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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-A/A-1
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Alliance Gaming Corporation
(Exact name of registrant as specified in its charter)
Nevada 88-0104066
(State of incorporation (IRS Employer
or organization) Identification No.)
6601 South Bermuda Road, Las Vegas, Nevada 89119
(Address of principal executive offices) Zip Code)
If this form relates to the If this form relates to the
registration of a class of registration of a class
securities pursuant to securities pursuant to
Section 12(b) of the Section 12(b) of the
Exchange Act and is effective Exchange Act and is effective
pursuant to General pursuant to General
Instruction A(c), Instruction A(d), please
please check the following check the following box. [ ]
box. [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
Securities to be registered pursuant to Section 12(g) of the Act:
Series F Special Stock Purchase Rights
(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On February 11, 1998, the Board of Directors of
Alliance Gaming Corporation (the "Company") declared a dividend of one special
share purchase right (a "Right") for each outstanding share of common stock, par
value $.10 per share (the "Common Shares"), of the Company. The dividend is
payable on March 12, 1998 (the "Record Date") to the stockholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series F Special Stock, par value $.10
per share (the "Series F Special Shares"), of the Company at a price of $25.00
per one one-hundredth of a Series F Special Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement dated as of March 9, 1998 (the "Rights Agreement") between
the Company and American Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons have
acquired beneficial ownership of 10% (which percentage may be reduced pursuant
to the Rights Agreement) or more of the outstanding Common Shares or 15% or more
of the Common Shares of the Company then outstanding if the Acquiring Person is
an institutional investor permitted under Nevada gaming regulatory restrictions
to acquire up to 15% of the Common Shares without regulatory approval (such 10%
or 15% amount being referred to as the "Threshold Amount") of the Company (an
"Acquiring Person") or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of the Threshold Amount (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
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certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on March 12, 2008 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier redeemed
or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Series F Special
Shares or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series F Special Shares, (ii) upon the grant to holders of the Series F Special
Shares of certain rights or warrants to subscribe for or purchase Series F
Special Shares at a price, or securities convertible into Series F Special
Shares with a conversion price, less than the then-current market price of the
Series F Special Shares or (iii) upon the distribution to holders of the Series
F Special Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Series F Special Shares) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Series F Special Share issuable upon exercise of each Right
are also subject to adjustment in the event of a stock split of the Common
Shares or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
Series F Special Shares purchasable upon exercise of the
Rights will not be redeemable. Each Series F Special Share
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will be entitled to an aggregate dividend of 100 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Series F Special
Shares will be entitled to an aggregate payment of 100 times the payment made
per Common Share. Except as otherwise provided by law, holders of Series F
Special Stock shall have no voting rights and their consent shall not be
required for taking any corporate action. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Series F Special Share will be entitled to receive 100 times the amount received
per Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Series F Special Shares' dividend
and liquidation rights, the value of the one one-hundredth interest in a Series
F Special Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, the Rights Agreement provides
that proper provision shall be made so that each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive (subject to adjustment) upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right. At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person or group of 50% or
more of the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group, which will
have become void), in whole or in part, at an exchange ratio of one Common
Share, or one one-hundredth of a Series F Special Share (or of a share of a
class or series of the Company's special stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
The Rights Agreement provides that none of the Company's
directors or officers shall be deemed to beneficially own any Common Shares
owned by any other director or officer by virtue of such persons acting in their
capacities as such, including in connection with the formulation and publication
of the Board of Directors recommendation of its position, and actions taken in
furtherance thereof, with respect to an acquisition proposal relating to the
Company or a tender or exchange offer for the Common Shares.
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In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Series F Special Shares will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Series F Special Share, which may, at the election of the Company, be evidenced
by depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Series F Special Shares on the last trading day
prior to the date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of the Threshold
Amount, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time on such basis with
such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including an amendment to (a) lower certain thresholds described above to not
less than the greater of (i) and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%, (b) fix a Final
Expiration Date later than March 12, 2008, (c) reduce the Redemption Price or
(d) increase the Purchase Price, except that from and after such time as any
person or group of affiliated or associated persons becomes an Acquiring Person
no such amendment may adversely affect the interests of the holders of the
Rights (other than the Acquiring Person and its affiliates and associates).
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Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
As of January 30, 1998, there were 32,013,284 shares of Common
Stock issued and outstanding. As long as the Rights are attached to the Common
Stock, the Company will issue one Right with each new share of Common Stock so
that all such shares will have Rights attached. The Company's Board of Directors
has reserved for issuance upon exercise of the Rights 350,000 Series F Special
Shares.
