SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - AUGUST 23, 1996
(Date of Earliest Event Reported)
BIG ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Commission File No. 0-22908
FLORIDA 65-0385636
(State of Incorporation) (I.R.S. Employer
Identification No.)
2255 GLADES ROAD, SUITE 237W, BOCA RATON, FLORIDA 33431
- ------------------------------------------------- -----
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (407) 998-8000
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ITEM 5. OTHER EVENTS
ADOPTION OF STOCKHOLDER RIGHTS PLAN
On August 23, 1996, the Board of Directors of the Company declared
a dividend of one Common Stock Purchase Right (the "Right(s)") for each
outstanding share of Common Stock, par value $.01 per share (the "Common
Stock"), of the Company. The dividend is payable as of September 4, 1996 to
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one share of Common Stock at a per share price of
$25.00 (the "Exercise Price"), subject to certain adjustments. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and American Stock Transfer & Trust Company, as
Rights Agent ("Rights Agent"), dated as of August 23, 1996.
Initially the Rights will not be exercisable, certificates will
not be sent to stockholders, and the Rights will automatically trade with the
Common Stock.
The Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 15% or more of
the outstanding voting stock of the Company (an "Acquiring Person") and (ii) the
tenth business day (or such later date as may be determined by the
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Board of Directors and the Continuing Directors (as defined in the Rights
Agreement) prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or exchange
offer the consummation of which would result in the ownership of 30% or more of
the Company's outstanding voting stock (even if no shares are actually purchased
pursuant to such offer); prior thereto, the Rights would not be exercisable,
would not be represented by a separate certificate, and would not be
transferable apart from the Company's Common Stock, but will instead be
evidenced, with respect to any of the Common Stock certificates outstanding as
of September 4, 1996, by such Common Stock certificate with a copy of this
Summary of Rights attached thereto. An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan, or (D) any person or group whose
ownership of 15% or more of the shares of voting stock of the Company then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person or (ii) a reduction in the number of issued and outstanding
shares of
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voting stock of the Company pursuant to a transaction or transactions approved
by the Board of Directors (provided that any person or group that does not
become an Acquiring Person by reason of clause (i) or (ii) above shall become an
Acquiring Person upon acquisition of an additional 1% of the Company's voting
stock unless such acquisition of additional voting stock will not result in such
person or group becoming an Acquiring Person by reason of such clause (i) or
(ii)) or (E) any Person who, as of March 16, 1996, together with all Affiliates
and Associates of such Person, was the Beneficial Owner of 15% or more of the
Voting Stock of the Company outstanding as of such date; PROVIDED, HOWEVER, that
any Person described in this clause (E) shall no longer be an exempt person and
shall become an Acquiring Person if such Person, together with all Affiliates
and Associates of such Person, from May 16, 1996 acquires Beneficial Ownership
of an additional 5% or more of the Voting Stock (unless such acquisition is
pursuant to a transaction described in clause (D)(i) or (D)(ii) above).
Until the Distribution Date (or earlier redemption or expiration
of the Rights), new Common Stock certificates issued after September 4, 1996
will contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Company's Common Stock certificates
outstanding as of September 4, 1996 with or without a copy of the Summary of
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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
("Right Certificates") will be mailed to holders of record of the Company's
Common Stock as of the close of business on the Distribution Date and such
separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on September 4, 2006, unless earlier
redeemed by the Company as described below.
The number of shares of Common Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed, in the event that, after
the time that the Rights become exercisable, the Company were to be acquired in
a merger or other business combination (in which any shares of the Company's
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Company and its subsidiaries
(taken
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as a whole) were to be sold or transferred in one or a series of related
transactions, the Rights Agreement provides that proper provision will be made
so that each holder of record of a Right will from and after such date have the
right to receive, upon payment of the Exercise Price, that number of shares of
common stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price. In addition, unless the
Rights are earlier redeemed, if a person or group becomes an Acquiring Person,
the Rights Agreement provides that proper provision will be made so that each
holder of record of a Right, other than the Acquiring Person (whose Rights will
thereupon become null and void), will thereafter have the right to receive, upon
payment of the Exercise Price, that number of shares of the Company's Common
Stock having a market value at the time of the transaction equal to two times
the Exercise Price.
Fractions of shares of Common Stock may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares.
