement (the
Persons described in clauses (i) through (iv) above are referred to herein as
"Exempt Persons"); provided, however, that (A) the term "Acquiring Person" shall
not include any Grandfathered Person, unless such Grandfathered Person at any
time after the Grandfathered Time becomes the Beneficial Owner of more than the
Grandfathered Percentage of the shares of Common Stock of the Company then
outstanding, and (B) until the issuance of any stock of the Company pursuant to
any of the transactions contemplated by that certain letter agreement dated
December 15, 1998 (the "Letter of Intent") between Apollo Real Estate Advisors
III, L.P., Apollo Management IV, L.P., Thomas H. Lee, Beacon Capital Partners,
Inc. and Rosen Consulting Group (collectively, the "Investors"), and the
Company, Wyndham and Patriot American Hospitality Partnership, L.P., the term
"Acquiring Person" shall not include any of the Investors or their respective
Affiliates or Associates by reason of their execution of the Letter of Intent.
Any Grandfathered Person who after the Grandfathered Time becomes the Beneficial
Owner of less than 10% of the shares of Common Stock of the Company then
outstanding shall cease to be a Grandfathered Person.
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition by the Company of Common Stock of the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 10% (or in
the case of a Grandfathered Person, the Grandfathered Percentage applicable to
such Grandfathered Person) or more of the shares of Common Stock of the Company
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 10% (or in the case of a Grandfathered Person, the
Grandfathered Percentage applicable to such Grandfathered Person) or more of the
shares of 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 (other than pursuant to a
stock split, stock dividend or similar transaction) of Common Stock of the
Company and immediately thereafter be the Beneficial Owner of 10% (or in the
case of a Grandfathered Person, the Grandfathered Percentage applicable to such
Grandfathered
2
<PAGE>
Person) or more of the shares of Common Stock of the Company then outstanding,
then such Person shall be deemed to be an "Acquiring Person."
In addition, notwithstanding the foregoing, a Person shall not be an
"Acquiring Person" if the Board of Directors of the Company determines that a
Person who would otherwise be an "Acquiring Person" has become such without
intending to become an "Acquiring Person," and such Person divests as promptly
as practicable (or within such period of time as the Board of Directors of the
Company determines is reasonable) a sufficient number of shares of Common Stock
of the Company so that such Person would no longer be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this Section 1(a).
(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 (the "Rules") under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement; provided,
however, that no Person who is a director or officer of the Company shall be
deemed an Affiliate or an Associate of any other director or officer of the
Company solely as a result of his or her position as director or officer of the
Company.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own" and have "Beneficial Ownership" of, any
securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, beneficially owns (as
determined pursuant to Rule 13d-3 of the Rules under the Exchange Act,
as in effect on the date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has:
(A) the right to acquire (whether or not
such right is exercisable immediately or only after the
passage of time or upon the satisfaction of any conditions or
both) pursuant to any agreement, arrangement or understanding
(whether or not in writing) (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) or upon
the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (1)
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; (2) securities issuable
upon exercise of these Rights at any time prior to the
occurrence of a Triggering Event; or (3) securities issuable
3
<PAGE>
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 Sections 3(a), 11(i) or 22
hereof; or
(B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any
security under this clause (B) if the agreement, arrangement
or understanding to vote such security (1) arises solely from
a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the Rules of the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(C) the right to dispose of pursuant to any
agreement, arrangement or understanding (whether or not in
writing) (other than customary arrangements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities); 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) (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering
of securities) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (B) of Section
1(d)(ii) hereof) or disposing of any securities of the Company;
provided, however, that (1) no Person engaged in business as an underwriter of
securities shall be deemed the Beneficial Owner of any securities acquired
through such Person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of forty (40) days after the date
of such acquisition, (2) no Person who is a director or an officer of the
Company shall be deemed, as a result of his or her position as director or
officer of the Company, the Beneficial Owner of any securities of the Company
that are beneficially owned by any other director or officer of the Company, and
(3) none of the Forward Transaction Counterparties or any of their Affiliates or
Associates shall be deemed to be the Beneficial Owner of (i) any Collateral
Shares held by such Forward Transaction Counterparty or any of its Affiliates or
Associates, or (ii) any shares of Common Stock of the Company which any such
Forward Transaction Counterparty or any of its Affiliates or Associates has the
right to acquire pursuant to its Forward Transaction Agreement prior to its
acquisition of such shares.
Notwithstanding anything in this Section 1(d) to the contrary, the
phrase "then outstanding," when used with reference to the percentage of the
then outstanding shares of
4
<PAGE>
Common Stock of the Company beneficially owned by a Person, shall mean the
number of securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding which such Person would
be deemed to beneficially own hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the City of New York, New York
are authorized or obligated by law or executive order to close.
(f) "Certificate of Incorporation" when used in reference to
the Company shall mean the Amended and Restated Certificate of Incorporation, as
amended, of the Company.
(g) "Close of Business" on any given date shall mean 5:00
P.M., New York, New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York, New York time, on
the next succeeding Business Day.
(h) "Collateral Shares" shall mean any of the following: (i)
any Collateral Shares (as defined in the Nations Forward Agreement), but only to
the extent that such shares are then held by Nations as collateral in connection
with the Nations Forward Agreement, (ii) any Collateral Shares (as defined in
the PaineWebber Forward Agreement), but only to the extent that such shares are
then held by PaineWebber as collateral in connection with the PaineWebber
Forward Agreement, and (iii) any shares of Common Stock delivered by the Company
to UBS to secure the Company's obligations under the UBS Forward Agreement, but
only to the extent that such shares are then held by UBS as collateral in
connection with the UBS Forward Agreement.
(i) "Common Stock" when used in reference to the Company shall
mean the common stock, par value $0.01 per share, of the Company or any other
shares of capital stock of the Company into which such stock shall be
reclassified or changed. "Common Stock" when used with reference to any Person
other than the Company organized in corporate form shall mean (i) the capital
stock or other equity interest of such Person with the greatest voting power,
(ii) the equity securities or other equity interest having power to control or
direct the management of such Person or (iii) if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person and which have issued any such outstanding capital stock,
equity securities or equity interest. "Common Stock" when used with reference to
any Person not organized in corporate form shall mean units of beneficial
interest which (x) shall represent the right to participate generally in the
profits and losses of such Person (including without limitation any flow-through
tax benefits resulting from an ownership interest in such Person) and (y) shall
be entitled to exercise the greatest voting power of such Person or, in the case
of a limited partnership, shall have the power to remove or otherwise replace
the general partner or partners.
5
<PAGE>
(j) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(k) "Depositary Agent" shall have the meaning set forth in
Section 7(c) hereof.
(l) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(m) "Exempt Person" shall have the meaning set forth in the
definition of "Acquiring Person."
(n) "Exercise Price" shall have the meaning set forth in
Section 4(a) hereof.
(o) "Expiration Date" and "Final Expiration Date" shall have
the meanings set forth in Section 7(a) hereof.
(p) "Fair Market Value" of any securities or other property
shall be as determined in accordance with Section 11(d) hereof.
(q) "Forward Transaction Agreement" shall mean (A) with
respect to PaineWebber, the PaineWebber Forward Agreement, (B) with respect to
Nations, the Nations Forward Agreement, and (C) with respect to UBS, the UBS
Forward Agreement
(r) "Forward Transaction Counterparties" shall mean
PaineWebber, Nations and UBS.
(s) "Grandfathered Percentage" shall mean, with respect to any
Grandfathered Person, the percentage of the outstanding shares of Common Stock
of the Company that such Grandfathered Person, together with all Affiliates and
Associates of such Grandfathered Person, beneficially owns as of the
Grandfathered Time plus an additional 1/2%; provided, however, that in the event
any Grandfathered Person shall sell, transfer, or otherwise dispose of any
shares of Common Stock of the Company after the Grandfathered Time, the
Grandfathered Percentage applicable to such Grandfathered Person shall,
subsequent to such sale, transfer or disposition, mean the lesser of (i) the
Grandfathered Percentage as in effect immediately prior to such sale, transfer
or disposition or (ii) the percentage of outstanding shares of Common Stock that
such Grandfathered Person beneficially owns immediately following such sale,
transfer or disposition plus an additional 1/2%.