A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
ITEM 2. EXHIBITS
Exhibit No. Description
(1) Rights Agreement
(2) Form of Certificate of Designations, included in Exhibit A to
the Rights Agreement
(3) Form of Rights Certificate, included in Exhibit B to the Rights
Agreement
(4) Summary of Rights to Purchase Series F Special Stock, included
in Exhibit C to the Rights Agreement
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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.
ALLIANCE GAMING CORPORATION
Date: March 12, 1998 By: /s/ Scott Schweinfurth
-------------------------
Name: Scott Schweinfurth
Title: Senior Vice President,
Chief Financial Officer
& Treasurer
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EXHIBIT INDEX
Exhibit
1. Rights Agreement ("Rights Agreement") dated as of March 9, 1998 between
the Company and American Stock Transfer & Trust Company, as Rights
Agent.
2. Form of Certificate of Designations with respect to Series F Special
Stock (attached as Exhibit A to the Rights Agreement).
3. Form of Right Certificate (attached as Exhibit B to the Rights
Agreement). Pursuant to the Rights Agreement, printed Right
Certificates will not be mailed until the Distribution Date (as defined
in the Rights Agreement).
4. Summary of Rights to Series F Special Shares (attached as Exhibit C to
the Rights Agreement).
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Exhibit 1
ALLIANCE GAMING CORPORATION
and
American Stock Transfer & Trust Company, as Rights Agent
RIGHTS AGREEMENT
Dated as of March 9, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Certain Definitions................................................................................ 2
Section 2. Appointment of Rights Agent........................................................................ 8
Section 3. Issue of Right Certificates........................................................................ 8
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; Purchase Price; Expiration Date of Rights...................................... 16
Section 8. Cancellation and Destruction of Right Certificates................................................. 18
Section 9. Availability of Special Shares..................................................................... 19
Section 10. Special Shares Record Date........................................................................ 20
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights................................ 21
Section 12. Certificate of Adjusted Purchase Price or Number of Shares........................................ 37
</TABLE>
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<TABLE>
<S> <C>
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................................ 37
Section 14. Fractional Rights and Fractional Shares............................................................. 40
Section 15. Rights of Action.................................................................................... 42
Section 16. Agreement of Right Holders.......................................................................... 43
Section 17. Right Certificate Holder Not Deemed a Stockholder................................................... 44
Section 18. Concerning the Rights Agent......................................................................... 45
Section 19. Merger or Consolidation or Change of Name of Rights Agent........................................... 47
Section 20. Duties of Rights Agent.............................................................................. 48
Section 21. Change of Rights Agent.............................................................................. 53
Section 22. Issuance of New Right Certificates.................................................................. 55
Section 23. Redemption.......................................................................................... 55
Section 24. Exchange............................................................................................ 57
Section 25. Notice of Certain Events............................................................................ 60
Section 26. Notices. ........................................................................................... 62
Section 27. Supplements and Amendments.......................................................................... 63
Section 28. Successors.......................................................................................... 64
Section 29. Benefits of this Rights Agreement................................................................... 64
</TABLE>
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<TABLE>
<S> <C>
Section 30. Severability........................................................................................ 65
Section 31. Governing Law....................................................................................... 65
Section 32. Counterparts........................................................................................ 65
Section 33. Descriptive Headings................................................................................ 65
Section 34. Administration...................................................................................... 66
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Special
Shares
</TABLE>
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Agreement, dated as of March 9, 1998 (the "Rights Agreement"),
between Alliance Gaming Corporation, a Nevada corporation (the "Company"), and
American Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent").
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has authorized and declared a dividend of one special share purchase
right (a "Right") for each Common Share (as hereinafter defined) of the Company
outstanding at the Close of Business (as hereinafter defined) on March 12, 1998
(the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Special Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
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Section 1. Certain Definitions. For purposes of this Rights
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 and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of (i) 10% or more of the Common
Shares of the Company then outstanding or (ii) 15% or more of the Common Shares
of the Company then outstanding if the Acquiring Person is an institutional
investor as permitted under Nevada gaming regulatory restrictions to acquire up
to 15% of the Common Shares without regulatory approval (such 10% or 15% amount
being referred to as the "Threshold Amount"); but shall not include the Company,
any Subsidiary (as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company, or any
entity holding Common Shares of the Company for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the Company which,
by reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to the Threshold Amount for such
Person or more of the Common Shares of
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the Company then outstanding; provided, however, that if a Person shall become
the Beneficial Owner of the Threshold Amount for such Person or more of the
Common Shares 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 Common Shares of the Company, then such
Person shall be deemed to be an "Acquiring Person". Notwithstanding the
foregoing, Fred Wilms, so long as he, or any of his surviving or transferee
Persons, is the Beneficial Owner of not more than the 7,034,082 Common Shares
beneficially owned as of the date of this Rights Agreement, shall not be deemed
an Acquiring Person. Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Rights Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations promulgated under the Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule is in effect
on the date of this Rights Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any
agreement,
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arrangement or understanding; provided further, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own,
any security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any of such Person's Affiliates or Associates)
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the purpose
of acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of any securities of the
Company.