At any time on or prior to the close of business on the tenth day
after the time that a person has become an Acquiring Person (or such later date
as a majority of the Board of Directors and a majority of the Continuing
Directors may determine), the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right
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("Redemption Price"). The Rights may be redeemed after the time that any Person
has become an Acquiring Person only if approved by a majority of the Continuing
Directors. Immediately upon the effective time of the action of the Board of
Directors of the Company authorizing redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of the
Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may,
except with respect to the redemption price or date of expiration of the Rights,
amend the Rights in any manner, including an amendment to extend the time period
in which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement from and after the time that any Person
becomes an Acquiring Person requires the approval of a majority of the
Continuing Directors (as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group who attempts to acquire the
Company on terms not
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approved by the Company's Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the Board since they
may be redeemed by the Company at $.01 per Right at any time until the close of
business on the tenth day (or such later date as described above) after a person
or group has obtained beneficial ownership of 15% or more of the voting stock.
The form of Rights Agreement between the Company and American
Stock Transfer & Trust Company, as rights agent, specifying the terms of the
Rights, which includes as Exhibit A the form of Summary of Rights to Purchase
Common Stock and as Exhibit B the form of Rights Certificate are attached hereto
as exhibits and incorporated herein by reference. The foregoing description of
the Rights is qualified by reference to such exhibits.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(c) Exhibits.
1. Rights Agreement dated as of August 23, 1996 between Big
Entertainment, Inc. and American Stock Transfer & Trust Company as
Rights Agent.
2. Press Release, dated August 29, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
BIG ENTERTAINMENT, INC.
By: /s/ MITCHELL RUBENSTEIN
------------------------
Mitchell Rubenstein
Chairman of the Board and Chief
Executive Officer
September 4, 1996
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
1. Rights Agreement dated as of August 23,
1996 between Big Entertainment, Inc.
and American Stock Transfer & Trust
Company as Rights Agent.
2. Press Release, dated August 29, 1996.
EXHIBIT 1
RIGHTS AGREEMENT
by and between
BIG ENTERTAINMENT, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
Dated as of
August 23, 1996
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TABLE OF CONTENTS
SECTION PAGE
1. CERTAIN DEFINITIONS................................................. 1
2. APPOINTMENT OF RIGHTS AGENT......................................... 12
3. ISSUANCE OF RIGHT CERTIFICATES...................................... 13
4. FORM OF RIGHT CERTIFICATES.......................................... 16
5. COUNTERSIGNATURE AND REGISTRATION................................... 17
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR
STOLEN RIGHT CERTIFICATES....................................... 18
7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE
OF RIGHTS....................................................... 20
8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.................. 24
9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON
STOCK........................................................... 25
10. COMMON STOCK RECORD DATE........................................... 28
11. ADJUSTMENT OF EXERCISE PRICE OR NUMBER OF SHARES................... 28
12. CERTIFICATION OF ADJUSTED EXERCISE PRICE OR NUMBER
OF SHARES........................................................41
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER................................................ 42
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES............................ 49
15. RIGHTS OF ACTION................................................... 50
16. AGREEMENT OF RIGHT HOLDERS......................................... 51
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.................. 52
18. CONCERNING THE RIGHTS AGENT........................................ 53
19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF,
THE RIGHTS AGENT................................................ 54
20. DUTIES OF RIGHTS AGENT............................................. 55
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SECTION PAGE
21. CHANGE OF RIGHTS AGENT............................................. 59
22. ISSUANCE OF NEW RIGHT CERTIFICATES................................. 61
23. REDEMPTION......................................................... 61
24. NOTICE OF PROPOSED ACTIONS......................................... 63
25. NOTICES ......................................................... 64
26. SUPPLEMENTS AND AMENDMENTS......................................... 65
27. SUCCESSORS......................................................... 67
28. BENEFITS OF THIS RIGHTS AGREEMENT.................................. 67
29. FLORIDA CONTRACT................................................... 67
30. COUNTERPARTS....................................................... 68
31. DESCRIPTIVE HEADINGS............................................... 68
32. SEVERABILITY....................................................... 68
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
ii
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RIGHTS AGREEMENT
Agreement, dated as of August 23, 1996, by and between Big
Entertainment, Inc., a Florida corporation (the "Company"), and American Stock
Transfer & Trust Company (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on August 23, 1996, the Board of Directors of the Company
authorized the issuance of, and declared a dividend payable in, one right (a
