<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
LODGENET ENTERTAINMENT CORPORATION
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 46-0371161
- ---------------------------------------- -------------------
(State of incorporation or organization) (IRS Employer
Identification No.)
808 West Avenue North, Sioux Falls, SD 57104
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A(c)(1) please
check the following box. [_]
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a current
registration statement under the Securities Act of 1933 pursuant to General
Instruction A(c)(2) please check the following box. [_]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
<PAGE>
Securities to be registered pursuant to Section 12(g) of the Act:
SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS
------------------------------------------------------
(Title of Class)
-2-
<PAGE>
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
SUMMARY OF RIGHTS
On February 28, 1997, the Board of Directors of LodgeNet Entertainment
Corporation (the "Company") declared a dividend distribution of one "Right" for
each outstanding share of common stock, par value $.01 per share (the "Common
Stock"), of the Company to stockholders of record at the close of business on
March 10, 1997 (the "Record Date"). Except as set forth below, each Right, when
exercisable, entitles the registered holder to purchase from the Company one
one-thousandth of a share of a new series of preferred stock, designated as
Series A Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock"), at a price of $60.00 (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Harris Trust and Savings Bank, as
"Rights Agent."
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights certificates will
be distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earliest of (i) a public announcement
that a person, entity or group of affiliated or associated persons and/or
entities (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common Stock,
other than as a result of repurchases of stock by the Company or certain
inadvertent actions by institutional or certain other stockholders, or (ii) ten
days (unless such date is extended by the Board of Directors) following the
commencement of (or a public announcement of an intention to make) a tender
offer or exchange offer which would result in any person, entity or group of
affiliated or associated persons and/or entities becoming an Acquiring Person.
Until the Distribution Date the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with this Summary of Rights. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with Common Stock certificates. From as soon as
practicable after the Record Date and until the Distribution Date
-3-
<PAGE>
(or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new issuance of the
Common Stock 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 Stock
outstanding as of the Record Date (with or without this Summary of Rights
attached) will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date, and the separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on the earliest of (i) February 28, 2007, (ii) consummation of a
merger transaction with a Person or group who acquired Common Stock pursuant
to a Permitted Offer (as defined below), and is offering in the merger the
same price per share and form of consideration paid in the Permitted Offer,
or (iii) redemption or exchange of the Rights by the Company as described
below.
The number of Rights associated with each share of Common Stock shall be
proportionately adjusted to prevent dilution in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the Common Stock. The
Purchase Price payable, and the number of shares of Preferred Stock or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for Preferred Stock, certain convertible securities or
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends
out of earnings or retained earnings) or of subscription rights or warrants
(other than those referred to above). With certain exceptions, no adjustments
in the Purchase Price will be required
-4-
<PAGE>
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price.
In the event that, after the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such, the
Company is involved in a merger or other business combination transaction
(whether or not the Company is the surviving corporation) or 50% or more of the
Company's assets or earning power are sold (in one transaction or a series of
transactions), proper provision shall be made so that each holder of a Right
(other than an Acquiring Person) shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price, that number of
shares of common stock of either the Company, in the event that it is the
surviving corporation of a merger or consolidation, or the acquiring company
(or, in the event there is more than one acquiring company, the acquiring
company receiving the greatest portion of the assets or earning power
transferred) which at the time of such transaction would have a market value of
two times the Purchase Price (such right being called the "Merger Right"). In
the event that a Person becomes the beneficial owner of 15% or more of the
outstanding shares of Common Stock (unless pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock at a price and on
terms determined prior to the date of the first acceptance of payment for any of
such shares by at least a majority of the members of the Board of Directors who
are not officers of the Company and are not Acquiring Persons or Affiliates or
Associates thereof to be both adequate and otherwise in the best interests of
the Company and its stockholders (a "Permitted Offer")), then proper provision
shall be made so that each holder of a Right will for a 60-day period (subject
to extension under certain circumstances) thereafter have the right to receive
upon exercise that number of shares of Common Stock (or, at the election of the
Company, which election may be obligatory if sufficient authorized shares of
Common Stock are not available, a combination of Common Stock, property, other
securities (E.G., Preferred Stock) and/or a reduction in the exercise price of
the Right) having a market value of two times the Purchase Price (such right
being called the "Subscription Right"). The holder of a Right will continue to
have the Merger Right whether or not such holder exercises the Subscription
Right. Notwithstanding the foregoing, upon the occurrence of any of the events
giving rise to the exercisability of the Merger Right or the Subscription Right,
any Rights that are or were at any time
-5-
<PAGE>
after the Distribution Date owned by an Acquiring Person shall immediately
become null and void.
At any time prior to the earlier to occur of (i) a Person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Company may thereafter redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price (i) if
such redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not involving an
Acquiring Person or certain related Persons or (ii) following an event giving
rise to, and the expiration of the exercise period for, the Subscription Right
if and for as long as the Acquiring Person triggering the Subscription Right
beneficially owns securities representing less than 15% of the outstanding
shares of Common Stock and at the time of redemption there are no other
Acquiring Persons. The redemption of Rights described in the preceding sentence
shall be effective only as of such time when the Subscription Right is not
exercisable, and in any event, only after ten business days' prior notice. Upon
the effective date of the 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.
Subject to applicable law, the Board of Directors, at its option, may at
any time after a Person becomes an Acquiring Person (but not after the
acquisition by such Person of 50% or more of the outstanding Common Stock),
exchange all or part of the then outstanding and exercisable Rights (except for
Rights which have become void) for shares of Common Stock at a rate of one share
of Common Stock per Right or, alternatively, for substitute consideration
consisting of cash, securities of the Company or other assets (or any
combination thereof).
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company may
issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential quarterly dividend in an amount equal
to 1,000 times the dividend declared on each share of Common Stock, but in no
event less than $25.00. In the event of liquidation, the holders of shares of
Preferred Stock will receive a preferred liquidation
-6-
<PAGE>
payment equal to the greater of $1,000.00 or 1,000 times the payment made per
each share of Common Stock. Each share of Preferred Stock will have 1,000
votes, voting together with the shares of Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Preferred Stock will be entitled to receive 1,000 times
the amount and type of consideration received per share of Common Stock. The
rights of the Preferred Stock as to dividends, liquidation and voting, and in
the event of mergers and consolidations, are protected by customary antidilution
provisions. Fractional shares of Preferred Stock will be issuable; however, (i)
the Company may elect to distribute depositary receipts in lieu of such
fractional shares and (ii) in lieu of fractional shares other than fractions
that are multiples of one one-thousandth of a share, an adjustment in cash will
be made based on the market price of the Preferred Stock on the last trading
date prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. The Company and the Rights Agent retain broad
authority to amend the Rights Agreement; however, following any Distribution
Date any amendment may not adversely affect the interests of holders of Rights.
A copy of the Rights Agreement is attached as an Exhibit to this
Registration Statement on Form 8-A. THIS SUMMARY DESCRIPTION OF THE RIGHTS DOES
NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
RIGHTS AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE.
ITEM 2. EXHIBITS.
4.1 Form of Rights Agreement dated as of March 5, 1997 between LodgeNet
Entertainment Corporation and Harris Trust and Savings Bank which
includes as Exhibit B the form of Rights Certificate. Pursuant to the
Rights Agreement, Rights Certificates will not be mailed until the
earlier of (i) a public announcement that a person or a group of
affiliated or associated persons has acquired beneficial ownership of
securities representing 15% or more of the outstanding common stock or
(ii) ten days after a person or a group of affiliated or associated
persons has commenced or announced an intent to
-7-
<PAGE>
commence a tender offer or exchange offer which, upon consummation
thereof, would cause such person or group to own beneficially
securities representing 15% or more of the outstanding common stock.