(t) "Grandfathered Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, is, as of the
Grandfathered Time, the Beneficial Owner of 10% or more of the shares of Common
Stock of the Company then outstanding.
6
<PAGE>
(u) "Grandfathered Time" shall mean 5:00 P.M., New York, New
York time, on December 21, 1998.
(v) "Group" shall have the meaning set forth in clause (b) of
the definition of "Person."
(w) "Nations" shall mean Nations Banc Mortgage Capital
Corporation or its successor or assignee under the Nations Forward Agreement.
(x) "Nations Forward Agreement" shall mean the Purchase Price
Adjustment Mechanism, dated as of February 26, 1998, as amended on August 14,
1998 and November 23, 1998, by and among the Company, Wyndham and NMS Services,
Inc. (succeeded by NationsBanc Mortgage Capital Corporation).
(y) "PaineWebber" shall mean PaineWebber Financial Products,
Inc. or its successor or assignee under the PaineWebber Forward Agreement.
(z) "PaineWebber Forward Agreement" shall mean the Purchase
Price Adjustment Mechanism Agreement, dated as of April 6, 1998, as amended on
August 14, 1998, September 15, 1998 and October 22, 1998, by and among the
Company, Wyndham and PaineWebber.
(aa) "Paired Shares" shall mean the shares of Common Stock of
the Company and the Common Stock of Wyndham, which shares are paired and
transferable and traded only in combination as a single unit.
(bb) "Person" shall mean (a) an individual, a corporation, a
partnership, an association, a joint stock company, a trust, a business trust, a
government or political subdivision, any unincorporated organization, or any
other association or entity, and (b) a "group" as that term is used for purposes
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
(cc) "Preferred Stock" shall mean shares of Series X Junior
Participating Cumulative Preferred Stock, par value $0.01 per share, of the
Company having the rights and preferences set forth in the form of Certificate
of Designation attached hereto as Exhibit A.
(dd) "Preferred Stock Equivalents" shall have the meaning set
forth in Section 11(b) hereof.
(ee) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(ff) "Redemption Price" shall have the meaning set forth in
Section 23 hereof.
7
<PAGE>
(gg) "Registered Common Stock" shall have the meaning set
forth in Section 13(b) hereof.
(hh) "Right Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(ii) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(jj) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(kk) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(ll) "Section 24(a)(i) Exchange Ratio" shall have the meaning
set forth in Section 24(a)(i) hereof.
(mm) "Section 24(a)(ii) Exchange Ratio" shall have the meaning
set forth in Section 24(a)(ii) hereof.
(nn) "Securities Act" shall have the meaning set forth in
Section 9(c) hereof.
(oo) "Series A Certificate of Designation" shall mean the
Certificate of Designation for the Series A Preferred Stock.
(pp) "Series A Preferred Stock" shall mean the Series A
Convertible Preferred Stock, par value $.01 per share, of the Company.
(qq) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(rr) "Stock Acquisition Date" shall mean the date of the first
public announcement (which for purposes of this definition shall include,
without limitation, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) by the Company, acting pursuant to
a resolution adopted by the Board of Directors of the Company, or an Acquiring
Person that an Acquiring Person has become such.
(ss) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other
8
<PAGE>
persons performing similar functions of such corporation or other entity are at
the time directly or indirectly beneficially owned or otherwise controlled by
such Person either alone or together with one or more Affiliates of such Person.
(tt) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(uu) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(vv) "UBS" shall mean UBS AG, London Branch, or its successor
or assignee under the UBS Forward Agreement.
(ww) "UBS Forward Agreement" shall mean the Forward Stock
Contract, dated as of December 31, 1997, as amended on August 14, 1998 and
September 11, 1998, by and among the Company, Wyndham and Nations Bank of
Switzerland (succeeded by UBS AG, London Branch).
(xx) "Wyndham" shall mean Wyndham International, Inc.
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 (as
hereinafter defined in Section 3(a)) also be the holders of the Common Stock of
the Company and Series A Preferred Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and any Co-Rights Agents shall
be as the Company shall determine. The Company shall give notice to the Rights
Agent of the appointment of one or more Co-Rights Agents and the respective
duties of the Rights Agent and any such Co-Rights Agents.
Section 3. Issue of Right Certificates.
(a) From the date hereof until the earlier of (i) the Close of
Business on the tenth calendar day after the Stock Acquisition Date or (ii) the
Close of Business on the tenth Business Day (or such later calendar day, if any,
as the Board of Directors of the Company may determine in its sole discretion)
after the date a tender or exchange offer by any Person, other than an Exempt
Person, is first published or sent or given within the meaning of Rule 14d-4(a)
of the Exchange Act, or any successor rule, if, upon consummation thereof, such
Person would be the Beneficial Owner of 10% (or in the case of a Grandfathered
Person, the Grandfathered Percentage applicable to such Grandfathered Person) or
more of the shares of Common Stock of the Company then outstanding (including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights) (the earliest of such dates being
9
<PAGE>
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for the Common Stock of the Company and for the Series A
Preferred Stock, as applicable, registered in the names of the holders of the
Common Stock of the Company and the Series A Preferred Stock, as applicable
(which certificates for Common Stock of the Company and Series A Preferred
Stock shall be deemed also to be certificates for Rights), and not by
separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock of the
Company and the underlying shares of Series A Preferred Stock, as applicable.
As soon as practicable after the Distribution Date, the Rights Agent will, at
the Company's expense send, by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock of the Company and to each record
holder of the Series A Preferred Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more certificates, in substantially the form of Exhibit B
hereto (the "Right Certificates"), evidencing one Right for each share of
Common Stock of the Company and each share of Series A Preferred 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 of the Company
or Series A Preferred Stock has been made pursuant to Section 11(o) hereof,
the Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) at the time of distribution of the
Right Certificates, so that Right Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Close of Business on the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) With respect to certificates for the Common Stock of the
Company or Series A Preferred Stock issued prior to the Close of Business on the
Record Date, the Rights will be evidenced by such certificates for the Common
Stock of the Company or Series A Preferred Stock, as applicable, on or until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), and the registered holders of the Common Stock of the Company and
Series A Preferred Stock also shall be the registered holders of the associated
Rights. Until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), the transfer of any of the certificates for the
Common Stock of the Company or Series A Preferred Stock outstanding prior to the
date of this Agreement shall also constitute the transfer of the Rights
associated with the Common Stock of the Company or Series A Preferred Stock, as
applicable, represented by such certificate.
(c) Certificates for the Common Stock of the Company and
Series A Preferred Stock issued after the Record Date, but prior to the earlier
of the Distribution Date or the redemption, expiration or termination of the
Rights, shall be deemed also to be certificates for Rights, and shall bear a
legend, substantially in the form set forth below:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Shareholder Rights
Agreement between Patriot American Hospitality, Inc. and
American Stock Transfer and Trust Company, as Rights Agent,
dated as of
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December 20, 1998, as amended, restated, renewed or extended
from time to time (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of Patriot American
Hospitality, Inc. and the stock transfer administration office
of the Rights Agent. 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. Patriot American Hospitality, Inc. may redeem the
Rights at a redemption price of $0.01 per Right, subject to
adjustment, under the terms of the Rights Agreement. Patriot
American Hospitality, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances,
Rights issued to or held by Acquiring Persons or any
Affiliates or Associates thereof (as 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, if any, 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.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock of the Company and Series A Preferred Stock
represented by such certificates shall be evidenced by such certificates alone
until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), and the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with the Common Stock of
the Company or Series A Preferred Stock, as applicable, represented by such
certificates. In the event that the Company purchases or acquires any shares of
Common Stock of the Company or Series A Preferred Stock after the Record Date
but prior to the Distribution Date, any Rights associated with such Common Stock
of the Company or Series A Preferred Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the shares of Common Stock of the Company or Series A Preferred Stock which are
no longer outstanding. The failure to print the foregoing legend on any such
certificate representing Common Stock of the Company or Series A Preferred Stock
or any defect therein shall not affect in any manner whatsoever the application
or interpretation of the provisions of Section 7(e) hereof.