"Right") for each share of Common Stock, $0.01 par value per share, of the
Company outstanding as of the close of business on September 4, 1996 (the
"Record Date"), each such Right representing the right to purchase one share of
Common Stock, upon the terms and subject to the conditions hereinafter set
forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Expiration Date or the Final Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
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(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 15% or more of the Voting Stock of the Company then outstanding; PROVIDED,
that an Acquiring Person shall not include (i) an Exempt Person (as such term is
hereinafter defined) or (ii) any Person, together with all Affiliates and
Associates of such Person, who or which would be an Acquiring Person solely by
reason of (A) being the Beneficial Owner of shares of Voting Stock of the
Company, the Beneficial Ownership of which was acquired by such Person pursuant
to any action or transaction or series of related actions or transactions
approved by the Board of Directors before such Person otherwise became an
Acquiring Person or (B) a reduction in the number of issued and outstanding
shares of Voting Stock of the Company pursuant to a transaction or a series of
related transactions approved by the Board of Directors of the Company;
PROVIDED, FURTHER, HOWEVER, that in the event such Person described in this
clause (ii) does not become an Acquiring Person by reason of subclause (A) or
(B) of this clause (ii), such Person nonetheless shall become an Acquiring
Person in the event such Person thereafter acquires Beneficial Ownership of an
additional 1% of the Voting Stock of the Company, unless the acquisition of such
additional Voting Stock would not result in such Person becoming an Acquiring
Person by reason of
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subclause (A) or (B) of this clause (ii). Notwithstanding the foregoing, if the
Board of Directors of the Company within 10 Business Days after the first date
on which there shall be a public announcement by any Person that such Person,
together with all Affiliates and Associates of such Person, is the Beneficial
Owner of Voting Stock of the Company such that such Person would be (but for
this sentence) an Acquiring Person, determines in good faith (but only if at the
time of such determination by the Board of Directors there are then in office
not less than two Continuing Directors and such action is approved by a majority
of the Continuing Directors then in office) that a Person who would otherwise be
an "Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a) has become such inadvertently, and such Person divests as promptly
as practicable as determined by the Board of Directors a sufficient number of
shares of Common Stock so that such Person would no longer be an "Acquiring
Person" as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed an "Acquiring Person" for any purposes of
this Rights Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended ("Exchange Act"), as in effect on the date of this Rights
Agreement.
(c) "Associate" of a Person (as such term is hereinafter defined) shall
mean (i) with respect to a
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corporation, any officer or director thereof or of any Subsidiary (as such term
is hereinafter defined) thereof, or any Beneficial Owner (as such term is
hereinafter defined) of 10% or more of any class of equity security thereof,
(ii) with respect to an association, any officer or director thereof or of a
Subsidiary thereof, (iii) with respect to a partnership, any general partner
thereof or any limited partner thereof who is, directly or indirectly, the
Beneficial Owner of a 10% ownership interest therein, (iv) with respect to a
business trust, any officer or trustee thereof or of any Subsidiary thereof, (v)
with respect to any other trust or an estate, any trustee, executor or similar
fiduciary or any Person who has a 10% or greater interest as a beneficiary in
the income from or principal of such trust or estate, (vi) with respect to a
natural person, any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person, and (vii) any Affiliate of such
Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have correlative
meanings):
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Regulations 13D and 13G
thereunder (or any comparable or successor law or
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regulation), in each case as in effect on the date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or the
fulfillment of a condition or both) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, other rights (other than these Rights),
warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person
shall not be deemed the "Beneficial Owner" of, or to "Beneficially
Own", securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange or (B)
the right to vote, alone or in concert with others, 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 securities if the agreement,
arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given in response to a proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2) is
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not at the time reportable by such Person on a Schedule 13D report
under the Exchange Act (or any comparable or successor report), other
than by reference to a proxy or consent solicitation being conducted by
such Person; or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (whether
or not in writing) for the purpose of acquiring, holding, voting
(except as described in clause (B) of subparagraph (ii) of this
paragraph (d)) or disposing of any securities of the Company; PROVIDED,
HOWEVER, that for purposes of determining Beneficial Ownership of
securities under this Rights Agreement, officers and directors of the
Company solely by reason of their status as such shall not constitute a
group (notwithstanding that they may be Associates of one another or
may be deemed to constitute a group for purposes of Section 13(d) the
Exchange Act) and shall not be deemed to own shares owned by another
officer or director of the Company.