-8-
<PAGE>
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.
Dated: March 5, 1997 LODGENET ENTERTAINMENT CORPORATION
By: /s/ Eric R. Jacobsen
-----------------------------
Eric R. Jacobsen
Vice President, General
Counsel and Secretary
-9-
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
- ------- ----
4.1 Form of Rights Agreement dated as of March 5, -9-
1997 between LodgeNet Entertainment Corporation and Harris
Trust and Savings Bank which includes as Exhibit B the form
of Rights Certificate. Pursuant to the Rights Agreement,
Rights Certificates will not be mailed until the earlier of
(i) a public announcement that a person or a group of
affiliated or associated persons has acquired beneficial
ownership of securities representing 15% or more of the
outstanding common stock or (ii) ten days after a person
or a group of affiliated or associated persons has commenced
or announced an intent to commence a tender offer or exchange
offer which, upon consummation thereof, would cause such
person or group to own beneficially securities representing
15% or more of the outstanding common stock.
-10-
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LODGENET ENTERTAINMENT CORPORATION
a Delaware corporation
and
HARRIS TRUST AND SAVINGS BANK,
an Illinois banking corporation
Rights Agent
------------
Rights Agreement
Dated as of March 5, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
1. Certain Definitions..................................................... 1
2. Appointment of Rights Agent............................................. 4
3. Issue of Rights Certificates............................................ 5
4. Form of Rights Certificates............................................. 6
5. Countersignature and Registration....................................... 7
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates................ 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights........... 8
8. Cancellation and Destruction of Rights Certificates..................... 11
9. Reservation and Availability of Preferred Stock......................... 11
10. Preferred Stock Record Date............................................. 13
11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights............................................................... 13
12. Certificate of Adjusted Purchase Price or Number of Shares.............. 22
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.... 23
14. Additional Covenants.................................................... 26
15. Fractional Rights and Fractional Shares................................. 26
16. Rights of Action........................................................ 28
17. Agreement of Rights Holders............................................. 28
18. Rights Certificate Holder Not Deemed a Stockholder...................... 28
19. Concerning the Rights Agent............................................. 29
20. Merger or Consolidation or Change of Name of Rights Agent............... 29
21. Duties of Rights Agent.................................................. 30
22. Change of Rights Agent.................................................. 33
-i-
<PAGE>
23. Issuance of New Rights Certificates..................................... 34
24. Redemption, Termination and Exchange.................................... 35
25. Notice of Certain Events................................................ 38
26. Notices................................................................. 38
27. Supplements and Amendments.............................................. 39
28. Determination and Actions by the Board of Directors, etc................ 39
29. Successors.............................................................. 40
30. Benefits of This Agreement.............................................. 40
31. Severability............................................................ 40
32. Governing Law........................................................... 40
33. Counterparts............................................................ 41
34. Descriptive Headings.................................................... 41
Exhibit A -- Certificate of Designation of Series A
Participating Preferred Stock ................... A-1
Exhibit B -- Form of Rights Certificate ....................... B-1
Exhibit C -- Form of Summary of Rights ........................ C-1
-ii-
<PAGE>
RIGHTS AGREEMENT
THIS AGREEMENT is dated as of March 5, 1997, between LODGENET ENTERTAINMENT
CORPORATION, a Delaware corporation (the "Company"), and HARRIS TRUST AND
SAVINGS BANK, an Illinois banking corporation (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on February 28, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each share of Common Stock, par value $.01 per share, of the
Company (the "Common Stock") outstanding as of the close of business on March
10, 1997 (the "Record Date"), and contemplates the issuance of one Right
(subject to adjustment as provided herein) for each share of Common Stock of the
Company issued between the Record Date and the earlier of the Distribution Date
and the Expiration Date, as such terms are hereinafter defined (with Rights also
to be issued in connection with certain issuances of Common Stock after the
Distribution Date, as provided more fully herein), each Right representing the
right to purchase one one-thousandth of a share of Series A Participating
Preferred Stock, par value $.01 per share, of the Company ("Preferred Stock")
having the rights, powers and preferences set forth in the form of Certificate
of Designation attached hereto as Exhibit A ("Certificate of Designation"), upon
the terms and subject to the conditions hereinafter set forth (the "Rights").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of securities representing 15% or more of the shares
of Common Stock then outstanding or who was such a Beneficial Owner at any
time on or after the date hereof, whether or not such Person continues to
be the Beneficial Owner of securities representing 15% or more of the
outstanding shares of Common Stock. Notwithstanding the foregoing, (i) in
no event shall a Person who or which, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of less than 15% of the
Company's outstanding shares of Common Stock become an Acquiring Person
solely as a result of a reduction of the number
-1-
<PAGE>
of shares of outstanding Common Stock, including repurchases of outstanding
shares of Common Stock by the Company, which reduction increases the
percentage of outstanding shares of Common Stock beneficially owned by such
Person (provided that any subsequent increase in the amount of Common Stock
beneficially owned by such Person, together with all Affiliates and
Associates of such Person, without the prior written approval of the Board
of Directors of the Company shall cause such Person to be an Acquiring
Person); (ii) the term Acquiring Person shall not mean (A) the Company,
(B) any subsidiary of the Company (as such term is hereinafter defined),
(C) any employee benefit plan of the Company or any of its subsidiaries,
(D) any entity holding securities of the Company organized, appointed or
established by the Company or any of its subsidiaries for or pursuant to
the terms of any such plan, or (E) any underwriter acting in good faith in
a firm commitment underwriting of an offering of the Company's securities
pursuant to arrangements with the Company which have been approved by the
Board of Directors of the Company (HOWEVER, the exception provided by this
clause (E) shall no longer be available in the event that any such
underwriter is otherwise an Acquiring Person on or after the date which is
forty days after the date of initial acquisition of the Company's
securities by such underwriter in connection with such offering); and
(iii) no Person shall be deemed to be an Acquiring Person if: (A) (1) any
Schedule 13D under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any comparable or successor report, filed (or required
to be filed) by such Person does not (or would not) state any intention to
or reserve the right to control or influence the management or policies of
the Company or engage in any of the actions specified in Item 4 (or any
comparable or successor Item) of such Schedule 13D (other than the
disposition of Common Stock), (2) either (x) within two Business Days of
being requested by the Company to advise the Company regarding the same,
such Person certifies in writing to the Company that such Person acquired
Beneficial Ownership of securities representing shares of Common Stock in
excess of 15% inadvertently or without knowledge of the terms of the
Rights, or (y) the Board of Directors of the Company determines in good
faith that such Person has become an Acquiring Person inadvertently, (3)
such Person divests as promptly as practicable a sufficient number of
securities representing shares of Common Stock so that such Person shall
not be deemed to be an Acquiring Person pursuant to the first sentence of
this Section 1(a), and (4) promptly following such Person's divestiture of
such securities, such Person certifies to the Board of Directors of the
Company that such Person is no longer an Acquiring Person as defined
pursuant to
-2-
<PAGE>
the first sentence of this Section 1(a); or (B) by reason of such Person's
Beneficial Ownership of 15% or more of the outstanding shares of Common
Stock on the date hereof if prior to the Record Date, such Person notifies
the Board of Directors that such Person is no longer the Beneficial Owner
of 15% or more of the then outstanding shares of Common Stock.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement.
(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 or obligation to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for payment
or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing)
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or with which such Person or any of such Person's
Affiliates or Associates have otherwise formed a group, for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in clause (B) of subparagraph (ii) of this
paragraph (c)) or disposing of any securities of the Company.
-3-
<PAGE>
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Illinois are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5 P.M., Central
time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5 P.M., Central time, on the next succeeding Business
Day.