(d) Notwithstanding anything in this Agreement to the
contrary, in the event that prior to the earlier of the Distribution Date or
the redemption, expiration or termination of the Rights, any shares of Common
Stock of the Company are retired and canceled in connection with the
conversion of such shares to Excess Stock pursuant
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to Article IV of the Company's Certificate of Incorporation, then the associated
Rights shall be deemed to be similarly retired and canceled.
(e) Notwithstanding anything in this Agreement to the
contrary, in the event that prior to the earlier of the Distribution Date or the
redemption, expiration or termination of the Rights, any shares of Series A
Preferred Stock are retired and canceled in connection with the conversion of
such shares into Common Stock of the Company pursuant to the Series A
Certificate of Designation or into Excess Stock pursuant to Article IV of the
Company's Certificate of Incorporation, then the associated Rights shall be
deemed to be similarly retired and canceled.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment and certificate to be printed on the reverse
thereof) shall each be substantially in the form of Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to customary usage. The Right Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Rights
Agent. Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date, shall
show the date of countersignature, and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price set forth therein (the
"Exercise Price"), but the number of such shares and the Exercise Price shall be
subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) 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 Associate or Affiliate of an Acquiring Person)
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 the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights, the shares of Common Stock of the Company or
Series A Preferred Stock associated with such Rights or the Company or (B) a
transfer which the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) hereof, and any Right Certificate issued pursuant to
Section 6, Section 11 or Section 22 upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
have deleted therefrom the second
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<PAGE>
sentence of the existing legend on such Right Certificate and in substitution
therefor shall contain the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement). This
Right Certificate and the Rights represented hereby may become
null and void under certain circumstances as specified in
Section 7(e) of the Rights Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or any Associate or
Affiliate thereof. The Company shall instruct the Rights Agent in writing of the
Rights which should be so legended. The failure to print the foregoing legend on
any such Right Certificate or any defect therein shall not affect in any manner
whatsoever the application or interpretation of the provisions of Section 7(e)
hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board of Directors, or its President or any Vice
President and by its Treasurer or any Assistant Treasurer, or by its Secretary
or any Assistant Secretary, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof which shall be
attested to by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent and shall not be
valid for any purpose unless so countersigned, and such countersignature upon
any Right Certificate shall be conclusive evidence, and the only evidence, that
such Right Certificate has been duly countersigned as required hereunder. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by an authorized
signatory of the Rights Agent, and issued and delivered by the Company with the
same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right Certificates may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices designated as the appropriate
place for surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the
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<PAGE>
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(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 Expiration
Date, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Certificates, entitling
the registered holder to purchase a like number of one one-thousandths of a
share of Preferred Stock (or following a Triggering Event, preferred stock,
cash, property, debt securities, Common Stock of the Company or any combination
thereof) as the Right Certificate or Certificates surrendered then entitled such
holder to purchase and at the same Exercise Price. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Certificates to be transferred, split up, combined or
exchanged, with the form of assignment and certificate duly executed, at the
office or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right 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 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 Right Certificate or Certificates, as the case may be, as so
requested. The Company may require payment by the registered holder of a Right
Certificate, of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
(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 Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate, if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder of
any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in
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<PAGE>
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase and the certificate on
the reverse side thereof duly executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose, together with payment
of the aggregate Exercise Price for the total number of one one-thousandths of a
share of Preferred Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercised, at or prior to
the earlier of (i) the Close of Business on the tenth anniversary of the date of
this Agreement (the "Final Expiration Date"), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof (the earlier of (i), (ii)
or (iii) being herein referred to as the "Expiration Date"). Except as set forth
in Section 7(e) hereof and notwithstanding any other provision of this
Agreement, any Person who prior to the Distribution Date becomes a record holder
of shares of Common Stock of the Company or Series A Preferred Stock may
exercise all of the rights of a registered holder of a Right Certificate with
respect to the Rights associated with such shares of Common Stock of the Company
or Series A Preferred Stock in accordance with the provisions of this Agreement,
as of the date such Person becomes a record holder of shares of Common Stock of
the Company or Series A Preferred Stock.
(b) The Exercise Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
Thirty-Five Dollars ($35.00), shall be subject to adjustment from time to time
as provided in Section 11 and Section 13 hereof and shall be payable in lawful
money of the United States of America in accordance with Section 7(c) below.
(c) As promptly as practicable following the Distribution
Date, the Company shall deposit with a corporation, trust, bank or similar
institution in good standing organized under the laws of the United States or
any State of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by a federal or state authority (such institution is hereinafter
referred to as the "Depositary Agent"), certificates representing the shares of
Preferred Stock that may be acquired upon exercise of the Rights and the Company
shall cause such Depositary Agent to enter into an agreement pursuant to which
the Depositary Agent shall issue receipts representing interests in the shares
of Preferred Stock so deposited. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, accompanied by payment of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) by certified check
or bank draft payable to the order of the Company or by money order, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) requisition
from the Depositary Agent (or make available, if the Rights Agent is the
Depositary Agent) depositary receipts or certificates for the number of one
one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes the Depositary Agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) promptly after receipt
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<PAGE>
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder and (iv) when
appropriate, after receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate. In the event that the Company
is obligated to issue other securities (including Common Stock) of the Company,
pay cash or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash
or other property are available for distribution by the Rights Agent, if and
when appropriate. The payment of the Exercise Price may be made by certified or
bank check payable to the order of the Company, or by money order or wire
transfer of immediately available funds to the account of the Company (provided
that notice of such wire transfer shall be given by the holder of the related
Right to the Rights Agent).
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of 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 or
Section 13 Event, any 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 Associate or Affiliate of an Acquiring Person) who
becomes a transferee after the Acquiring Person becomes such or (iii) a
transferee of an Acquiring Person (or of any Associate or Affiliate of an
Acquiring Person) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, the shares of Common Stock of the Company or
Series A Preferred Stock associated with such Rights or the Company, or (B) a
transfer which the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall be 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 Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or any Affiliates or Associates of an Acquiring Person or any transferee
of any of them 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 of Rights upon the
occurrence of any purported exercise as set forth in this
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<PAGE>
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right 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 Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding and exercisable Rights. Upon the
occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock issuable upon exercise of all outstanding Rights in
excess of the number then reserved, the Company shall make appropriate increases
in the number of shares so reserved.
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance to be listed, upon official notice of issuance,
upon the principal national securities exchange, if any, upon which the Common
Stock of the Company is listed or, if the principal market for the Common Stock
of the Company is not on any national securities exchange, to be eligible for
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any successor thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (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
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<PAGE>
remain effective (with a prospectus that at all times meets 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 or (B) the Expiration Date. The
Company will also take such action as may be appropriate under, and which will
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
determined in accordance with the provisions of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon such suspension,
the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect, in each case with prompt
written notice to the Rights Agent. Notwithstanding any such provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon the exercise of the Rights shall, at the time of delivery of the
certificates or depositary receipts for such shares (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any certificates for shares of Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or in respect of the issuance or
delivery of securities in a name other than that of, the registered holder of
the Right Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for securities in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Preferred Stock (including any fraction of a share of Preferred
Stock) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
transfer books of the Company are open; and further provided, however, that if
delivery of shares of Preferred Stock is delayed pursuant to
18
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Section 9(c), such Person shall be deemed to have become the record holder of
such shares of Preferred Stock only when such shares first become deliverable.
Prior to the exercise of the Right evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a shareholder 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 Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise 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 Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Exercise 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 capital stock
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such date and at
a time when the Preferred Stock transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the Company
issuable upon exercise of a Right. If an event occurs which would
require an adjustment under both 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.
(ii) Subject to the provisions of Section 24 hereof,
in the event any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person (a "Section 11(a)(ii)
Event"), then promptly following any such occurrence, proper provision
shall be made so that each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have a right to receive, upon
exercise thereof at the then current Exercise Price in accordance with
the terms of this Agreement, such number of shares of Preferred Stock
of the Company as shall equal the result obtained by (x) multiplying
the then current Exercise Price by the then number of one
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<PAGE>
one-thousandths of a share of Preferred Stock for which a Right was or
would have been exercisable (if the Rights had been exercisable) as of
a time immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and dividing that product by (y) 50% of the Fair Market Value
per one one-thousandth of a share of the Preferred Stock (determined
pursuant to Section 11(d)) on the date of the occurrence of a Section
11(a)(ii) Event (such number of shares being referred to as the
"Adjustment Shares").