Notwithstanding anything in this paragraph (d) to the contrary, a
Person shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own,"
any security beneficially owned by another Person solely by reason of an
agreement, arrangement or
6
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understanding with such other Person for the purposes of: (x) soliciting the
Company's stockholders for the election of director nominees or any other
stockholder resolution, the formation of and membership on any committee for the
purpose of promoting or opposing any stockholder resolution or for electing a
slate of nominees to the Company's Board of Directors, service on such a slate
of nominees, or agreement to a slate of director nominees, PROVIDED, that such
other Person retains the right at any time to withdraw as a nominee or member of
any such committee, and to withhold or revoke any vote or proxy for or against
any such stockholder resolution or for such slate of nominees; (y) entering into
revocable voting agreements or the granting or solicitation of revocable proxies
with respect to any of the matters described in the foregoing clause (x); or (z)
the sharing of expenses and the indemnification against expenses and liabilities
by any such other Person with respect to expenses incurred or conduct occurring
during the time such other Person is a nominee or a member of any such committee
described in the foregoing clause (x). Further, notwithstanding anything in this
paragraph (d) to the contrary, a Person engaged in the business of underwriting
securities shall not be deemed the "Beneficial Owner" of, or to "Beneficially
Own," any securities acquired in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
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State of Florida are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., New
York City time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the Common Stock, $.01 par value, of the Company. "Common Stock" when used with
reference to any Person other than the Company which shall be organized in
corporate form shall mean the capital stock or other equity security with the
greatest per share voting power of such Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits, losses, deductions and credits of such Person
and which shall be entitled to exercise the greatest voting power per unit of
such Person.
(h) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors prior to
the time that any Person became an Acquiring Person (other than pursuant to a
Qualifying Tender Offer) or (ii) subsequently
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became a member of the Board of Directors, and whose nomination for election or
election to the Board of Directors was recommended or approved by a majority of
the Continuing Directors then on the Board of Directors.
(i) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
(j) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan or employee stock plan of the
Company or any Subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Common Stock for or pursuant to the
terms of any such plan or (iv) any Person who, as of May 16, 1996, together with
all Affiliates and Associates of such Person, was the Beneficial Owner of 15% or
more of the Voting Stock of the Company outstanding as of such date; PROVIDED,
HOWEVER, that any Person described in this clause (E) shall no longer be an
exempt person and shall become an Acquiring Person if such Person, together with
all Affiliates and Associates of such Person, from May 16, 1996 acquires
Beneficial Ownership of an additional 5% or more of the Voting Stock, unless
such acquisition of an additional 5% or more of the Voting Stock was pursuant to
(i) any action or transaction or series of related actions or transactions
approved by the Board of Directors before such acquisition or (ii) a reduction
in the number of issued and outstanding
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shares of Voting Stock of the Company pursuant to a transaction or a series of
related transactions approved by the Board of Directors of the Company;
PROVIDED, FURTHER, HOWEVER, that in the event such Person described in this
clause (E) does not become an Acquiring Person by reason of clause (i) or (ii),
such Person nonetheless shall become an Acquiring Person in the event such
Person thereafter acquires Beneficial Ownership of an additional 1% of the
Voting Stock of the Company, unless the acquisition of such additional Voting
Stock would not result in such Person becoming an Acquiring Person by reason of
such clause (i) or (ii).
(l) "Exercise Price" shall have the meaning set forth in Sections 4 and
7(b) hereof.
(m) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(n) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(d) hereof.
(o) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation or other
entity.
(q) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
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(s) "Right Certificate" shall have the meaning set forth in Section
3(d) hereof.
(t) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) or such earlier date as a majority of the Continuing Directors
shall become aware of the existence of an Acquiring Person.
(u) "Subsidiary" of a Person shall mean any corporation or other entity
of which securities or other ownership interests having voting power sufficient
to elect a majority of the board of directors or other persons performing
similar functions are beneficially owned, directly or indirectly, by such Person
or by any corporation or other entity that is otherwise controlled by such
Person.
(v) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
(w) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(x) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of any security, instrument or right,
including Rights, shares of Common Stock and shares of Preferred Stock.