(f) "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company, except that "Common Stock" when used with reference
to stock issued by any Person other than the Company shall mean the capital
stock with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person or, if such Person is a subsidiary of another Person, of the Person
which ultimately controls such first-mentioned Person and which has issued
and outstanding such capital stock, equity securities or equity interests.
(g) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, joint venture, association, trust
or other entity.
(h) "Preferred Stock" shall mean the Series A Participating Preferred
Stock, par value $.01 per share, of the Company.
(i) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
(j) A "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 voting interests is owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(k) "Voting power" shall mean the voting power of all securities of
the Company then outstanding and generally entitled to vote for the
election of directors of the Company.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem
-4-
<PAGE>
necessary or desirable. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agents and any Co-Rights Agents
shall be as the Company shall determine.
3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Stock Acquisition Date or (ii) the tenth
day (or such later date as may be determined by action of the Board of
Directors) after the date of the commencement of, or first public announcement
of the intent of any Person (other than the Company, any subsidiary of the
Company, any employee benefit plan of the Company or any of its subsidiaries, or
any entity organized, appointed or established by the Company or any of its
subsidiaries for or pursuant to the terms of any such plan) to commence (which
intention to commence remains in effect for five Business Days after such
announcement), a tender or exchange offer which would result in such Person
becoming an Acquiring Person (including any such date which is on or after the
date of this Agreement and prior to the issuance of the Rights) (the earlier of
such dates being herein referred to as the "Distribution Date"), (x) the Rights
shall be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock shall be deemed
also to be certificates for Rights) and not by separate certificates, and
(y) the Rights (and the right to receive certificates therefor) shall be
transferable only in connection with the transfer of the underlying shares of
Common Stock. As soon as practicable after the Distribution Date, the Rights
Agent shall send, by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the Company, a certificate
for Rights, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held. As
of and after the Distribution Date, the Rights shall be evidenced solely by such
Rights Certificates.
As soon as practicable following the Record Date, the Company shall send a
copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date (or earlier redemption, expiration or termination of
the Rights), the Rights shall be evidenced by such certificates for the Common
Stock together with the Summary of Rights and the registered holders of the
Common Stock shall also be the registered holders of the associated Rights.
Until the Distribution Date (or earlier redemption, expiration or termination of
the Rights), the surrender for transfer of any of the certificates for the
Common Stock outstanding on the Record Date, even without a copy of the
-5-
<PAGE>
Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
(b) Certificates issued for Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) after the Record
Date, but prior to the earlier of the Distribution Date or the Expiration Date
(as such term is hereinafter defined), shall be deemed also to be certificates
for Rights, and shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between LodgeNet
Entertainment Corporation (the "Company") and Harris Trust and Savings Bank
(the "Rights Agent") dated as of March 5, 1997 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
may be redeemed, may expire, or may be evidenced by separate Certificates
and will no longer be evidenced by this Certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement without
charge within five days after receipt of a written request therefor. Under
certain circumstances, Rights issued to Acquiring Persons (as defined in
the Rights Agreement) or certain related Persons and any subsequent holder
of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase shares
and of assignment and certificates to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or interdealer
quotation system on which the Rights may from time to time be listed or traded,
or to conform to usage. Subject to the provisions of Section 11 and Section 23
-6-
<PAGE>
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date, and on their face shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share set forth therein
(the "Purchase Price"), but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) hereof that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Rights Certificate issued at any time upon the
transfer of any Rights to such an Acquiring Person or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate, and
any Rights Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were issued to a Person
who was an Acquiring Person or an Affiliate or an Associate of an Acquiring
Person, as such terms are defined in the Rights Agreement. This Rights
Certificate and the Rights represented hereby may become void under the
circumstances specified in Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights Certificate.
5. COUNTERSIGNATURE AND REGISTRATION. The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the Board, any Vice
Chairman of the Board, its President, Chief Operating Officer or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the Person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
-7-
<PAGE>
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. Subject to the
provisions of Sections 7(e), 7(f) and 15 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock as the Rights Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Rights 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
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
Subject to the provisions of Sections 7(e), 7(f) and 15 hereof, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate
and such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company shall execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon presentation of the Rights
Certificate,
-8-
<PAGE>
with the appropriate 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-thousandth of a
share of Preferred Stock (or such other number of shares or other securities) as
to which the Rights are exercised, at or prior to the earliest of (i) the close
of business on February 28, 2007 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 24 hereof, (iii) the
consummation of a transaction contemplated by Section 13(d) hereof or (iv) the
time at which the Rights are exchanged as provided in Section 24(c) hereof (such
earliest time being herein referred to as the "Expiration Date").
Notwithstanding any other provision of this Agreement, any Person who prior to
the Distribution Date becomes a record holder of shares of Common Stock may
exercise all of the rights of a registered holder of a Rights Certificate with
respect to the Rights associated with such shares of Common Stock in accordance
with and subject to the provisions of this Agreement, including the provisions
of Section 7(e) hereof, as of the date such Person becomes a record holder of
shares of Common Stock.
(b) The Purchase Price for each one one-thousandth share of Preferred
Stock pursuant to the exercise of a Right shall initially be $60.00, shall be
subject to adjustment from time to time as provided in Sections 11 and 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the appropriate form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares (or other securities or property)
to be purchased and an amount equal to any applicable transfer tax (as
determined by the Rights Agent) in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall, subject to
Section 21(k), thereupon promptly (i)(A) requisition from any transfer agent of
the shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company shall direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash, if any, to be paid
in lieu of issuance of fractional shares in accordance with Section 15,
(iii) promptly after receipt of such certificates or depositary receipts, cause
the same to be
-9-
<PAGE>
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt promptly deliver such cash to or
upon the order of the registered holder of such Rights Certificate. In the
event that the Company is obligated to issue other securities of the Company,
and/or distribute other property pursuant to Section 11(a), the Company shall
make all arrangements necessary so that such other securities and/or property
are available for distribution by the Rights Agent, if and when appropriate. In
addition, in the case of an exercise of the Rights by a holder pursuant to
Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to the
registered holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Rights Certificate no longer include
the rights provided by Section 11(a)(ii) of the Rights Agreement and if less
than all the Rights represented by such Rights Certificate were so exercised,
the Rights Agent shall indicate on the Rights Certificate the number of Rights
represented thereby which continue to include the rights provided by Section
11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall exercise
(except pursuant to Section 11(a)(ii)) less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Rights Certificate or to such registered holder's duly
authorized assigns, subject to the provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if there
occurs any of the events set forth in Section 11(a)(ii) or Section 13(a) then
any Rights that are or were on or after the Distribution Date beneficially owned
by an Acquiring Person or any Associate or Affiliate of an Acquiring Person
shall become null and void, without any further action, and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. Without limiting
the foregoing sentence, Rights held by the following Persons shall be null and
void without any further action: (i) any direct or indirect transferee of any
Rights that are or were on or after the Distribution Date beneficially owned by
an Acquiring Person or any Associate or Affiliate of an Acquiring Person; (ii)
any direct or indirect transferee of any Rights that were on or before the
Distribution Date beneficially owned by an Acquiring Person or any Associate or
Affiliate of an Acquiring Person if the transferee received such Rights,
directly or indirectly, (A) from an Acquiring Person or any Associate or
Affiliate of an Acquiring Person (x) as a result of a distribution by such
Acquiring Person or any Associate or Affiliate of an Acquiring Person to holders
of its equity securities or similar interests (including, without limitation,
partnership interests) or (y) pursuant to any continuing agreement, arrangement
or understanding with respect to the Rights
-10-
<PAGE>
or (B) in a transfer (or series of transfers) which the Board of Directors of
the Company determines is part of a plan, arrangement or understanding which has
the purpose or effect of avoiding the provisions of this Section 7(e); and (iii)
subsequent transferees of Persons referred to in the foregoing clauses (i) and
(ii) as well as this clause (iii). The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) are complied with, but shall
have no liability to any holder of Rights or any Rights Certificate or to any
other Person as a result of the Company's failure to make any determination with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the appropriate
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise shall have been properly completed and
duly executed by the registered holder thereof and the Company shall have been
provided with such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK. The Company
covenants and agrees that it shall cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock, or any authorized and
issued shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights and, after the occurrence of an event specified in
Section 11(a)(ii) or Section 13(a), shall so reserve
-11-
<PAGE>
and keep available a sufficient number of shares of Common Stock (and/or other
securities) which may be required to permit the exercise in full of the Rights
pursuant to this Agreement.