(iii) In lieu of issuing any shares of Preferred
Stock in accordance with Section 11(a)(ii) hereof, the Company, acting
by or pursuant to a resolution of the Board of Directors of the
Company, may, and in the event that the number of shares of Preferred
Stock which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company, acting by or
pursuant to a resolution of the Board of Directors of the Company,
shall: (A) determine the excess of (X) the Fair Market Value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (Y) the Exercise Price attributable to each Right (such
excess being referred to as the "Spread") and (B) with respect to all
or a portion of each Right (subject to Section 7(e) hereof), make
adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Exercise Price, (1) cash, (2) a reduction in
the Exercise Price, (3) Preferred Stock Equivalents which the Board of
Directors of the Company has deemed to have the same value as Paired
Shares or shares of Common Stock of the Company, (4) debt securities of
the Company, (5) other assets of the Company or (6) any combination of
the foregoing which, when added to any shares of Preferred Stock issued
upon such exercise, has an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board of
Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors
of the Company; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the 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
Exercise Price, shares of Preferred Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is likely that sufficient
additional shares of Preferred Stock could be authorized for issuance
upon exercise in full of the Rights, the 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, being referred
to herein as the "Substitution Period").
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To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences 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 such first sentence 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 and 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
Preferred Stock shall be the Fair Market Value (as determined pursuant
to Section 11(d) hereof) per share of the Preferred Stock on the
Section 11(a)(ii) Trigger Date and the value of any Preferred Stock
Equivalent shall be deemed to have the same value as the Preferred
Stock on such date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase Preferred Stock (or securities having the
same or more favorable rights, privileges and preferences as the shares of
Preferred Stock ("Preferred Stock Equivalents")) or securities convertible into
Preferred Stock or Preferred Stock Equivalents at a price per share of Preferred
Stock or per share of Preferred Stock Equivalents (or having a conversion price
per share, if a security convertible into Preferred Stock or Preferred Stock
Equivalents) less than the Fair Market Value (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock on such record date, the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or Preferred Stock Equivalents to be offered (and the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred Stock and Preferred
Stock Equivalents to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of a Right be less than the aggregate par value of the shares of stock of the
Company issuable upon exercise of a Right. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be the Fair Market Value thereof
determined in accordance with Section 11(d) hereof. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Exercise Price shall be
adjusted to be the Exercise Price which would then be in effect if such record
date had not been fixed.
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(c) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(b)), the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one one-thousandth of a share of Preferred Stock on such record date, less
the Fair Market Value (as determined pursuant to Section 11(d) hereof) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such convertible securities, subscription rights or warrants applicable to
one one-thousandth of a share of Preferred Stock and the denominator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one one-thousandth of a share of Preferred Stock; provided, however, that in
no event shall the consideration to be paid upon the exercise of a Right be less
than the aggregate par value of the shares of stock of the Company issuable upon
exercise of a Right. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Exercise Price shall again be adjusted to be the Exercise Price which would
be in effect if such record date had not been fixed.
(d) For the purpose of this Agreement, the "Fair Market Value"
of a Paired Share or any share of Preferred Stock, Common Stock or any other
stock or any Right or other security or any other property shall be determined
as provided in this Section 11(d).
(i) In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices per share of such stock or per unit
of such other security for the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the Fair Market Value per share of any
share of stock is determined during a period following the announcement
by the issuer of such stock of (x) a dividend or distribution on such
stock payable in shares of such stock or securities convertible into
shares of such stock or (y) any subdivision, combination or
reclassification of such stock, and prior to the expiration of the 30
Trading Day period 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 Fair Market Value
shall be properly 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 securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system
22
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with respect to securities listed on the principal national securities
exchange on which such security is listed or admitted to trading; or,
if not listed or admitted to trading on any national securities
exchange, the last quoted price (or, if not so quoted, the average of
the last quoted high bid and low asked prices) in the over-the-counter
market, as reported by NASDAQ or such other system then in use; or, if
on any such date no bids for such security are quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such
security selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in such security, the Fair
Market Value of such security on such date shall be determined
reasonably and with utmost good faith to the holders of the Rights by
the Board of Directors of the Company, provided, however, that if at
the time of such determination there is an Acquiring Person, the Fair
Market Value of such security on such date shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company, which determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. The term "Trading Day"
shall mean a day on which the principal national securities exchange on
which such security is listed or admitted to trading is open for the
transaction of business or, if such security is not listed or admitted
to trading on any national securities exchange, a Business Day.
(ii) If a security is not publicly held or not so
listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such security, determined
reasonably and with utmost good faith to the holders of the Rights by
the Board of Directors of the Company, provided, however, that if at
the time of such determination there is an Acquiring Person, the Fair
Market Value of such security on such date shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company, which determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights.
(iii) In the case of property other than securities,
the Fair Market Value thereof shall be determined reasonably and with
utmost good faith to the holders of Rights by the Board of Directors of
the Company, provided, however, that if at the time of such
determination there is an Acquiring Person, the Fair Market Value of
such property on such date shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors
of the Company, which determination shall be described in a statement
filed with the Rights Agent and shall be binding upon the Rights Agent
and the holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise 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
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account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest hundred-thousandth of a
share of Common Stock of the Company or Paired Share, as applicable, or
ten-millionth of a share of Preferred Stock, as the case may be, or to such
other figure as the Board of Directors of the Company may deem appropriate.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a) 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
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Section 11(a), (b), (c), (d), (e),
(g) through (k) and (m), inclusive, and the provisions of Sections 7, 9, 10, 13
and 14 hereof with respect to the 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 Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or amount of cash or combination
thereof) 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 Exercise Price as a
result of the calculations made in Section 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 Exercise Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-millionth) as the Board of Directors of the Company determines is
appropriate to preserve the economic value of the Rights, including, by way of
example, that number obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock for which a Right may be
exercisable immediately prior to this adjustment by (y) the Exercise Price in
effect immediately prior to such adjustment of the Exercise Price and (ii)
dividing the product so obtained by the Exercise Price in effect immediately
after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one hundred-thousandth) obtained by dividing the Exercise Price in
effect immediately prior to
24
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adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise 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 Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates 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 Exercise Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise
Price or the number of one one-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price per share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder without prejudice to any adjustment or change.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then stated value, if any, of the number
of one one-thousandths of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Preferred Stock at such
adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock or other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Exercise 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 upon the occurrence of the event requiring such adjustment.
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(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Stock, issuance wholly for cash of
any shares of Preferred Stock at less than the Fair Market Value, issuance
wholly for cash of shares of Preferred Stock or securities which by their terms
are convertible into or exchangeable for shares of Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to hereinabove in
this Section 11, hereafter made by the Company to holders of its Preferred
Stock, shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with (other than a Subsidiary of the Company in a
transaction which complies with the proviso at the end of this sentence), (ii)
merge with or into, 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 50% or more of the assets or earning power of the
Company and its Subsidiaries taken as a whole, to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with the proviso at the end of this
sentence) if (x) at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments outstanding or
agreements or arrangements 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 or
sale the shareholders of a Person who constitutes, or would constitute, the
"Principal Party" for the 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; provided, however, that this Section 11(n) shall not affect the
ability of any Subsidiary of the Company to consolidate with, or merge with or
into, or sell or transfer assets or earning power to, any other Subsidiary of
the Company. The Company further 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 substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
(o) Notwithstanding anything in this Agreement to the
contrary, in the event the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare or pay any dividend on
the outstanding Common Stock of the Company payable in shares of Common Stock of
the Company or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in shares of Common Stock of the Company)
into a greater or lesser number of shares of Common Stock of the Company, then
in any such case (A) the number of one one-thousandths of a share of Preferred
Stock purchasable after such event upon proper exercise of each Right attached
to a share of Common Stock of the
26
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Company shall be determined by multiplying the number of one one-thousandths of
a share of Preferred Stock so purchasable immediately prior to such event by a
fraction, the numerator of which is the number of shares of Common Stock of the
Company outstanding immediately prior to such event and the denominator of which
is the number of shares of Common Stock of the Company outstanding immediately
after such event, and (B) each share of Common Stock of the Company outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each share of Common Stock of the Company outstanding immediately
prior to such event had issued with respect to it, or (ii) declare or pay any
dividend on the outstanding Series A Preferred Stock payable in shares of Series
A Preferred Stock or effect a subdivision, combination or consolidation of the
outstanding shares of Series A Preferred Stock (by reclassification or otherwise
than by payment of dividends in shares of Series A Preferred Stock) into a
greater or lesser number of shares of Series A Preferred Stock, then in any such
case (A) the number of one one-thousandths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right attached to a
share of Series A Preferred Stock shall be determined by multiplying the number
of one one-thousandths of a share of Preferred Stock so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of
shares of Series A Preferred Stock outstanding immediately prior to such event
and the denominator of which is the number of shares of Series A Preferred Stock
outstanding immediately after such event, and (B) each share of Series A
Preferred Stock outstanding immediately after such event shall have issued with
respect to it that number of Rights which each share of Series A Preferred Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(o) shall be made successively
whenever a dividend is declared or paid or such a subdivision, combination or
consolidation is effected with respect to the Common Stock of the Company or the
Series A Preferred Stock.