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Notwithstanding anything in this definition of Beneficial
Owner to the contrary, the phrase "then outstanding," when used with reference
to a Person's beneficial ownership of securities of the Company, shall mean the
number of such 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 own beneficially hereunder.
Notwithstanding the foregoing, none of the Company's directors
or officers shall be deemed to be the Beneficial Owner of, or to beneficially
own, any Common Shares of the Company owned by any other director or officer of
the Company solely by virtue of such persons acting in their capacities as such,
including, without limitation, in connection with any formulation and
publication of the Board of Directors' recommendation of a position, and any
actions taken in furtherance thereof, with respect to any acquisition proposal
relating to the Company, a tender or exchange offer for any Common Shares of the
Company or any solicitation of proxies with respect to any Common Shares of the
Company.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
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(e) "Close of Business" on any given date shall mean 5:00 P.M.
Eastern time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 P.M. Eastern time on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $.10 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(i) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(j) "Special Shares" shall mean shares of Series F Special
Stock, par value $.10 per share, of the Company having
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the rights and preferences set forth in the Form of Certificate of Designations
attached to this Rights Agreement as Exhibit A.
(k) "Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.
(l) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(n) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day (or such later date as may
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be determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares of the Company for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares of the Company for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming an Acquiring Person (including, in the case of both clauses
(i) and (ii), any such date which is after the date of this Rights Agreement and
prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
Common Shares of the Company registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares of
the
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Company. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares of the Company as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share of the Company so
held. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) As soon as practicable after the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Special Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares of the
Company as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Shares of the Company outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the earlier
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of the Redemption Date or the Final Expiration Date), the surrender for transfer
of any certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares of the Company
represented thereby.
(c) Certificates for Common Shares of the Company which become
outstanding (including, without limitation, reacquired Common Shares of the
Company referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Alliance
Gaming Corporation and American Stock Transfer & Trust Company, dated
as of March 9, 1998 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of Alliance Gaming Corporation.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Alliance Gaming Corporation will mail to
the holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights issued to
any Person who becomes an Acquiring Person (as defined in the Rights
Agreement) may become null and void.
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With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares of the Company
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares of the Company
represented thereby. In the event that the Company purchases or acquires any
Common Shares of the Company after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares of the Company shall be
deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares of the Company which are
no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Special Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform
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to usage. Subject to the provisions of Section 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one one-hundredths
of a Special Share as shall be set forth therein at the Purchase Price, but the
number of such one one-hundredths of a Special Share and the Purchase Price
shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, or any of its Executive or Senior Vice
Presidents, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right
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<PAGE> 18
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
14
<PAGE> 19
entitling the registered holder to purchase a like number of one one-hundredths
of a Special Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right
15
<PAGE> 20
Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) The registered holder of any Right Certificate may, subject to
the second paragraph of Section 11(a)(ii), exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal office of the Rights Agent, together with payment of the
Purchase Price for each one one-hundredth of a Special Share as to which the
Rights are exercised, at or prior to the earliest of (i) the Close of Business
on March 12, 2008 (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "Redemption Date"), or
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof.
(b) The Purchase Price for each one one-hundredth of a Special
Share purchasable pursuant to the exercise of a Right shall initially be $25.00,
and shall be subject to adjustment from time to time as provided in Sections 11
and 13 hereof and
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<PAGE> 21
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below (the "Purchase Price").
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by wire transfer,
certified check, cashier's check, official bank check or money order payable to
the order of the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Special Shares certificates for the
number of Special Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a Special Share as are to be purchased (in which
case certificates for the Special Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or
17
<PAGE> 22
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,
deliver such cash to or upon the order of the registered holder of such Right
Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
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<PAGE> 23
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Special Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Special Shares or any Special Shares held in its
treasury, the number of Special Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Special Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Special Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
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 Special
19
<PAGE> 24
Shares 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 the issuance or
delivery of certificates or depositary receipts for the Special Shares in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or to deliver any certificates or
depositary receipts for Special Shares upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company's reasonable satisfaction that no such tax is due.