So long as the shares of Preferred Stock (and, after the occurrence of an
event specified in Section 11(a)(ii) or Section 13(a), any other securities)
issuable upon the exercise of the Rights may be listed on any national
securities exchange or national quotation system, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares (or other securities) reserved for such issuance to be listed on such
exchange or system upon official notice of issuance upon such exercise.
The Company covenants and agrees that it shall take all such action as may
be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares or securities.
The Company further covenants and agrees that it shall pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any certificates for shares of Preferred Stock and/or other securities upon the
exercise of Rights. The Company shall not, however, be required to (i) pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or in respect of the issuance or
delivery of the shares of Preferred Stock and/or other securities in a name
other than that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or (ii) issue or deliver any certificates for
shares of Preferred Stock and/or other securities in a name other than that of
the registered holder upon the exercise of any Rights until such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, if required by law, as
soon as practicable following the Distribution Date, a registration statement
under the Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act and the rules and regulations thereunder) until the Expiration Date (unless
and until the Company shall have received an opinion of counsel to the effect
that the maintenance of such registration statement in effect is
-12-
<PAGE>
no longer necessary). The Company will also take such action as may be
appropriate under the blue sky laws of the various states.
10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Preferred Stock (or other securities) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the shares of Preferred Stock (or other securities)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly presented and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such presentation and payment is a date upon which
the Preferred Stock (or other securities) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock (or other securities) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of
a Rights Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and in
Section 7(e), 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 and other securities
which, if such Right had been exercised immediately prior to such date and
at a time when the
-13-
<PAGE>
Preferred Stock transfer books of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an event
occurs which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24(c) of this Agreement, in the event any
Person, alone or together with its Affiliates and Associates, shall become
an Acquiring Person (except pursuant to a tender or exchange offer for all
outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the members of the Board of Directors who are not
officers of the Company and are not Acquiring Persons or Affiliates or
Associates thereof to be in the best interests of the Company and its
stockholders (other than the Person or an Affiliate or Associate thereof on
whose behalf the offer is being made) (a "Permitted Offer")), then,
promptly following the first occurrence of an event described in this
Section 11(a)(ii), proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e) hereof, shall, for a period of 60
days after the later of the occurrence of any such event and the effective
date of an appropriate registration statement pursuant to Section 9, have a
right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, in lieu of shares of
Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable (prior to any
adjustment required pursuant to this Section 11(a)(ii)) and (y) dividing
that product by 50% of the current market price per one share of Common
Stock (determined pursuant to Section 11(d)) on the date of the occurrence
of the event set forth in this subparagraph (ii) (such number of shares
being referred to as the "number of Adjustment Shares"); 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); and provided, further,
that such 60-day period shall not be deemed to run during any period in
which the exercise of the Rights or the fulfillment by the Company or the
Rights Agent of its or their obligations under this Agreement shall be
enjoined
-14-
<PAGE>
or otherwise prohibited in full or in part by any court or other
governmental agency or body.
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii) hereof, the Company may, if a majority of the Board of
Directors then in office determines that such action is necessary or
appropriate and not contrary to the interests of holders of Rights, elect
to (and, in the event that the Board of Directors has not exercised the
exchange right contained in Section 24(c) hereof and there are not
sufficient treasury shares and authorized but unissued shares of Common
Stock 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, issue or pay, upon the exercise of the Rights,
cash (including by way of a reduction of the Purchase Price), property,
shares of Common Stock, other securities or any combination thereof having
an aggregate value equal to the value of the shares of Common Stock which
otherwise would have been issuable pursuant to Section 11(a)(ii), which
aggregate value shall be determined by a nationally recognized investment
banking firm selected by a majority of the Board of Directors. For
purposes of the preceding sentence, the value of the Common Stock shall be
determined pursuant to Section 11(d) hereof and the value of any preferred
stock or preference stock which a majority of the Board of Directors
determines to be a "common stock equivalent" shall be deemed to have the
same value as the Common Stock. Any such election by the Board of
Directors must be made and publicly announced within 60 days following the
date on which the event described in Section 11(a)(ii) shall have occurred.
Following the occurrence of the event described in Section 11(a)(ii)
hereof, a majority of the Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60 days following the
date on which the event described in Section 11(a)(ii) shall have occurred
to the extent that such directors have not determined whether to exercise
their rights of election under this Section 11(a)(iii). In the event of
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Stock (or shares having the same or
more favorable rights, privileges and preferences as the Preferred Stock
("equivalent pre-
-15-
<PAGE>
ferred stock")) or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred Stock or per
share of equivalent preferred stock (or having a conversion price per
share, if a security convertible into Preferred Stock or equivalent
preferred stock) less than the current market price (as defined in
Section 11(d)) per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the number
of shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or equivalent preferred stock
to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription 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 determined reasonably and with good faith to the holders of Rights by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and conclusive for all purposes. Shares of Preferred
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed; and in the event
that such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after
such
-16-
<PAGE>
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as defined in Section 11(d)) per share
of Preferred Stock on such record date, less the fair market value (as
determined reasonably and with good faith to the holders of Rights by the
Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and conclusive for all purposes) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants distributable in respect of one share of
Preferred Stock and the denominator of which shall be the current market
price (as defined in Section 11(d)) per share of the Preferred Stock. Such
adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than as
provided in Section 11(a)(iii), the "current market price" per share of
Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that in the event that the current per share
market price of the Common Stock is determined during a period following
the announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
market price" shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the
-17-
<PAGE>
principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange but are
listed or quoted on the Nasdaq Stock Market, the last reported sale price,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices as reported by Nasdaq or, if the shares of
Common Stock are not listed or quoted on the Nasdaq Stock Market, 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 Nasdaq
Bulletin Board or such other system then in use, or, if on any such date
the shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined reasonably and with good faith by the Board of Directors of the
Company shall be used and shall be binding on the Rights Agent. The term
"Trading Day" shall mean a day on which the national securities exchange or
the Nasdaq Stock Market, as the case may be, on which the shares of Common
Stock are principally listed or admitted to trading or quoted is open for
the transaction of business or, if the shares of Common Stock are not
listed or admitted to trading or quoted on any national securities exchange
or the Nasdaq Stock Market, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share
shall mean the fair value per share determined reasonably and with good
faith to the holders of Rights by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current
market price" per share (or one one-thousandth of a share) of Preferred
Stock shall be determined in the same manner as set forth above for the
Common Stock in Section 11(d)(i) (other than the last sentence thereof).