(p) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights of holders of Right Certificates under
this Rights Agreement, including rights to purchase securities of the Principal
Party following a Section 13 Event which has occurred or may thereafter occur,
as set forth in Section 13 hereof. Upon exercise of a Right Certificate under
Section 11(a)(ii), the Rights Agent shall return such Right Certificate duly
marked to indicate that such exercise has occurred.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock, the Common Stock of the Company and the Series A Preferred
Stock a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock of the Company or
Series A Preferred Stock) in accordance with Section 26 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment contained therein and shall not be deemed to have knowledge of any
27
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such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, 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 is not prohibited by Section 11(n) 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 is not prohibited by the proviso at the end of the first sentence of
Section 11(n) hereof) shall consolidate with the Company, or merge with and into
the Company and the Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the shares of
Common Stock of the Company 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, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction or
a series of related transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions, each of which is not
prohibited by the proviso at the end of the first sentence of Section 11(n)
hereof), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e) hereof, shall
have the right to receive, upon the exercise thereof at the then current
Exercise Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid and nonassessable shares of freely
tradeable Common Stock of the Principal Party (as hereinafter defined in Section
13(b)), free and clear of rights of call or first refusal, liens, encumbrances,
transfer restrictions or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Exercise Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event, and dividing
that product by (2) 50% of the Fair Market Value (determined pursuant to Section
11(d) hereof) per share of the Common Stock of such Principal Party on the date
of consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale, mortgage or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
to permit exercise of all outstanding Rights in accordance with this Section
13(a) and the making of payments in cash and/or other securities in accordance
with Section 11(a)(iii) hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights.
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(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, or, if
there is more than one such issuer, the issuer of Common Stock that has
the highest aggregate Fair Market Value (determined pursuant to Section
11(d)), and if no securities are so issued, the Person that is the
other party to the merger or consolidation, or, if there is more than
one such Person, the Person the Common Stock of which has the highest
aggregate Fair Market Value (determined pursuant to Section 11(d)); and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person the Common Stock of which has the highest aggregate Fair Market
Value (determined pursuant to Section 11(d));
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-month period registered under Section 12 of the Exchange Act ("Registered
Common Stock"), or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary or Affiliate of another Person who has Registered Common
Stock outstanding, "Principal Party" shall refer to such other Person; (2) if
the Common Stock of such Person is not Registered Common Stock or such Person is
not a corporation, and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another Person which has
Registered Common Stock outstanding, "Principal Party" shall refer to the
ultimate parent entity of such first-mentioned Person; (3) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and one or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of such other Persons is
the issuer of the Registered Common Stock having the highest aggregate Fair
Market Value (determined pursuant to Section 11(d)); and (4) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate parent entity
is the corporation having the greatest stockholders' equity or, if no such
ultimate parent entity is a corporation, "Principal Party" shall refer to
whichever ultimate parent entity is the entity having the greatest net assets.
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<PAGE>
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto (x) 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 (y) the Company and each
Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in Section 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13(a), the Principal Party at its own expense 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, cause
such registration statement to become effective as soon as practicable
after such filing and cause such registration statement to remain
effective (with a prospectus that at all times meets the requirements
of the Securities Act) until the Expiration Date;
(ii) qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate;
(iii) list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements
for quotation on NASDAQ; and
(iv) 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.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock of such Principal Party at less than the then current Fair Market Value
(determined pursuant to Section 11(d)) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such Fair
Market Value, or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Stock of such Principal
Party pursuant to the provisions of this Section 13, then, in such event, the
Company shall not consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended,
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or that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(o)
hereof, or to distribute Right Certificates which evidence fractional Rights. If
the Company elects not to issue such fractional Rights, the Company shall pay,
in lieu of such fractional Rights, to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Fair Market Value
of a whole Right, as determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Fair Market Value of one one-thousandth of a share of Preferred
Stock. For purposes of this Section 14(b), the Fair Market Value of one
one-thousandth of a share of Preferred Stock shall be determined pursuant to
Section 11(d) hereof for the Trading Day immediately prior to the date of such
exercise.
(c) 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, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Stock of the Company and the Series A Preferred Stock);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock of the Company or the Series A Preferred
Stock), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Stock of
the Company and the Series A Preferred Stock), may, in such registered holder's
own behalf and for such registered holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
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Company to enforce, or otherwise act in respect of, his right to exercise the
Right evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be
transferable only simultaneously and together with the transfer of shares of
Common Stock of the Company or Series A Preferred Stock, as applicable;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f), the Company and the
Rights Agent may deem and treat the person in whose name a Right Certificate
(or, prior to the Distribution Date, the associated certificate representing
Common Stock of the Company or Series A Preferred Stock, as applicable) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated certificate representing Common Stock of the Company or Series
A Preferred Stock made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and, subject to the last sentence of Section 7(e),
neither the Company nor the Rights Agent 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 the result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligations; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
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Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of 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 Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the Rights
Agent 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
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom, directly
or indirectly. The provisions of this Section 18(a) shall survive the expiration
of the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate representing Common Stock of the Company, Series A
Preferred Stock, Preferred Stock, or 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 in good faith and without negligence to be genuine and to be
signed and executed by the proper Person or Persons.