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(y) "Voting Stock" shall mean (i) the Common Stock of the Company and
(ii) any other shares of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Stock
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. For purposes of this
Agreement, a stated percentage of the Voting Stock shall mean a number of shares
of the Voting Stock as shall equal in voting power that stated percentage of the
total voting power of the then outstanding shares of Voting Stock in the
election of a majority of the Board of Directors or in respect of any merger,
consolidation, sale of all or substantially all of the Company's assets,
liquidation, dissolution or winding up. Any determination required to be made by
the Board of Directors of the Company for purposes of applying the definitions
contained in this Section 1 shall be made by the Board of Directors in its good
faith judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
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Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) On the Record Date (or as soon as practicable thereafter), the
Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "Summary of Rights"),
by first class mail, postage prepaid, 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.
(b) Until the close of business on the day which is the earlier of (i)
the tenth day after the Stock Acquisition Date or (ii) the tenth business day
(or such later date as may be determined by action of the Board of Directors
(but only if at the time of such determination there are then in office not less
than two Continuing Directors and such action is approved by a majority of the
Continuing Directors then in office) prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Exempt Person) of, or the first public announcement of the intent of any
Person (other than an Exempt Person) to commence, a tender or exchange offer
upon the successful consummation of which such Person, together with its
Affiliates and Associates, would be the Beneficial Owner of 30% or more of the
then outstanding shares of Voting Stock of the Company (irrespective of whether
any shares are actually purchased pursuant to any such offer) (the earlier of
such dates being herein referred to as the "Distribution Date"), (x) the Rights
shall be evidenced by the certificates for
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Common Stock registered in the name of the holders of Common Stock (together
with, in the case of certificates for Common Stock outstanding as of the Record
Date, the Summary of Rights) and not by separate Right certificates and the
record holders of such certificates for Common Stock shall be the record holders
of the Rights represented thereby and (y) each Right shall be transferable only
simultaneously and together with the transfer of a share of Common Stock
(subject to adjustment as hereinafter provided). Until the Distribution Date
(or, if earlier, the Expiration Date or Final Expiration Date), the surrender
for transfer of any certificate for Common Stock shall constitute the surrender
for transfer of the Right or Rights associated with the Common Stock evidenced
thereby, whether or not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date (or, in certain circumstances as provided in Section 22
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hereof, after the Distribution Date) shall have impressed, printed, written or
stamped thereon or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof to
the same number of Rights (subject to adjustment) as the number of
shares of Common Stock represented by this certificate, such Rights
being on the terms provided under the Rights Agreement between Big
Entertainment, Inc. and American Stock Transfer & Trust Company (the
"Rights Agent"), dated as of August 23, 1996 (as it may be amended from
time to time the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Big Entertainment, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights shall
be evidenced by separate certificates and shall no longer be evidenced
by this certificate. Big Entertainment, Inc. shall mail to the
registered 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 AS PROVIDED IN SECTION 7(E) OF
THE RIGHTS AGREEMENT, RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY
ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Distribution Date, as shown by the records of
the Company, at the address of such holder shown on such records, a certificate
in the form provided by Section 4 hereof (a "Right Certificate"), evidencing one
Right (subject to adjustment as provided herein) for each share of Common Stock
so
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<PAGE>
held. As of and after the Distribution Date, the Rights shall be evidenced
solely by Right Certificates and may be transferred by the transfer of the Right
Certificate as permitted hereby, separately and apart from any transfer of one
or more shares of Common Stock.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares, certificate and assignment to be printed
on the reverse thereof), when, as and if issued, shall 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 may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Common
Stock or the Rights may from time to time be listed or as the Company may deem
appropriate to conform to usage or otherwise and as are not inconsistent with
the provisions of this Rights Agreement. Subject to the provisions of Section 22
hereof, Right Certificates evidencing Rights whenever issued, (i) shall be dated
as of the date of issuance of the Rights they represent and (ii) subject to
adjustment from time to time as provided herein, on their face shall entitle the
holders thereof to purchase such number of shares of Common Stock as shall be
set forth therein at the price payable upon exercise of a Right provided by
Section 7(b) hereof as the same may from time to time be adjusted as provided
herein (the "Exercise Price").