Section 10. Special Shares Record Date. Each Person in whose
name any certificate for Special Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Special Shares represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Special Shares transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
20
<PAGE> 25
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Special Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Special Shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and kind of securities 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 Rights Agreement (A) declare a dividend on the Special Shares
payable in Special Shares, (B) subdivide the outstanding Special Shares, (C)
combine the outstanding Special Shares into a smaller number of Special Shares
or (D) issue any shares of its capital stock in a reclassification of the
Special Shares (including any such reclassification in connection with a
consolidation or merger in which the Company
21
<PAGE> 26
is the continuing or surviving corporation), except as otherwise provided in
this Section 11(a), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of 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 Special Shares 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 one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.
(ii) Subject to Section 24 of this Rights Agreement, in the event any
Person becomes an Acquiring Person, each holder of a Right shall thereafter have
a right to receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-hundredths of a Special Share
for which a Right is then exercisable, in accordance with the terms of this
Rights Agreement and in lieu of Special
22
<PAGE> 27
Shares, such number of Common Shares of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the number of one
one-hundredths of a Special Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event; provided, however, that if the transaction
that would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii). In the event that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall not take any action which
would eliminate or diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Rights Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an Acquiring
Person whose Rights would be
23
<PAGE> 28
void pursuant to the preceding sentence or any Associate or Affiliate thereof;
no Right Certificate shall be issued at any time upon the transfer of any Rights
to an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to
the Rights Agent for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be canceled.
(iii) In the event that there shall not be sufficient Common
Shares of the Company issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be necessary to
authorize additional Common Shares of the Company for issuance upon exercise of
the Rights. In the event the Company shall, after good faith effort, be unable
to take all such action as may be necessary to authorize such additional Common
Shares of the Company, the Company shall substitute, for each Common Share of
the Company that would otherwise be issuable upon exercise of a Right, a number
of Special Shares or fraction thereof such that the current per share market
price of one Special Share multiplied by such number or fraction is equal to the
current
24
<PAGE> 29
per share market price of one Common Share of the Company as of the date
of issuance of such Special Shares or fraction thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Special Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Special Shares (or shares having the same
rights, privileges and preferences as the Special Shares ("equivalent special
shares")) or securities convertible into Special Shares or equivalent special
shares at a price per Special Share or equivalent special share (or having a
conversion price per share, if a security convertible into Special Shares or
equivalent special shares) less than the then current per share market price of
the Special Shares (as defined in Section 11(d) hereof) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Special Shares
outstanding on such record date plus the number of Special Shares which the
aggregate offering price of the total number of Special Shares and/or equivalent
special shares so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall
25
<PAGE> 30
be the number of Special Shares outstanding on such record date plus the number
of additional Special Shares and/or equivalent special shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Special Shares owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Special Shares (including any such
distribution made in connection with
26
<PAGE> 31
a consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Special Shares) or subscription
rights or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per share market
price of the Special Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Special Share and the
denominator of which shall be such current per share market price of the Special
Shares; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price
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<PAGE> 32
shall again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) which fall within the one-year period
ending on such date and have the lowest such average; provided, however, that in
the event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in
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<PAGE> 33
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
29
<PAGE> 34
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Special Shares shall be determined in accordance with
the method set forth in Section 11(d)(i). If the Special Shares are not publicly
traded, the "current per share market price" of the Special Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares of the Company as determined pursuant to Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If neither the
Common Shares of the Company nor the Special Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-millionth
of a Special
30
<PAGE> 35
Share or one ten-thousandth of any other share or security as the case may be.
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
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Special Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Special Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Special Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Special Share purchasable from time to time hereunder upon exercise of
31
<PAGE> 36
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Special Share (calculated to the nearest one
one-millionth of a Special Share) obtained by (i) multiplying (x) the number of
one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a Special Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a Special Share for which a
32
<PAGE> 37
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 ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten 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
33
<PAGE> 38
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 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 Purchase
Price or the number of one one-hundredths of a Special Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Special Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Special Shares 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 Special Shares at such adjusted Purchase Price.