(c) The Rights Agent shall not be liable for consequential
damages under any provision of this Agreement or for any consequential damages
arising out of any act or failure to act hereunder.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from
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any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust or
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected
by it (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "Fair Market Value") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof shall be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by a person believed by the Rights Agent to be the Chairman
of the Board of Directors, a Vice Chairman of the Board of Directors, the
President, a Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company and delivered to the Rights
Agent. Any such certificate shall be full authorization to the Rights Agent for
any
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action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own 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
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e) hereof) or any
adjustment required under the provisions of Sections 11, 13 or 23(c) 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 Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12 hereof), nor shall it be responsible for any
determination by the Board of Directors of the Company of the Fair Market Value
of the Rights or Preferred Stock pursuant to the provisions of Section 14
hereof; 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
of the Company or Preferred Stock to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of Common Stock of the Company or
Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to be the Chairman of the Board of Directors, any Vice
Chairman of the Board of Directors, the President, a Vice President, the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of
the Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set
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forth in writing any action proposed to be taken or omitted by the Rights Agent
under this Agreement and the date on or after which such action shall be taken
or such omission shall be effective. The Rights Agent shall not be liable for
any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in 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 instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the 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 the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause (1) or clause
(2) thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company by first class
mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause), effective immediately or on a specified date, by
written notice given to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock of the Company, Series A
Preferred Stock and Preferred Stock, and by giving notice to the holders of the
Right Certificates by any means reasonably determined by the Company to inform
such holders of such removal (including, without limitation, by including such
information in one or more of the Company's reports to shareholders or reports
or filings with the Securities and Exchange Commission). If the Rights Agent
shall resign or be removed or shall otherwise become
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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 incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
incumbent Rights Agent or the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation 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 corporation is authorized to do business as a
banking institution in the State of New York), in good standing, which is
authorized under such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100,000,000 or (b) an Affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; 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 of the Company, the Series A Preferred Stock and the Preferred
Stock, and mail a notice thereof in writing to the registered holders of the
Right Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by the Board of Directors of the Company to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock of
the Company or Series A Preferred Stock following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock of the Company or Series A Preferred 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
hereafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the person to whom
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such Right Certificate would be issued, and (ii) no such Right Certificate shall
be issued if, and to the extent that, appropriate adjustments shall otherwise
have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $0.01 per Right, appropriately adjusted to reflect (i) any dividend
declared or paid on the Common Stock of the Company in shares of Common Stock of
the Company or any subdivision or combination of the outstanding shares of
Common Stock of the Company or similar event or (ii) any dividend declared or
paid on the Series A Preferred Stock in shares of Series A Preferred stock or
any subdivision or combination of the outstanding shares of Series A Preferred
Stock or similar event, in each case occurring after the date of this Agreement
(such redemption price, as adjusted from time to time, being hereinafter
referred to as the "Redemption Price"). The Rights may be redeemed only until
the earliest to occur of (i) the time at which any Person becomes an Acquiring
Person or (ii) the Final Expiration Date.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights in accordance with Section 23
hereof, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors of the Company ordering the
redemption of the Rights, in accordance with Section 23 hereof, 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 the Rights Agent and 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 of the Company and the Series A
Preferred Stock. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. The Company
promptly shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or Section 24 hereof or in
connection with the purchase of shares of Common Stock of the Company or Series
A Preferred Stock prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price
in cash, Paired Shares (based on the Fair Market Value of the Paired Shares as
of the time of redemption), shares of Common Stock of the Company (based on the
Fair Market Value of the shares of Common Stock of the Company as of the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors of the Company.
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Section 24. Exchange.
(a) (i) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for Paired Shares or shares of
Common Stock of the Company at an exchange ratio of one Paired Share or
one share of Common Stock of the Company, as applicable, 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 "Section 24(a)(i) Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors of the
Company shall not be empowered to effect such exchange at any time
after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock of the Company.
(ii) Notwithstanding the foregoing, the Board of
Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for
Paired Shares or shares of Common Stock of the Company at an exchange
ratio specified in the following sentence, as appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement. Subject to the adjustment
described in the foregoing sentence, each Right may be exchanged for
that number of Paired Shares or shares of Common Stock of the Company
obtained by dividing the Spread (as defined in Section 11(a)(iii)) by
the then Fair Market Value per one one-thousandth of a share of
Preferred Stock on the earlier of (x) the date on which any person
becomes an Acquiring Person or (y) the date on which a tender or
exchange offer by any Person (other than an Exempt Person) is first
published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act or any successor rule, if upon consummation thereof such
Person would be the Beneficial Owner of 10% or more of the shares of
Common Stock of the Company then outstanding (such exchange ratio being
referred to herein as the "Section 24(a)(ii) Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors of the Company
shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more
of the Common Stock of the Company.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Paired Shares or shares
of Common Stock of the Company, as applicable, equal to the number of such
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Rights held by such holder multiplied by the Section 24(a)(i) Exchange Ratio or
the Section 24(a)(ii) Exchange Ratio, as applicable. The Company shall promptly
give notice of any such exchange in accordance with Section 26 hereof and 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;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by which the
exchange of the Paired Shares or shares of Common Stock of the Company, as
applicable, for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or Preferred Stock Equivalent)
for Paired Shares or shares of Common Stock of the Company exchangeable for
Rights, at the initial rate of one one-thousandth of a share of Preferred Stock
(or Preferred Stock Equivalent) for each Paired Share or share of Common Stock
of the Company, as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each Paired Share or
share of Common Stock of the Company shall have the same voting rights as one
share of Common Stock of the Company.
(d) In the event that there shall not be sufficient Paired
Shares, shares of Common Stock of the Company or shares of Preferred Stock (or
Preferred Stock Equivalents) 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 Paired Shares, shares of Common Stock of the Company or
shares of Preferred Stock (or Preferred Stock Equivalent) for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue fractional
Paired Shares or fractional shares of Common Stock of the Company or to
distribute certificates which evidence fractional Paired Shares or fractional
shares of Common Stock of the Company. If the Company elects not to issue such
fractional Paired Shares or fractional shares of Common Stock of the Company,
the Company shall pay, in lieu of such fractional Paired Shares or fractional
shares of Common Stock of the Company, to the registered holders of the Right
Certificates with regard to which such fractional Paired Shares or fractional
shares of Common Stock of the Company would otherwise be issuable, an amount in
cash equal to the same fraction of the Fair Market Value of one whole Paired
Share or share of Common Stock of the Company. For the purposes of this
paragraph (e), the Fair Market Value of a whole Paired Share or share of Common
Stock of the Company shall be the closing price of a Paired Share or share of
Common Stock of the Company, as applicable (as determined pursuant to the
40
<PAGE>
second sentence of Section 11(d)(i) 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 Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with, or to effect any sale, mortgage or other transfer (or to
permit one or more of its Subsidiaries to effect any sale, mortgage or other
transfer), in one transaction or a series of related transactions, of 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to, any other Person (other than a Subsidiary of the Company in one
or more transactions each of which is not prohibited by the proviso at the end
of the first sentence of Section 11(n) hereof), (v) to effect the liquidation,
dissolution or winding up of the Company, (vi) to declare or pay any dividend on
the Common Stock of the Company payable in Common Stock of the Company or to
effect a subdivision, combination or consolidation of the Common Stock of the
Company (by reclassification or otherwise than by payment of dividends in Common
Stock of the Company), or (vii) to declare or pay any dividend on the Series A
Preferred Stock payable in Series A Preferred Stock or to effect a subdivision,
combination or consolidation of the Series A Preferred Stock (by
reclassification or otherwise than by payment of dividends in Series A Preferred
Stock), then in each such case, the Company shall give to each holder of a Right
Certificate and to the Rights Agent, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock of the
Company, Series A Preferred Stock and/or Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of 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 Common Stock of the
Company, Series A Preferred Stock and/or Preferred Stock, whichever shall be the
earlier; provided, however, no such notice shall be required pursuant to this
Section 25 as a result of any Subsidiary of the Company effecting a
consolidation or merger with or into, or effecting a sale or other transfer of
assets or earnings power to, any other Subsidiary of the Company in a manner not
inconsistent with the provisions of this Agreement.
41
<PAGE>
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to each
registered holder of a Right Certificate and to the Rights Agent, 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.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, facsimile transmission or by nationally recognized
overnight courier addressed (until another address is filed in writing with the
Rights Agent) as follows:
Patriot American Hospitality, Inc.
1950 Stemmons Freeway
Suite 6001
Dallas, TX 75207
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, by facsimile transmission or by
nationally-recognized overnight courier addressed (until another address is
filed in writing with the Company) as follows:
American Stock Transfer and Trust Company
40 Wall Street
New York, NY 10005
Attention: Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock of the Company or Series A Preferred Stock ) shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. Prior to the time at which any
Person becomes an Acquiring Person, the Company and the Rights Agent shall, if
the Board of Directors of the Company so directs, supplement or amend any
provision of this Agreement as the Board of Directors of the Company may deem
necessary or desirable without the approval of any holders of certificates
representing shares of Common Stock of the Company, Series A Preferred Stock or
any other securities of the Company. From and after the time at which any Person
becomes an Acquiring Person, the Company and the Rights Agent shall, if the
Board of Directors of the Company so directs, supplement or amend this Agreement
without the
42
<PAGE>
approval of any holder of Right 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 hereof in any manner which the Board of Directors of the Company may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of Right Certificates (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person); provided, however, that from and
after the time at which any Person becomes an Acquiring Person, this Agreement
may not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and the benefits to, the holders of Rights (other than an Acquiring
Person or any Affiliate or Associate of an Acquiring Person). Upon the delivery
of such 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. Prior
to the time at which any Person becomes an Acquiring Person, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock of the Company or Series A Preferred Stock, as
applicable. Notwithstanding any other provision hereof, the Rights Agent's
consent must be obtained regarding any amendment or supplement pursuant to this
Section 27 which alters the Rights Agent's rights or duties.