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<PAGE>
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Each Right Certificate shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President, either manually
or by facsimile signature, and 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. Each Right
Certificate 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
Right Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed on
behalf of the Company by any person who, on the date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for surrender of
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Right Certificates upon exercise or transfer, and in such other locations as may
be required by law, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 7(e), 7(f) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the earlier of the Expiration Date or the Final
Expiration Date, any Right Certificate, may be (i) transferred or (ii) split up,
combined or exchanged for one or more other Right Certificates, entitling the
registered holder to purchase a like number of shares of Common Stock as the
Right Certificate or Rights Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer any Right Certificate
shall surrender the Right Certificate at the office of the Rights Agent
designated for the surrender of Right Certificates with the form of certificate
and assignment on the reverse side thereof duly endorsed (or enclosed with such
Right Certificate a written instrument of transfer in form satisfactory to the
Company and the Rights Agent), duly executed by the registered holder thereof
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<PAGE>
or his attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate to be split up, combined or
exchanged at the office of the Rights Agent designated therefor. Thereupon, the
Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any Transfer Tax
that may be imposed in connection with any transfer, split up, combination or
exchange of any Right Certificates.
(b) Subject to the provisions of Section 7(e), 7(f) and 14 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 Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them and, if requested by the Company, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, or
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company shall issue and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
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<PAGE>
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRA- TION DATE OF
RIGHTS.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e) and 23(a) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York, New York, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earlier of (i)September 4, 2006 (the
"Final Expiration Date") or (ii) the date on which the Rights are redeemed as
provided in Section 23 hereof (such earlier date being herein referred to as the
"Expiration Date").
(b) The Exercise Price shall initially be $25.00 for each share of
Common Stock issued pursuant to the exercise of a Right. The Exercise Price and
the number of shares of Common Stock or other securities to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof. The Exercise Price shall be payable
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<PAGE>
in lawful money of the United States of America, in accordance with paragraph
(c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Company or the Rights Agent of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Stock
of the Company one or more certificates representing the number of shares of
Common Stock to be so purchased, and the Company hereby authorizes and directs
such transfer agent to comply with all such requests, (ii) as provided in
Section 14(b), at the election of the Company, cause depositary receipts to be
issued in lieu of fractional shares of Common Stock, (iii) if the election
provided for in the immediately preceding clause (ii) has not been made,
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 14(b) hereof, (iv)
after receipt of such Common Stock certificates and, if applicable, depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (v) when appropriate, after
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<PAGE>
receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate; PROVIDED, HOWEVER, that in the case of a
purchase of securities, other than Common Stock, pursuant to Section 13 hereof,
the Rights Agent shall promptly take the appropriate actions corresponding in
such case to that referred to in the foregoing clauses (i) through (v) of this
Section 7(c). Notwithstanding the foregoing provisions of this Section 7(c), the
Company may suspend the issuance of shares of Common Stock upon exercise of a
Right for a reasonable period, not in excess of 90 days, during which the
Company seeks to register under the Securities Act of 1933, as amended (the
"Act"), and any applicable securities law of any other jurisdiction, the shares
of Common Stock to be issued pursuant to the Rights; PROVIDED, HOWEVER, that
nothing contained in this Section 7(c) shall relieve the Company of its
obligations under Section 9(c) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or his
assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, any Rights that are beneficially owned by (x)
such
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<PAGE>
Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (y) a
transferee of such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. 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 Right Certificates or any other Person as a
result of its failure to make any determination with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued pursuant to Section 3 hereof that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant to
the provisions of this Section 7(e) or any Associate or Affiliate
23
<PAGE>
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
provisions of this Section 7(e) or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the provisions of this Section 7(e) shall
be cancelled.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate following the form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof
24
<PAGE>
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 cancel and retire, any Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.
(a) The Company covenants and agrees that from and after the time that
the Rights become exercisable it will cause to be reserved and kept available
out of its authorized and unissued shares of Common Stock or out of authorized
and issued shares of Common Stock held in its treasury, such number of shares of
Common Stock as will from time to time be sufficient to permit the exercise in
full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares of Common Stock issued or
reserved for issuance in accordance with this Rights Agreement to be listed,
upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in the National
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Association of Securities Dealers' Automated Quotation System or any successor
thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to insure that all shares of Common Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Common Stock 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) until the earlier of (A) the date as of which the Rights are no longer
exercisable for Common Stock, and (b) the date of the expiration of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
days, the issuance of shares of Common Stock upon exercise of a Right in order
to prepare and file a registration statement under the Act and permit it to
become effective. The Company will also take such
26
<PAGE>
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the exercisability
of the Rights. Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Act (if required) shall have been declared
effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Common Stock issued or delivered upon the exercise of Rights. The Company
shall not, however, be required to pay any Transfer Tax which may be payable in
respect of any transfer or delivery of a Right Certificate to a Person other
than, or the issuance or delivery of certificates for Common Stock upon exercise
of Rights in a name other than that of, the registered holder of the Right
Certificate, and the Company shall not be required to issue or deliver a Right
Certificate or certificate for Common Stock to a Person other than such
registered holder until any such Transfer Tax shall have been paid (any such
Transfer Tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such Transfer Tax is due.