34
<PAGE> 39
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Special Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Special Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Special
Shares, issuance wholly for cash of any Special Shares at less than the current
market price, issuance wholly for cash of Special Shares or securities which by
their terms are convertible into or exchangeable for Special Shares, dividends
35
<PAGE> 40
on Special Shares payable in Special Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Special Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Rights Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Shares of the Company payable in
Common Shares of the Company or (ii) effect a subdivision, combination or
consolidation of the Common Shares of the Company (by reclassification or
otherwise than by payment of dividends in Common Shares of the Company) into a
greater or lesser number of Common Shares of the Company, then in any such case
(A) the number of one one-hundredths of a Special Share purchasable after such
event upon proper exercise of each Right shall be determined by multiplying the
number of one one-hundredths of a Special Share so purchasable immediately prior
to such event by a fraction, the numerator of which is the number of Common
Shares of the Company outstanding immediately before such event and the
denominator of which is the number of Common Shares of the Company outstanding
immediately after such event, and (B) each Common Share of the Company
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each Common Share of the Company outstanding
immediately prior to such event had issued with
36
<PAGE> 41
respect to it. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares of the Company or the Special Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or indirectly, at any time after
a Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares of the Company shall be changed into or
exchanged for stock or other securities of any other Person (or the
37
<PAGE> 42
Company) or cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than the Company or one or more of
its wholly-owned Subsidiaries, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (other than Rights which have
become void pursuant to Section 11(a)(ii) hereof) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-hundredths of a Special Share
for which a Right is then exercisable, in accordance with the terms of this
Rights Agreement and in lieu of Special Shares, such number of Common Shares of
such other Person (including the Company as successor thereto or as the
surviving corporation) as shall equal the result obtained by (A) multiplying the
then current Purchase Price by the number of one one-hundredths of a Special
Share for which a Right is then exercisable and dividing that product by (B) 50%
of the then current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; (ii) the issuer of such
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Common Shares shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Rights Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares to permit the exercise in full of all outstanding
Rights in accordance with this Rights Agreement) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of
this Section 13 shall similarly
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apply to successive mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
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<PAGE> 45
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Special Shares (other than fractions which are integral multiples of one
one-hundredth of a Special Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Special Shares (other than fractions
which are integral multiples of one one-hundredth of a Special Share). Fractions
of Special Shares in integral multiples of one one-hundredth of a Special Share
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that
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<PAGE> 46
the holders of such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as beneficial owners of the Special
Shares represented by such depositary receipts. In lieu of fractional Special
Shares that are not integral multiples of one one-hundredth of a Special Share,
the Company shall pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Special Share. For the purposes
of this Section 14(b), the current market value of a Special Share shall be the
closing price of a Special Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect
of this Rights Agreement, excepting the rights of action given to the Rights
Agent under Section 18 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares of the Company); and any
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registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares of the Company), without the consent of the Rights Agent or
of the holder of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares of the Company), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Rights Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Rights Agreement.
Section 16. Agreement of Right Holders. 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:
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<PAGE> 48
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares of the
Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Special Shares
or any other securities of the Company which may at any time be issuable on the
exercise
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of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred by the Rights Agent
in the administration and execution of this Rights 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,
obligation, damage or expense (including reasonable attorneys' fees and other
professional services) (collectively, "Losses"), incurred without negligence,
bad faith or willful misconduct on the part
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<PAGE> 50
of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Rights Agreement,
including, without limitation, the costs and expenses of defending against any
claim of liability in the premises.
The Rights Agent shall be protected and shall incur no
liability and shall be indemnified for and held harmless against any and all
Losses for, or in respect of, any action taken, suffered or omitted by it in
connection with, its administration of this Rights Agreement (i) in reliance
upon any Right Certificate or certificate for the Special Shares or Common
Shares or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or (ii) otherwise upon the advice
of counsel as set forth in Section 20 hereof. Anything in this Rights Agreement
to the contrary notwithstanding, in no event shall the Rights Agent be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
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Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation or other Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation or other Person resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation or other Person succeeding to the stock transfer or corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, that such corporation or other Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights
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Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted
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by it in good faith and in accordance with or in reliance on such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking,
suffering or omitting any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate in form reasonably
satisfactory to the Rights Agent signed by any one of the Chairman of the Board,
the Chief Executive Officer, or any Executive or Senior Vice President of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken, suffered or omitted to
be taken in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its
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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 Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any 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 Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in this Rights Agreement, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it be responsible for any determination of the market value of the
Rights or any Common Shares of the Company pursuant to the provisions hereof;
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or
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reservation of any Special Shares to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any Special Shares will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, or any
Executive or Senior Vice President of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken, or suffered or omitted by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become
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peculiarly interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully and
freely as though it were not Rights Agent under this Rights Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Rights 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.