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 of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of 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 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 of 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 parties, and (y) not subject any
member of the Board of Directors to any liability to the holders of the Rights
or to any other person.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock of the Company and Series A Preferred
Stock) any legal or equitable right,
43
<PAGE>
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock of the Company and Series A Preferred
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 of
Directors of the Company determines in its good faith judgment that severing the
invalid language from the Agreement would adversely affect the purpose or effect
of the 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 of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and to be performed entirely within such State. The courts of the State
of Delaware and of the United States of America located in the State of Delaware
(the "Delaware Courts") shall have exclusive jurisdiction over any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby, and any Person commencing or otherwise involved in any such litigation
shall waive any objection to the laying of venue of such litigation in the
Delaware Courts and shall not plead or claim in any Delaware Court that such
litigation brought therein has been brought in an inconvenient forum.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 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.
[Remainder of page intentionally left blank.]
44
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as an instrument under seal and attested, all as of the day and
year first above written.
ATTEST: PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Veronica Sum By: /s/ William W. Evans III
-------------------------- -----------------------------
Name: William W. Evans III
Title: President and Chief
Operating Officer
ATTEST: AMERICAN STOCK TRANSFER AND
TRUST COMPANY, as Rights Agent
By: /s/ Susan Silber By: /s/ Paula Caroppoli
-------------------------- -----------------------------
Name: Paula Caroppoli
Title: Vice President
<PAGE>
Exhibit A
---------
FORM OF
VOTE OF DIRECTORS ESTABLISHING
SERIES X JUNIOR PARTICIPATING CUMULATIVE
PREFERRED STOCK
of
PATRIOT AMERICAN HOSPITALITY, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
VOTED, that pursuant to authority conferred upon and vested in the
Board of Directors by the Amended and Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), of Patriot American Hospitality,
Inc. (the "Corporation"), the Board of Directors hereby establishes and
designates a series of Preferred Stock of the Corporation, and hereby fixes and
determines the relative rights and preferences of the shares of such series, in
addition to those set forth in the Certificate of Incorporation, as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series X Junior Participating Cumulative Preferred Stock" (the
"Series X Preferred Stock"), and the number of shares initially constituting
such series shall be 2,500,000; provided, however, that if more than a total of
2,500,000 shares of Series X Preferred Stock shall be issuable upon the exercise
of Rights (the "Rights") issued pursuant to the Shareholder Rights Agreement
dated as of December 20, 1998, between the Corporation and American Stock
Transfer and Trust Company, as Rights Agent (the "Rights Agreement"), the Board
of Directors of the Corporation, pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware, shall direct by resolution or
resolutions that a certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of Section 103 thereof, providing
for the total number of shares of Series X Preferred Stock authorized to be
issued to be increased (to the extent that the Certificate of Incorporation then
permits) to the largest number of whole shares (rounded up to the nearest whole
number) issuable upon exercise of such Rights.
Section 2. Dividends and Distributions.
(A) (i) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and superior to
the Series X Preferred Stock with respect to dividends, the holders of shares of
Series X Preferred Stock, in preference to the holders of shares of common
stock, par value $.01 per share, of the Corporation (the "Common Stock") and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment
<PAGE>
Date after the first issuance of a share or fraction of a share of Series X
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provisions for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 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 or shares of common stock, par value $.01 per share, of
Wyndham International, Inc. (the "Wyndham Common Stock") or a subdivision of the
outstanding shares of Common Stock or Wyndham Common Stock (by reclassification
or otherwise)), declared on the Paired Shares (as hereinafter defined) 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 X Preferred Stock. The multiple of cash and
non-cash dividends declared on the Paired Shares to which holders of the Series
X Preferred Stock are entitled, which shall be 1,000 initially but which shall
be adjusted from time to time as hereinafter provided, is hereinafter referred
to as the "Dividend Multiple." In the event the Corporation shall at any time
after December 20, 1998 (the "Rights Declaration Date") (i) declare or pay any
dividend on Common Stock payable in shares of Common Stock, or (ii) effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the Dividend Multiple thereafter applicable to the
determination of the amount of dividends which holders of shares of Series X
Preferred Stock shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
For purposes of this Certificate of Designations, the term "Paired
Share" shall mean one share of Common Stock and one share of Wyndham Common
Stock, paired and transferable and traded only in combination as a single unit.
For purposes of this Section 2, so long as a share of Common Stock and a share
of Wyndham Common Stock are paired and transferable and traded only in
combination as a single unit, a dividend or distribution paid with respect to a
Paired Share shall include those instances where a dividend or distribution is
paid with respect to a share of Common Stock and/or a share of Wyndham Common
Stock.
(ii) Notwithstanding anything else contained in this paragraph (A), the
Corporation shall, out of funds legally available for that purpose, declare a
dividend or distribution on the Series X Preferred Stock as provided in this
paragraph (A) immediately after a dividend or distribution is declared on the
Paired Shares (other than a dividend payable in shares of Common Stock or
Wyndham Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the Paired Shares during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series X Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series
A-2
<PAGE>
X Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Series X Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares 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 X 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 X 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 in
accordance with applicable law a record date for the determination of holders of
shares of Series X Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than such
number of days prior to the date fixed for the payment thereof as may be allowed
by applicable law.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series X Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series X Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
The number of votes which a holder of a share of Series X Preferred Stock is
entitled to cast, which shall initially be 1,000 but which may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple." In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on Common Stock payable in
shares of Common Stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
Vote Multiple thereafter applicable to the determination of the number of votes
per share to which holders of shares of Series X Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series X Preferred Stock and the holders of shares of Common Stock and
the holders of shares of any other capital stock of this Corporation having
general voting rights, shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any shares
of Series X Preferred Stock shall be in arrears in an amount equal to at least
two full quarter dividends (whether or not declared and whether or not
consecutive), the holders of record of the outstanding shares of Series X
Preferred Stock shall have the exclusive right, voting separately as a single
A-3
<PAGE>
class, to elect two directors of the Corporation at a special meeting of
shareholders of the Corporation or at the Corporation's next annual meeting of
shareholders, and at each subsequent annual meeting of shareholders, as provided
below. The number of votes that one share of Series X Preferred Stock shall
entitle the holder thereof to cast in elections for such directors shall be
equal to the Vote Multiple.
(ii) Upon the vesting of such right of the holders of shares
of Series X Preferred Stock, the maximum authorized number of members of the
Board of Directors shall automatically be increased by two and the two vacancies
so created shall be filled by vote of the holders of the outstanding shares of
Series X Preferred Stock as hereinafter set forth. A special meeting of the
shareholders of the Corporation then entitled to vote shall be called by the
Chairman of the Board of Directors or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
15% of the shares of Series X Preferred Stock then outstanding. At such special
meeting, or, if no such special meeting shall have been called, then at the next
annual meeting of shareholders of the Corporation, the holders of the shares of
Series X Preferred Stock shall elect, voting as above provided, two directors of
the Corporation to fill the aforesaid vacancies created by the automatic
increase in the number of members of the Board of Directors. At any and all such
meetings for such election, the holders of a majority of the outstanding shares
of Series X Preferred Stock shall be necessary to constitute a quorum for such
election, whether present in person or proxy, and such two directors shall be
elected by the vote of at least a majority of the shares of Series X Preferred
Stock held by such shareholders present or represented at the meeting. Any
director elected by holders of shares of Series X Preferred Stock pursuant to
this Section may be removed at any annual or special meeting, by vote of a
majority of the shareholders voting as a class who elected such director, with
or without cause. In case any vacancy shall occur among the directors elected by
the holders of shares of Series X Preferred Stock pursuant to this Section, such
vacancy may be filled by the remaining director so elected, or his successor
then in office, and the director so elected to fill such vacancy shall serve
until the next meeting of shareholders for the election of directors. After the
holders of shares of Series X Preferred Stock shall have exercised their right
to elect directors in any default period and during the continuance of such
period, the number of directors shall not be further increased or decreased
except by vote of the holders of shares of Series X Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking senior to or
pari passu with the Series X Preferred Stock.