If the current market price per share (or one one-thousandth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner
described in Section 11(d)(i), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000
(as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalization with respect to the Common
Stock
-18-
<PAGE>
occurring after the date of this Agreement) multiplied by the current
market price per share of the Common Stock and the "current market price"
per one one-thousandth of a share of Preferred Stock shall be equal to the
current market price per share of the Common Stock (as appropriately
adjusted). If neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 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 thousandth of a share of Common
Stock or other share or one-millionth of a share of Preferred Stock, 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 mandates
such adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a), the holder of
any Right thereafter exercised shall become entitled to receive any shares
of capital stock of the Company other than Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 15 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each
-19-
<PAGE>
adjustment of the Purchase Price as a result of the calculations made in
Section 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of one one-thousandths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained
by (i) multiplying (x) the number of one one-thousandths of a share of
Preferred Stock 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 shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment
in the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one millionth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the
date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 15 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
-20-
<PAGE>
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares
which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of
Preferred Stock, Common Stock or other securities issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Preferred Stock,
Common Stock or other securities at such adjusted Purchase Price. If upon
any exercise of the Rights, a holder is to receive a combination of Common
Stock and common stock equivalents, a portion of the consideration paid
upon such exercise, equal to at least the then par value of a share of
Common Stock of the Company, shall be allocated as the payment for each
share of Common Stock of the Company so received.
(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 the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due 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 to the contrary in this Section 11 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
-21-
<PAGE>
consolidation or subdivision of the Preferred Stock, issuance wholly for
cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, stock dividends or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of
its capital stock in a reclassification of the outstanding Common Stock,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such
event by a fraction the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares
of Common Stock outstanding immediately following the occurrence of such
event.
(o) The exercise of Rights under Section 11(a)(ii) shall only result
in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under
this Rights Agreement, including the rights represented by Section 13.
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
(a) promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Preferred Stock and the
Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Rights Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have
-22-
<PAGE>
knowledge of any adjustment unless and until it shall have received such
certificate. Notwithstanding the foregoing provisions of this Section 12, the
failure of the Company to make such certification or give such notice shall not
affect the validity of or the force or effect of the requirement for such
adjustment.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person, (y) 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 (other than, in the case of either transaction
described in (x) or (y), a merger or consolidation which would result in all of
the voting power represented by the securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity) all
of the voting power represented by the securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such merger or
consolidation), or (z) the Company shall sell, mortgage or otherwise transfer
(or one or more of its subsidiaries shall sell, mortgage or otherwise transfer),
in one or more transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its subsidiaries (taken as a
whole) to any other Person, then, and in each such case, proper provision shall
be made so that (i) following the Distribution Date, each holder of a Right
(other than as provided in Section 7(e) hereof) shall have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of shares of freely tradable Common
Stock of the Principal Party (as hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other adverse claims, as shall
be equal to the result obtained by (x) multiplying the then current Purchase
Price by the number of one one-thousandths of a share of Preferred Stock for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) hereof) and (y) dividing that
product by 50% of the current market price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps (including, but not
limited to, the
-23-
<PAGE>
reservation of a sufficient number of shares of its Common Stock in accordance
with Section 9 hereof) in connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of the
first sentence of this Section 13, the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to the merger or consolidation (including,
if applicable, the Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of the first
sentence in this Section 13, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect subsidiary or Affiliate of another Person,
"Principal Party" shall refer to such other Person; (2) in case such Person
is a subsidiary, directly or indirectly, or Affiliate of more than one
Person, the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is
the issuer of the Common Stock having the greatest aggregate market value;
and (3) in case such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above
shall apply to each of the chains of ownership having an interest in such
joint venture as if such party were a "Subsidiary" of both or all of such
joint venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and each Principal Party and
-24-
<PAGE>
each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party at its
own expense shall:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, will use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to (x) qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate and (y) cause
the Rights and the securities purchasable upon exercise of the Rights to be
listed on any national securities exchange or national quotation system
upon which its Common Stock is listed, traded or quoted; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
material respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. The rights under this Section 13
shall be in addition to the rights to exercise Rights and adjustments under
Section 11(a)(ii) and shall survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a Permitted Offer (or a wholly
owned subsidiary of any such Person or Persons), (ii) the price per share of
Common Stock offered in such transaction is not less than the price per share of
Common Stock paid to all holders of Common Stock whose shares were purchased
pursuant to such Permitted Offer and (iii) the form of consideration being
offered to the remaining holders of Common Stock pursuant to such transaction is
the same as the form of consideration paid pursuant to such Permitted Offer.
Upon consummation of any such
-25-
<PAGE>
transaction contemplated by this subsection (d), all Rights hereunder shall
expire.
14. ADDITIONAL COVENANTS.
(a) The Company covenants and agrees that after the Stock Acquisition Date
it shall not, except as permitted by Section 24 hereof, (i) consolidate with,
(ii) merge with or into, or (iii) sell or transfer to any other Person, in one
or more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its subsidiaries taken as a whole, if
at the time of or after such consolidation, merger or sale there are any charter
or by-law provisions or any rights, warrants or other instruments outstanding or
any other action taken which would diminish or otherwise eliminate the benefits
intended to be afforded by the Rights. The Company shall not consummate any
such consolidation, merger or sale unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this subsection.
(b) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 24 hereof, take any action the
purpose or effect of which is to diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(n), or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 15(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 of the Rights for any day shall
be the last sale price, 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 Nasdaq National Market 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 reasonably and with good faith to
the holders of Rights by the Board of Directors of the Company shall be used and
shall be binding on the Rights Agent.
-26-
<PAGE>
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 15(b), the current market value
of one one-thousandth of a share of Preferred Stock shall be one one-thousandth
of the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 or Section 13 giving rise to the right to receive common
stock equivalents (other than Preferred Stock) or other securities upon the
exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such common stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of such common stock equivalents or other securities. In lieu of
fractional shares or units of such common stock equivalents or other securities,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share or unit of such common stock
equivalent or other securities. For purposes of this Section 15(c), the current
market value shall be determined in the manner set forth in Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise and, if such
common stock equivalent is not traded, each such common stock equivalent shall
have the value of one one-thousandth of a share of Preferred Stock.
(d) Except as otherwise expressly provided herein, 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 (other than, in the case of
Preferred Stock, fractions which are integral multiples of one one-thousandth of
a share of Preferred Stock) upon exercise of a Right.
-27-
<PAGE>
16. RIGHTS OF ACTION. All rights of action in respect of this Agreement,
except those rights of action vested in the Rights Agent pursuant to Section 21,
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
the Common Stock), may, in 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 Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
17. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the 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 a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as
such, of any Rights Certificate shall be entitled to
-28-
<PAGE>
vote, receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock, Common Stock or any other securities of the Company which may
at any time be issuable upon exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions thereof.
19. 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 disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly. The indemnification provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement. The costs and
expenses incurred in enforcing this right of indemnification shall be paid by
the Company.
The Rights Agent may conclusively rely upon and shall be protected against
and shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons.
20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust or
stockholder services business of the Rights
-29-
<PAGE>
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 22 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
21. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and
obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Rights Agent) upon the following
terms and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel selected by it (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person
and the determination of "current market price") be proved or established
by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof shall be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a
-30-
<PAGE>
certificate signed by the Chairman of the Board, any Vice Chairman of the
Board, the President, the Chief Operating Officer, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except as to the fact that it has countersigned the
Rights Certificates) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof), nor shall it be responsible for any change in
the exercisability of the Rights (including the Rights becoming void
pursuant to Section 7(e)) except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of such change; nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt of a certificate
pursuant to Section 12 describing any such adjustment); nor shall it be
responsible for any determination by the Board of Directors of the Company
of the current market value of the Rights or Preferred Stock or Common
Stock pursuant to the provisions of Section 15 hereof; nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock or other
securities will, when so issued, be
-31-
<PAGE>
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from the Chairman
of the Board, any Vice Chairman of the Board, the President, the Chief
Operating Officer, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and is
authorized to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
of any such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set
forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Rights Agreement
and the date on and/or after which such action shall be taken or omitted
and the Rights Agent shall not be liable for any action taken or omitted in
accordance with a proposal included in any such application on or after the
date specified therein (which date shall not be less than five Business
Days after the date any such officer actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking or omitting any such action, the Rights Agent has
received written instructions in response to such application specifying
the action to be taken or omitted.