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Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares of the Company or Special Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares of the Company or Special Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 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 such holder's Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by
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the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States (so long as such corporation is authorized to do business as a banking
institution under such laws), in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authorities and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares of the Company or Special Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to appoint
a successor Rights Agent or to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
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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 Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to such time as any Person becomes
an Acquiring Person, redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors may
be made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
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(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, 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. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within ten days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares of the Company. 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 in
Section 24
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hereof, and other than in connection with the purchase of Common Shares of the
Company prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 11(a)(ii) hereof) for Common Shares of the Company at an exchange
ratio of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares of the Company for or pursuant
to the terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Shares of
the Company then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights
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pursuant to paragraph (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 Common Shares of the Company equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Common Shares of
the Company for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares of the Company issued but not outstanding or authorized but unissued to
permit any exchange of Rights as
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contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares of the Company
for issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares of the Company, the Company shall
substitute, for each Common Share of the Company that would otherwise be
issuable upon exchange of a Right, a number of Special Shares or fraction
thereof such that the current per share market price of one Special Share
multiplied by such number or fraction is equal to the current per share market
price of one Common Share of the Company as of the date of issuance of such
Special Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
Common Shares of the Company or to distribute certificates which evidence
fractional Common Shares of the Company. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares of the Company
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share of the Company. For the purposes of
this paragraph (d), the current market value of a whole Common Share shall be
the closing price of a Common Share of the Company (as determined
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pursuant to the 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 (i) to pay any dividend payable in stock of any class to the
holders of its Special Shares or to make any other distribution to the holders
of its Special Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Special Shares rights or warrants to subscribe for
or to purchase any additional Special Shares or shares of stock of any class or
any other securities, rights or options, (iii) to effect any reclassification of
its Special Shares (other than a reclassification involving only the subdivision
of outstanding Special Shares), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares of the Company payable in Common Shares of the
Company or to effect a subdivision, combination or consolidation of the Common
Shares of the Company (by reclassification or otherwise
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than by payment of dividends in Common Shares of the Company), then, in each
such case, the Company shall give to each holder of a Right Certificate, 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, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares of the Company and/or Special Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten days prior to the record date for
determining holders of the Special Shares for purposes of such action, and in
the case of any such other action, at least ten days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares of the Company and/or Special Shares, whichever
shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such
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event and the consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Alliance Gaming Corporation
6601 South Bermuda Road
Las Vegas, NV 89119-3605
Telecopier No.: (702) 270-7600
Attention: Scott Schweinfurth
with a copy to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005-1413
Telecopier No.: (212) 530-5219
Attention: Mark L. Weissler, Esq.
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
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Attention: Carolyn O'Neill
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from
time to time and the Rights Agent shall, if the Company so directs, supplement
or amend this Rights Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Rights Agreement shall not be amended in any manner which
would adversely affect the interests of the holders of Rights (other than any
Acquiring Person and its Affiliates and Associates). Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Rights Agreement to (a) lower the
63
<PAGE> 68
thresholds set forth in Sections 1(a) and 3(a) hereof to not less than the
greater of (i) the largest percentage of the outstanding Common Shares of the
Company then known by the Company to be beneficially owned by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity holding Common
Shares of the Company for or pursuant to the terms of any such plan) and (ii)
10%, (b) fix a Final Expiration Date later than the date set forth in Section 7
hereof, (c) reduce the Redemption Price or (d) increase the Purchase Price.
Section 28. Successors. All the covenants and provisions of
this Rights 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. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares of the Company) any
legal or equitable right, remedy or claim under this Rights Agreement; but this
Rights Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered
64
<PAGE> 69
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares of the Company).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are
65
<PAGE> 70
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 34. Administration. The Board of Directors of the
Company shall have the exclusive power and authority to administer and interpret
the provisions of this Rights Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company or to the Company
or as may be necessary or advisable in the administration of this Rights
Agreement. All such actions, calculations, determinations and interpretations
which are done or made by the Board of Directors of the Company in good faith
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and shall not subject the Board of
Directors of the Company to any liability to the holders of the Rights.
66
<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
ALLIANCE GAMING CORPORATION
Attest:
By __________________________ By_____________________________
Title: Title:
Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
By __________________________ By_____________________________
Title: Title:
67
<PAGE> 72
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES F SPECIAL STOCK
of
ALLIANCE GAMING CORPORATION
(Pursuant to Section 78.1955 of the
Nevada Revised Statutes)
------------------------------------
Alliance Gaming Corporation, a Nevada corporation (the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation in accordance with the provisions of
Sections 78.195 and 78.1955 of the Nevada Revised Statutes at a meeting duly
called and held on February 11, 1998, which resolution remains in full force and
effect on the date hereof:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation (the "Board") in accordance with
the provisions of the Articles of Incorporation of the Corporation, as amended
to date, the Board hereby creates a new series of special stock, par value $.10
per share, which series shall be designated as "Series F Special Stock" (the
"Series F Special Stock") of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series F Special Stock:
Section 1. Amount. The number of shares constituting the
Series F Special Stock shall be 450,000. Such number of shares may be increased
or decreased by resolution of the Board; provided, that no decrease shall reduce
the number of shares of
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<PAGE> 73
Series F Special Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series F
Special Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Special Stock (or any other stock) ranking prior and superior
to the Series F Special Stock with respect to dividends, the holders of
shares of Series F Special Stock, in preference to the holders of
Common Stock, par value $.10 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 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 F Special Stock,
in an amount per share (rounded to the nearest cent) equal to, subject
to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series F Special Stock.