(iii) The right of the holders of shares of Series X Preferred
Stock, voting separately as a class, to elect two members of the Board of
Directors of the Corporation as aforesaid shall continue until, and only until,
such time as all arrears in dividends (whether or not declared) on the Series X
Preferred Stock shall have been paid or declared and set apart for payment, at
which time such right shall terminate, except as herein or by law expressly
provided subject to revesting in the event of each and every subsequent default
of the character above-mentioned. Upon any termination of the right of the
holders of the Series X Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors then in office elected by
the holders of shares of Series X Preferred Stock pursuant to this Section shall
terminate immediately. Whenever the term of office of the directors elected by
the holders of shares of
A-4
<PAGE>
Series X Preferred Stock pursuant to this Section shall terminate and the
special voting powers vested in the holders of the Series X Preferred Stock
pursuant to this Section shall have expired, the maximum number of members of
this Board of Directors of the Corporation shall be such number as may be
provided for in the By-laws of the Corporation, irrespective of any increase
made pursuant to the provisions of this Section.
(D) Except as otherwise required by applicable law or as set forth
herein, holders of Series X 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 X
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series X Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series X
Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series X Preferred Stock, except dividends paid ratably on
the Series X Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) except as permitted in subsection 4(A)(iv) below, redeem,
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 X
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 X
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series X Preferred Stock, or any shares of any stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series X Preferred Stock,
except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend
A-5
<PAGE>
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 subsection (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 X 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.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (x) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series X Preferred Stock unless, prior thereto, the holders of shares of Series
X Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus (1) an amount per share equal to the 1,000 times the Wyndham
Liquidation Preference (as hereinafter defined), plus (2) an amount equal to the
greater of (A) $1,000.00 per share or (B) an aggregate amount per share, subject
to the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, or (y)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series X Preferred Stock,
except distributions made ratably on the Series X Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare or pay any dividend on Common Stock payable in shares of Common
Stock, or (ii) effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount per share
to which holders of shares of Series X Preferred Stock were entitled immediately
prior to such event under clause (x) 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.
For purposes of this Section 6, the term "Wyndham Liquidation
Preference" shall mean, as applicable, (i) in the event that Wyndham
International, Inc. ("Wyndham") has previously been or is simultaneously being
liquidated, dissolved or wound up, an amount per share of Series X
A-6
<PAGE>
Preferred Stock equal to the amount per share of Wyndham Common Stock which was
or will be received by the holders of Wyndham Common Stock upon such
liquidation, dissolution or winding up of Wyndham, or (ii) if Wyndham has not
previously been or is not simultaneously liquidated, dissolved or wound up, an
amount per share of Series X Preferred Stock equal to the then current value of
a share of Wyndham Common Stock, without regard to the paired share structure of
the Corporation and Wyndham, as such value shall be determined by a nationally
recognized independent investment banker selected by the Board of Directors of
the Corporation. In the event that Wyndham shall have previously been
liquidated, dissolved or wound up, then interest shall accrue and the amount of
any Wyndham Liquidation Preference shall be increased by the amount of such
accrued interest. Such interest shall accrue at the applicable Federal rate
(within the meaning of Section 1274(d) of the Internal Revenue Code of 1986, as
amended, in effect on the date of such liquidation, dissolution or winding up)
from the date or dates on which liquidating distributions on the shares of
Wyndham Common Stock were paid, and such applicable Federal rate (i.e.,
long-term, mid-term or short-term) shall be based upon the length of time
between such date or dates and the date or dates on which liquidating
distributions on the shares of the Series X Preferred Stock are paid in
connection with the liquidation, dissolution and winding up of the Corporation.
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series X Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 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,
plus accrued and unpaid dividends, if any, payable with respect to the Series X
Preferred Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on Common Stock payable in
shares of Common Stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series X Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. Redemption. The shares of Series X Preferred Stock shall not
be redeemable.
A-7
<PAGE>
Section 9. Ranking. Unless otherwise expressly provided in the
Certificate of Incorporation or a Certificate of Designations relating to any
other series of preferred stock of the Corporation, the Series X Preferred Stock
shall rank junior to every other series of the Corporation's preferred stock
previously or hereafter authorized, as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and shall rank
senior to the Common Stock.
Section 10. Amendment. The Certificate of Incorporation and this
Certificate of Designations shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series X Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series X
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series X Preferred Stock may be issued
in whole shares or in any fraction of a share that is one one-thousandth
(1/1,000th) of a share or any integral multiple of such fraction, which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series X Preferred Stock. In
lieu of fractional shares, the Corporation may elect to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-thousandth (1/1,000th) of a share or any integral multiple thereof.
A-8
<PAGE>
Exhibit B
---------
[Form of Right Certificate]
Certificate No. R- Rights
------
NOT EXERCISABLE AFTER DECEMBER 20, 2008 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF PATRIOT AMERICAN
HOSPITALITY, INC., AT $0.01 PER RIGHT, ON THE TERMS SET FORTH IN THE SHAREHOLDER
RIGHTS AGREEMENT BETWEEN PATRIOT AMERICAN HOSPITALITY, INC. AND AMERICAN STOCK
TRANSFER AND TRUST COMPANY, AS RIGHTS AGENT, DATED AS OF DECEMBER 20, 1998 (THE
"RIGHTS AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF
THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID.
Right Certificate
PATRIOT AMERICAN HOSPITALITY, INC.
This certifies that , or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Shareholder Rights
Agreement dated as of December 20, 1998 (the "Rights Agreement") between Patriot
American Hospitality, Inc. (the "Company") and American Stock Transfer and Trust
Company, as Rights Agent (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to the close of business on December 20, 2008 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 the
Series X Junior Participating Cumulative Preferred Stock (the "Preferred Stock")
of the Company, at a purchase price of $____ per one one-thousandth of a share
(the "Exercise Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and the related Certificate
duly executed. The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Exercise Price per share set forth above, are the number and Exercise
Price as of __________, based on the Preferred Stock as constituted at such
date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights
<PAGE>
Agreement), if the Rights evidenced by this Right Certificate are 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), (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,
after such transfer, became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, such Rights 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.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, 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 principal office of the
Company and the designated office of the Rights Agent and are also available
upon written request to the Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or
Certificates for the number of whole Rights not exercised. If this Right
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Right
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors of the Company at its option may exchange all
or any part of the Rights evidenced by this Certificate for common stock of
the Company or paired shares ("Paired Shares") of the Company's Common Stock
and the common stock of Wyndham International, Inc. or Preferred Stock at an
exchange ratio (subject to adjustment) specified in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $0.01 per Right (payable in cash, common
stock of the Company, Paired Shares or other consideration
B-2
<PAGE>
deemed appropriate by the Board of Directors).
The Company is not obligated to issue fractional shares of stock upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts).
If the Company elects not to issue such fractional shares, in lieu thereof a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock, the Company's Common Stock, Paired Shares or 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 Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the Company
as a document under corporate seal.
Attested: PATRIOT AMERICAN HOSPITALITY, INC.
By: By:
-------------------------- -----------------------------
[Secretary or Assistant Secretary] Name:
Title: [Chairman, Vice Chairman,
President or Vice President]
Countersigned:
[RIGHTS AGENT]
By:
--------------------------
Name:
Title:
B-3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto ____________________________________ (Please print name and
address of transferee) ____________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , -------------------------
------------------- ------- Signature
Signature Guaranteed:
---------------------
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ______ are ______
are not being 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 in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ____ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: , -------------------------
------------------- ------- Signature
B-4
<PAGE>
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To PATRIOT AMERICAN HOSPITALITY, INC.:
The undersigned hereby irrevocably elects to exercise _______ Rights
represented by this Right 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:
Please insert social security
or other identifying taxpayer number:
------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section
11(a)(ii) of the Rights Agreement, a new Right Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying taxpayer number:
------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated: , -------------------------
------------------- ------- Signature
Signature Guaranteed:
-----------------------
B-6
<PAGE>
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ____ are ____ are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ____ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: , -------------------------
------------------- ------- Signature
B-7
<PAGE>
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-8