(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 pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not the Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company
or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform
-32-
<PAGE>
any duty hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act,
omission, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company or to the holders of the Rights resulting from
any such act, omission, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the Certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause l
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting
with the Company.
22. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days' notice in writing mailed to the Company and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and at the
expense of the Company, to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 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 Rights Certificate
(who shall, with such notice, submit such holder's Rights Certificate for
inspection by the Company), then the registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States
-33-
<PAGE>
or of the State of New York or the State of Illinois (or of any other state of
the United States so long as such corporation is authorized to do business as a
banking institution in the State of New York or the State of Illinois), in good
standing, having a principal office in the State of New York or the State of
Illinois, which is authorized under such laws to exercise corporate trust or
stockholder services powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000.00 or (b) an
affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment the Company shall mail notice thereof in writing to the
predecessor Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 22, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
23. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or otherwise under any employee plan or
arrangement, which plan or arrangement is existing as of the Distribution Date,
or upon the exercise, conversion or exchange of any other securities issued by
the Company on or prior to the Distribution Date, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Rights Certificates shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificates would be issued, and (ii) no such Rights Certificates shall
be issued if, and to the
-34-
<PAGE>
extent that appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
24. REDEMPTION, TERMINATION AND EXCHANGE.
(a) (i) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) the Stock Acquisition Date or (y) 5 P.M.,
Central time, on the Final Expiration Date, redeem all but not less than all of
the then outstanding Rights at a redemption price of $.01 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").
(ii) In addition, and notwithstanding the provisions of Section 24(a)(i),
the Board of Directors of the Company may redeem all but not less than all of
the then outstanding Rights at the Redemption Price following the Stock
Acquisition Date but prior to any event described in Section 13(a) either (x) in
connection with any event specified in Section 13(a) in which all holders of
Common Stock are treated alike and not involving (other than as a holder of
Common Stock being treated like all other such holders) an Acquiring Person or
an Affiliate or Associate thereof or any other Person in which such Acquiring
Person or Affiliate or Associate thereof has any interest, or any other Person
acting directly or indirectly on behalf of or in association with any such
Acquiring Person or Affiliate or Associate thereof, or (y) following the
occurrence of an event set forth in, and the expiration of any period during
which the holder of Rights may exercise the rights under, Section 11(a)(ii) if
and for as long as any Acquiring Person having triggered such event is not
thereafter the Beneficial Owner of securities representing 15% or more of the
outstanding shares of Common Stock, and at the time of redemption there are no
other Persons who are Acquiring Persons.
(b) In the case of a redemption permitted under Section 24(a)(i),
immediately upon the action of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have been filed with the
Rights Agent and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. In the case of a redemption
permitted only under Section 24(a)(ii), evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price only after ten Business
Days following the giving of notice of such redemption to the holders of such
Rights if no event set forth in Section 11(a)(ii) shall have occurred, and, if
such event shall have occurred, upon the later of ten Business Days following
the giving of such notice or the expiration of any period during which the
rights under Section 11(a)(ii) may be exercised. Within ten days after the
action of the Board of Directors ordering any such redemption of the Rights, the
Company shall give notice of such redemption to the Rights
-35-
<PAGE>
Agent and the holders of the then outstanding Rights by mailing such notice to
the Rights Agent and to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. 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.
In the case of a redemption permitted under Section 24(a)(i) or (ii), the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent of the Common Stock, and upon such action, all
outstanding Rights Certificates shall be null and void without any further
action by the Company.
(c) (i) Subject to the limitations of applicable law, the Board of
Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for (A) shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (the "Exchange Shares") or (B) Substitute
Consideration (as that term is defined below). The Board of Directors may
determine, in its sole discretion, whether to deliver Exchange Shares or
Substitute Consideration. Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any subsidiary of the Company, any employee benefit
plan of the Company or any such subsidiary, or any entity holding Common Stock
for or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding.
(ii) In the event the Board of Directors shall determine to deliver
Substitute Consideration in exchange for Rights, the Company shall (1) determine
the value of the Exchange Shares (the "Exchange Value"), and (2) with respect to
each Right to be exchanged, make adequate provision to substitute for Exchange
Shares the following (the "Substitute Consideration"): (v) cash, (w) Common
Stock or common stock equivalents (as that term is defined in Section 11(a)(iii)
hereof) or Preferred Stock or equivalent preferred stock (as that term is
defined in Section 11(b) hereof), (x) debt securities of the Company, (y) other
assets, or (z) any combination of the foregoing, having an
-36-
<PAGE>
aggregate value equal to the Exchange Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors
of the Company. For purposes of this Section 24(c), the value of a share of
Common Stock shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on the day that is the later of
(x) the first occurrence of an event described in Section 11(a)(ii) hereof and
(y) the date on which the Company's right of redemption pursuant to Section
24(a) expires; and the value of any common stock equivalent shall be deemed to
have the same value as the Common Stock on such date.
(iii) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to this Section 24(c), 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 Exchange Shares or Substitute Consideration for each Right
exchanged by such holder. 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 address 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 Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(iv) In the event that there shall not be sufficient shares of Common Stock
or Preferred Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this
Section 24(c), the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock or Preferred Stock for issuance upon
exchange of the Rights.
(v) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Rights Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this Section 24(c)(v), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to Section 11(d) hereof) for the
Trading
-37-
<PAGE>
Day immediately prior to the date of exchange pursuant to this Section 24(c).
25. NOTICE OF CERTAIN EVENTS. In case the Company shall propose (a) to
pay any dividend payable in stock of any class to the holders of Preferred Stock
or to make any other distribution to the holders of Preferred Stock (other than
a regular quarterly cash dividend out of earnings or retained earnings of the
Company) or (b) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (c) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (d) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) to, any other Person, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, in accordance
with Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (a) or (b) above at least 20 days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock whichever
shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) or 13(a) of this
Agreement shall occur, then, in any such case, the Company or the Principal
Party, as the case may be, shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) or 13(a)
hereof, as the case may be.
The failure to give notice required by this Section 25 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote upon any such action.
26. NOTICES. Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights Certificate to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid,
-38-
<PAGE>
addressed (until another address is filed in writing with the Rights Agent) as
follows:
LodgeNet Entertainment Corporation
808 West Avenue North
Sioux Falls, SD 47104
Attention: Eric R. Jacobsen, Esq.
Vice President, General Counsel
and Secretary
Subject to the provisions of Section 22, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sent by registered or certified
mail (and shall be deemed given upon receipt) addressed (until another address
is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
311 W. Monroe Street, 14th Floor
Chicago, Illinois 60606
Attention: Stock Transfer Representative for LodgeNet
Entertainment Corporation
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
27. SUPPLEMENTS AND AMENDMENTS. The Company and the Rights Agent may from
time to time supplement or amend this Agreement without approval of any holders
of Rights or Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) prior to the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable or (iv) on or following the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment unless
the Rights Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interests under this Agreement. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. For all
purposes of this Agreement, any calculation of the
-39-
<PAGE>
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Common Stock or any other securities of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement. Except as otherwise provided herein, the Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights Certificates and all other parties, and (y) not subject
the Board to any liability to the holders of the Rights Certificates.
29. SUCCESSORS. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the Common Stock).
31. SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
32. GOVERNING LAW. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and to
be performed entirely within such state.