In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series F Special Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding
A-2
<PAGE> 74
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) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series F Special Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series F Special 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 F Special 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 may fix a record date for the
determination of holders of shares of Series F Special Stock entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. Except as otherwise provided by law,
holders of Series F Special Stock shall have no voting rights and their consent
shall not be required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series F Special 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 F Special Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation,
A-3
<PAGE> 75
dissolution or winding up) to the Series F Special Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series F Special Stock, except dividends
paid ratably on the Series F Special Stock and all such parity
stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series F Special Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series F
Special Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series F Special Stock, or any
shares of stock ranking on a parity with the Series F Special
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series F Special
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly
A-4
<PAGE> 76
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Special Stock and may be reissued as
part of a new series of Special Stock subject to the conditions and restrictions
on issuance set forth herein, in the Corporation's Amended Certificate of
Incorporation, or in any other Certificate of Designations creating a series of
Special Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (upon liquidation,
dissolution or winding up) to the Series F Special Stock unless, prior thereto,
the holders of shares of Series F Special 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, provided that the holders of shares of
Series F Special Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (2) to the holders of shares of stock ranking on a parity
(upon liquidation, dissolution or winding up) with the Series F Special Stock,
except distributions made ratably on the Series F Special Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision 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 to which holders of shares of Series F Special
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such
A-5
<PAGE> 77
case each share of Series F Special Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision 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 F Special Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series F Special Stock
shall not be redeemable.
Section 9. Rank. The Series F Special Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of Special Stock.
Section 10. Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series F Special Stock
so as to affect them adversely, without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of Series F Special Stock, voting
together as a single class.
A-6
<PAGE> 78
IN WITNESS WHEREOF, the undersigned as President and Secretary
of Alliance Gaming Corporation have caused this Certificate of Designations of
Series F Special Stock to be duly executed this ____ day of March, 1998.
ALLIANCE GAMING CORPORATION
------------------------------
President
------------------------------
Secretary
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on March __, 1998 by
___________ as President and Secretary of Alliance Gaming Corporation.
--------------------------------
Signature of Notarial Officer
A-7
<PAGE> 79
Exhibit B
Form of Right Certificate
Certificate No. R- _________________ Rights
NOT EXERCISABLE AFTER MARCH 12, 2008 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS OWNED BY ANY PERSON WHO IS OR
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) SHALL BECOME NULL AND VOID.
Right Certificate
ALLIANCE GAMING CORPORATION
This certifies that _________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of March 9, 1998 (the "Rights Agreement"),
between Alliance Gaming Corporation, a Nevada corporation (the "Company"), and
American Stock Transfer & Trust Company (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., Eastern time, on March 12, 2008 at
the principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable share of Series F
Special Stock, par value $.10 per share (the "Series F Special Shares"), of the
Company, at a purchase price of $25.00 per one one-hundredth of a Special Share
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-hundredths
of a share of Series F Special Stock which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of _____ __, 199_, based on the Series F Special Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
<PAGE> 80
Price and the number of one one-hundredths of a Special Share 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.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Series F Special Shares as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.001 per Right or (ii) may be exchanged in whole or in part for Series
F Special Shares or shares of the Company's Common Stock.
No fractional Series F Special Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Special Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Series F
Special Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the 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
B-2
<PAGE> 81
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 the Rights Agent.
B-3
<PAGE> 82
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _________________, ____.