-40-
<PAGE>
33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
34. DESCRIPTIVE HEADINGS. Descriptive headings of the several Sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: LODGENET ENTERTAINMENT CORPORATION
/s/ Steven J. Rindsig By: /s/ Eric R. Jacobsen
- -------------------------------- ------------------------------
Title: Associate General Counsel Title: Vice President, General
Counsel and Secretary
--------------------------- ------------------------------
Attest: HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
/s/ James S. Anderson By: /s/ Susan M. Shadel
- ------------------------------ --------------------------------
Title: Vice President Title: Assistant Vice President
------------------------ --------------------------------
-41-
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF SERIES A PARTICIPATING PREFERRED STOCK
OF
LODGENET ENTERTAINMENT CORPORATION
We, Tim C. Flynn, the Chief Executive Officer, and Eric R. Jacobsen, the
Secretary, of LodgeNet Entertainment Corporation, a corporation organized and
existing under the General Corporation Law of the State of Delaware, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the said Board of Directors on
February 28, 1997, adopted the following resolution creating a series of 200,000
shares of Preferred Stock designated as Series A Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby
is created, and that the designation and amount thereof and the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be designated
as "Series A Participating Preferred Stock," par value $.01 per share, and the
number of shares constituting such series shall be 200,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A
Participating Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the Corporation.
2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Participating Preferred Stock in preference to the holders of
shares of Common Stock, par value $.01 per share (the "Common Stock"), of the
Corporation and any other junior stock, shall be
A-1
<PAGE>
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Participating Preferred Stock in
an amount per share (rounded to the nearest cent) equal to the greater of
(a) $25.00, or (b) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Participating Preferred Stock. In the event the
Corporation shall at any time after the close of business on March 10, 1997 (the
"Rights Declaration Date") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares, by
reclassification or otherwise, then in each such case the amount to which
holders of shares of Series A Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per share on
the Series A Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Participating Preferred Stock unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly
A-2
<PAGE>
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than
30 days prior to the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Participating
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock into a greater number of shares, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by
reclassification or otherwise, then in each such case the number of votes
per share to which holders of shares of Series A Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by law, the holders of shares of Series A Participating
Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series A Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the holders of the Series A Participating Preferred
Stock,
A-3
<PAGE>
voting as a separate series from all other series of Preferred Stock and
classes of capital stock, shall be entitled to elect two members of the
Board of Directors in addition to any Directors elected by any other
series, class or classes of securities and the authorized number of
Directors will automatically be increased by two. Promptly thereafter, the
Board of Directors of this Corporation shall, as soon as may be
practicable, call a special meeting of holders of Series A Participating
Preferred Stock for the purpose of electing such members of the Board of
Directors. Said special meeting shall in any event be held within 45 days
of the occurrence of such arrearage.
(ii) During any period when the holders of Series A Participating
Preferred Stock, voting as a separate series, shall be entitled and shall
have exercised their right to elect two Directors, then and during such
time as such right continues (a) the then authorized number of Directors
shall be increased by two, and the holders of Series A Participating
Preferred Stock, voting as a separate series, shall be entitled to elect
the additional Directors so provided for, and (b) each such additional
Director shall not be a member of any existing class of the Board of
Directors, but shall serve until the next annual meeting of stockholders
for the election of Directors, or until his or her successor shall be
elected and shall qualify, or until his or her right to hold such office
terminates pursuant to the provisions of this Section 3(C).
(iii) A Director elected pursuant to the terms hereof may be removed
with or without cause by the holders of Series A Participating Preferred
Stock entitled to vote in an election of such Director.
(iv) If, during any interval between annual meetings of stockholders
for the election of Directors and while the holders of Series A
Participating Preferred Stock shall be entitled to elect two Directors,
there are fewer than two such Directors in office by reason of resignation,
death or removal, then, promptly thereafter, the Board of Directors shall
call a special meeting of the holders of Series A Participating Preferred
Stock for the purpose of filling such vacancy(ies) and such vacancy(ies)
shall be filled at such special meeting. Such special meeting shall in any
event be held within 45 days of the occurrence of any such vacancy(ies).
(v) At such time as the arrearage is fully cured, and all dividends
accumulated and unpaid on any shares of Series A Participating Preferred
Stock outstanding are paid, and, in addition thereto, at least one regular
A-4
<PAGE>
dividend has been paid subsequent to curing such arrearage, the term of
office of any Director elected pursuant to this Section 3(C), or his or her
successor, shall automatically terminate, and the authorized number of
Directors shall automatically decrease by two, and the rights of the
holders of the shares of the Series A Participating Preferred Stock to vote
as provided in this Section 3(C) shall cease, subject to renewal from time
to time upon the same terms and conditions.
(D) Except as set forth herein or as otherwise provided by law,
holders of Series A Participating Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock and any other
capital stock of the Corporation having general voting rights as set forth
herein) for taking any corporate action.
4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either as to
dividends or
A-5
<PAGE>
upon dissolution, liquidation or winding up) to the Series A Participating
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock or any shares of stock ranking on a
parity with the Series A Participating Preferred Stock except in accordance
with a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The 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.
5. REACQUIRED SHARES. Any shares of Series A Participating Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Participating Preferred Stock shall have
received per share, the greater of $1,000.00 or 1,000 times the payment made per
share of Common Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing
(i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted
as set forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and
A-6
<PAGE>
recapitalization with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Participating Preferred Stock and Common Stock,
respectively, holders of Series A Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series A Participating Preferred Stock then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series A
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change of
shares of Series A Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator
A-7
<PAGE>
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that are outstanding immediately prior to such event.
8. REDEMPTION. The shares of Series A Participating Preferred Stock
shall not be redeemable.
9. RANKING. The Series A Participating Preferred Stock shall rank junior
to all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
10. AMENDMENT. The Certificate of Incorporation and the By-Laws of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of
Series A Participating Preferred Stock voting separately as a class.
11. FRACTIONAL SHARES. Series A Participating Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury as of the ___ day of
March 1997.
---------------------------------------
Tim C. Flynn, Chief Executive Officer
Attest:
---------------------------------------
Eric R. Jacobsen, Secretary
A-8
<PAGE>
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R-______________ _____________ Rights
NOT EXERCISABLE AFTER FEBRUARY 28, 2007, OR EARLIER IF NOTICE OF REDEMPTION
IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE ISSUED TO A PERSON
WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
LODGENET ENTERTAINMENT 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 February 28, 1997 (the "Rights
Agreement") between LodgeNet Entertainment Corporation, a Delaware
corporation (the "Company"), and Harris Trust and Savings Bank, an Illinois
banking corporation (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 P.M. (Central time) on March 5, 2007, at the office
of the Rights Agent designated for such purpose, one one-thousandth of a
fully paid, nonassessable share of Series A Participating Preferred Stock
(the "Preferred Stock") of the Company, at a purchase price of $60.00 per one
one-thousandth of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the appropriate Form of Election to
Purchase and Certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of the
close of business on the record date relating to the initial distribution of the
- ---------------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
<PAGE>
Rights, based on the Preferred Stock as constituted at such date. As provided
in the Rights Agreement, the Purchase Price and the number of shares of
Preferred Stock or other securities which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised (other than pursuant
to Section 11(a)(ii) of the Rights Agreement) in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised. If this Rights
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Rights
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right. Subject to the provisions of the Rights Agreement, the
Company, at its option, may elect to mail payment of the redemption price to the
registered holder of the Right at the time of redemption, in which event this
certificate may become void without any further action by the Company.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose
B-2
<PAGE>
the holder of shares of Preferred Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated: ____________, 19__.
Attest: LODGENET ENTERTAINMENT CORPORATION
By
- ---------------------------- -------------------------------
Title Title
---------------------- ----------------------------
Countersigned:
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By
-------------------------
B-3
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, _______________________________ hereby sells, assigns
and transfers unto _____________________________
_______________________________________________________________
(please print name and address of transferee)
_______________________________________________________________ this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________ Attorney, to transfer
the within Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ____________, 19___.
----------------------------------
Signature
Signature Guaranteed:
B-4
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, 19__.
----------------------------------
Signature
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To: LODGENET ENTERTAINMENT CORPORATION
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
(or such other securities of the Company) issuable upon the exercise of the
Rights and requests that certificates for such shares be issued in the name of:
- --------------------------------------------------------------------------------
(Please insert social security or other identifying number)
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless such Person requests that the Rights
Certificate be registered in the name of and delivered to:
- --------------------------------------------------------------------------------
Please insert social security or other identifying number (complete only if
Rights Certificate is to be registered in a name other than the undersigned)
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: ____________, 19__.
----------------------------------
Signature
Signature Guaranteed:
B-6
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement); and
(3) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, 19__.
----------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-7
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To: LODGENET ENTERTAINMENT CORPORATION
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
(or such other securities of the Company or any other Person) issuable upon the
exercise of the Rights and requests that certificates for such shares be issued
in the name of:
- --------------------------------------------------------------------------------
(Please insert social security or other identifying number)
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless such Person requests that the Rights
Certificate be registered in the name of and delivered to:
- --------------------------------------------------------------------------------
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in a name other than
the undersigned)
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: ____________, 19__.
----------------------------------
Signature
Signature Guaranteed:
B-8
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, 19__.
----------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the fact of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-9
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS
On February 28, 1997, the Board of Directors of LodgeNet Entertainment
Corporation (the "Company") declared a dividend distribution of one "Right" for
each outstanding share of common stock, par value $.01 per share (the "Common
Stock"), of the Company to stockholders of record at the close of business on
March 10, 1997 (the "Record Date"). Except as set forth below, each Right, when
exercisable, entitles the registered holder to purchase from the Company one
one-thousandth of a share of a new series of preferred stock, designated as
Series A Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock"), at a price of $60.00 (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Harris Trust and Savings Bank, as
"Rights Agent."
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights certificates will
be distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earliest of (i) a public announcement
that a person, entity or group of affiliated or associated persons and/or
entities (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common Stock,
other than as a result of repurchases of stock by the Company or certain
inadvertent actions by institutional or certain other stockholders, or (ii) ten
days (unless such date is extended by the Board of Directors) following the
commencement of (or a public announcement of an intention to make) a tender
offer or exchange offer which would result in any person, entity or group of
affiliated or associated persons and/or entities becoming an Acquiring Person.
Until the Distribution Date the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with this Summary of Rights. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with Common Stock certificates. From as soon as
practicable after the Record Date and until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuance of the Common Stock 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 Stock outstanding as of
the Record Date (with or without this Summary of Rights attached) will also
constitute the transfer of
C-1
<PAGE>
the Rights associated with the Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution Date,
and the separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on the earliest of (i) February 28, 2007, (ii) consummation of a
merger transaction with a Person or group who acquired Common Stock pursuant
to a Permitted Offer (as defined below), and is offering in the merger the
same price per share and form of consideration paid in the Permitted Offer,
or (iii) redemption or exchange of the Rights by the Company as described
below.
The number of Rights associated with each share of Common Stock shall be
proportionately adjusted to prevent dilution in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the Common Stock. The
Purchase Price payable, and the number of shares of Preferred Stock or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for Preferred Stock, certain convertible securities or
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends
out of earnings or retained earnings) or of subscription rights or warrants
(other than those referred to above). With certain exceptions, no adjustments
in the Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.
In the event that, after the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such, the
Company is involved in a merger or other business combination transaction
(whether or not the Company is the surviving corporation) or 50% or more of the
Company's assets or earning power are sold (in one transaction or a series of
transactions), proper provision shall be made so that each holder of a Right
(other than an Acquiring Person) shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price, that number of
shares of common stock of either the Company, in the event that it is the
surviving corporation of a merger or consolidation, or the acquiring company
(or, in the event there is more than one acquiring company, the acquiring
company receiving the greatest portion of the assets or
C-2
<PAGE>
earning power transferred) which at the time of such transaction would have a
market value of two times the Purchase Price (such right being called the
"Merger Right"). In the event that a Person becomes the beneficial owner of 15%
or more of the outstanding shares of Common Stock (unless pursuant to a tender
offer or exchange offer for all outstanding shares of Common Stock at a price
and on terms determined prior to the date of the first acceptance of payment for
any of such shares by at least a majority of the members of the Board of
Directors who are not officers of the Company and are not Acquiring Persons or
Affiliates or Associates thereof to be both adequate and otherwise in the best
interests of the Company and its stockholders (a "Permitted Offer")), then
proper provision shall be made so that each holder of a Right will for a 60-day
period (subject to extension under certain circumstances) thereafter have the
right to receive upon exercise that number of shares of Common Stock (or, at the
election of the Company, which election may be obligatory if sufficient
authorized shares of Common Stock are not available, a combination of Common
Stock, property, other securities (E.G., Preferred Stock) and/or a reduction in
the exercise price of the Right) having a market value of two times the Purchase
Price (such right being called the "Subscription Right"). The holder of a Right
will continue to have the Merger Right whether or not such holder exercises the
Subscription Right. Notwithstanding the foregoing, upon the occurrence of any
of the events giving rise to the exercisability of the Merger Right or the
Subscription Right, any Rights that are or were at any time after the
Distribution Date owned by an Acquiring Person shall immediately become null and
void.
At any time prior to the earlier to occur of (i) a Person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Company may thereafter redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price (i) if
such redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not involving an
Acquiring Person or certain related Persons or (ii) following an event giving
rise to, and the expiration of the exercise period for, the Subscription Right
if and for as long as the Acquiring Person triggering the Subscription Right
beneficially owns securities representing less than 15% of the outstanding
shares of Common Stock and at the time of redemption there are no other
Acquiring Persons. The redemption of Rights described in the preceding sentence
shall be effective only as of such time when the Subscription Right is not
exercisable, and in any event, only after ten business days' prior notice. Upon
the effective date of the 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.
C-3
<PAGE>
Subject to applicable law, the Board of Directors, at its option, may at
any time after a Person becomes an Acquiring Person (but not after the
acquisition by such Person of 50% or more of the outstanding Common Stock),
exchange all or part of the then outstanding and exercisable Rights (except for
Rights which have become void) for shares of Common Stock at a rate of one share
of Common Stock per Right or, alternatively, for substitute consideration
consisting of cash, securities of the Company or other assets (or any
combination thereof).
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company may
issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential quarterly dividend in an amount equal
to 1,000 times the dividend declared on each share of Common Stock, but in no
event less than $25.00. In the event of liquidation, the holders of shares of
Preferred Stock will receive a preferred liquidation payment equal to the
greater of $1,000.00 or 1,000 times the payment made per each share of Common
Stock. Each share of Preferred Stock will have 1,000 votes, voting together
with the shares of Common Stock. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount and type of
consideration received per share of Common Stock. The rights of the Preferred
Stock as to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions. Fractional
shares of Preferred Stock will be issuable; however, (i) the Company may elect
to distribute depositary receipts in lieu of such fractional shares and (ii) in
lieu of fractional shares other than fractions that are multiples of one
one-thousandth of a share, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. The Company and the Rights Agent retain broad
authority to amend the Rights Agreement; however, following any Distribution
Date any amendment may not adversely affect the interests of holders of Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. THIS
SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, WHICH IS
INCORPORATED HEREIN BY REFERENCE.
C-4