ATTEST: ALLIANCE GAMING CORPORATION
_____________________________ By: ___________________________
Countersigned:
American Stock Transfer & Trust Company
By__________________________________
Authorized Signature
B-4
<PAGE> 83
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:
Signatures must be guaranteed by an eligible guarantor
institution (a bank, stockbroker, savings and loan association or credit union
with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
B-5
<PAGE> 84
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: ALLIANCE GAMING CORPORATION
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to purchase the
Series F Special Shares issuable upon the exercise of such Rights and requests
that certificates for such Series F Special Shares be issued in the name of:
Please insert social security
or other identifying number
- - ----------------------------------------------------------------
(Please print name and address)
- - ----------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- - ----------------------------------------------------------------
(Please print name and address)
- - ----------------------------------------------------------------
Dated: _________________, ____
----------------------------------
Signature
B-6
<PAGE> 85
Form of Reverse Side of Right Certificate -- continued
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor
institution (a bank, stockbroker, savings and loan association or credit union
with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934.
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-7
<PAGE> 86
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS OWNED BY ANY
PERSON WHO IS OR BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS AGREEMENT) SHALL
BECOME NULL AND VOID
SUMMARY OF RIGHTS TO PURCHASE
SERIES F SPECIAL SHARES
On February 11, 1998, the Board of Directors of
Alliance Gaming Corporation (the "Company") declared a dividend of one special
share purchase right (a "Right") for each outstanding share of common stock, par
value $.10 per share (the "Common Shares"), of the Company. The dividend is
payable on March 12, 1998 (the "Record Date") to the stockholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series F Special Stock, par value $.10
per share (the "Series F Special Shares"), of the Company at a price of $25.00
per one one-hundredth of a Series F Special Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement dated as of March 9, 1998 (the "Rights Agreement") between
the Company and American Stock Transfer & Trust Company & Trust Company, as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons have
acquired beneficial ownership of 10% (which percentage may be reduced pursuant
to the Rights Agreement) or more of the outstanding Common Shares or 15% or more
of the Common Shares of the Company then outstanding if the Acquiring Person is
an institutional investor permitted under Nevada gaming regulatory restrictions
to acquire up to 15% of the Common Shares without regulatory approval (such 10%
or 15% amount being referred to as the "Threshold Amount") of the Company (an
"Acquiring Person") or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of the Threshold Amount (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the
<PAGE> 87
Record Date, by such Common Share certificate with a copy of this Summary of
Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on March 12, 2008 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier redeemed
or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Series F Special
Shares or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series F Special Shares, (ii) upon the grant to holders of the Series F Special
Shares of certain rights or warrants to subscribe for or purchase Series F
Special Shares at a price, or securities convertible into Series F Special
Shares with a conversion price, less than the then-current market price of the
Series F Special Shares or (iii) upon the distribution to holders of the Series
F Special Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Series F Special Shares) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Series F Special Share issuable upon exer-
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<PAGE> 88
cise of each Right are also subject to adjustment in the event of a stock split
of the Common Shares or a stock dividend on the Common Shares payable in Common
Shares or subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, prior to the Distribution Date.
Series F Special Shares purchasable upon exercise of the
Rights will not be redeemable. Each Series F Special Share will be entitled to
an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Series F Special Shares will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Except as otherwise provided by law, holders of Series F Special Stock shall
have no voting rights and their consent shall not be required for taking any
corporate action. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Series F Special Share
will be entitled to receive 100 times the amount received per Common Share.
These rights are protected by customary antidilution provisions.
Because of the nature of the Series F Special Shares' dividend
and liquidation rights, the value of the one one-hundredth interest in a Series
F Special Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, the Rights Agreement provides
that proper provision shall be made so that each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive (subject to adjustment) upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right. At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person or group of 50% or
more of the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group, which will
have become void), in whole or in part, at an exchange ratio of one Common
Share, or one one-hundredth of a Series F Special Share (or of a share of a
class or series of the Company's special stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
The Rights Agreement provides that none of the Company's
directors or officers shall be deemed to beneficially own any Common Shares
owned by any other director or officer by
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virtue of such persons acting in their capacities as such, including in
connection with the formulation and publication of the Board of Directors
recommendation of its position, and actions taken in furtherance thereof, with
respect to an acquisition proposal relating to the Company or a tender or
exchange offer for the Common Shares.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Series F Special Shares will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Series F Special Share, which may, at the election of the Company, be evidenced
by depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Series F Special Shares on the last trading day
prior to the date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of the Threshold
Amount, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time on such basis with
such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including an amendment to (a) lower certain thresholds described above to not
less than the greater of (i) and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%, (b) fix
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a Final Expiration Date later than March 12, 2008, (c) reduce the Redemption
Price or (d) increase the Purchase Price, except that from and after such time
as any person or group of affiliated or associated persons becomes an Acquiring
Person no such amendment may adversely affect the interests of the holders of
the Rights (other than the Acquiring Person and its affiliates and associates).
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated March 10, 1998. A copy of the Rights Agreement is available free
of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
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