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Section 10. COMMON STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Common Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Stock represented thereby on, and such certificate shall be dated as of,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; PROVIDED, HOWEVER, that, if the date of such surrender and
payment is a date upon which the Common Stock transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated as of, the next succeeding
Business Day on which the Common Stock transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
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.
Section 11. ADJUSTMENT OF EXERCISE PRICE OR NUMBER OF SHARES. The
Exercise Price, the number and kind of shares which may be purchased upon
exercise of a Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
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<PAGE>
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare or pay any dividend on Common Stock payable in
shares of Common Stock, (B) subdivide or split the outstanding shares of Common
Stock into a greater number of shares or (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Common Stock, then and in each such
event the number of shares of Common Stock issuable upon the exercise of a Right
after the record date for such event (if one shall have been established or, if
not, after the date of such event) shall be the number of shares of Common Stock
issuable immediately prior to such event multiplied by a fraction the numerator
of which is the number of Rights outstanding immediately prior to such event and
the denominator of which is the number of Rights outstanding immediately after
such event and the Exercise Price after such event shall be the Exercise Price
in effect immediately prior to such event multiplied by such fraction. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made
29
<PAGE>
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event that any Person (other than an Exempt Person),
alone or together with its Affiliates and Associates, shall become an
Acquiring Person, then, subject to the last sentence of Section 23(a)
and except as otherwise provided in this Section 11, each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have
the right to receive upon exercise of such Right in accordance with the
terms of this Rights Agreement and payment of the Exercise Price, the
greater of (1) the number of shares of Common Stock for which such
Right was exercisable immediately prior to the first occurrence of the
event described in this Section 11(a)(ii) or (2) such number of shares
of Common Stock, based on the per share Fair Market Value of the Common
Stock (determined pursuant to Section 11(d) hereof) on the date of such
first occurrence, having a value equal to twice the Exercise Price;
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).
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(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Common Stock or securities convertible into Common Stock at a price
per share of Common Stock (or having a conversion price per share, if a security
convertible into shares of Common Stock) less than the then current per share
Fair Market Value of the Common Stock (as defined in Section 11(d)) on such
record date, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of
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the Company, whose determination shall be described in a statement filed with
the Rights Agent. Shares of Common 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, options or warrants are not so issued, the
Exercise Price shall be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend not in excess of 150% of the previous
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price of the Common Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described
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<PAGE>
in a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one share of Common Stock and the denominator of which
shall be such current per share market price of the Common Stock. Such
adjustment shall be made successively whenever such a record date is fixed and
in the event that such distribution is not so made, the Exercise Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) For the purpose of this Rights Agreement, the "Fair Market Value"
of any share of Common Stock or any other stock or any Right or other security
or any other property on any date shall be determined as provided in this
Section 11(d). In the case of a publicly-traded stock or other security, the
Fair Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such stock or per unit of such other security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Fair Market Value per share of any share of Common Stock is determined during a
period which includes any date that is within 30 Trading Days after (i) the
ex-dividend date for a dividend or distribution on such stock payable in shares
of Common Stock or securities convertible into shares of Common Stock, or (ii)
the effective date of any subdivision, split, combination, consolidation,
reverse stock
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<PAGE>
split or reclassification of such stock, then, and in each such case, the Fair
Market Value shall be appropriately adjusted by the Board of Directors of the
Company to take into account ex- dividend or post-effective date trading. The
closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way (in either case, as reported in the applicable transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange), or, if the securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the applicable
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such security is listed or admitted to
trading; or, if not listed or admitted to trading on any national securities
exchange, the last quoted price (or, if not so quoted, the average of the high
bid and low asked prices) in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use; or, if no bids for such security
are quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in such
security selected by the Board of Directors of the Company. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which such security is listed or admitted to trading is open for the
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<PAGE>
transaction of business or, if such security is not listed or admitted to
trading on any national securities exchange, a Business Day. If a security is
not publicly held or not so listed or traded, "Fair Market Value" shall mean the
fair value per share of stock or per other unit of such other security, as
determined by an independent investment banking firm experienced in the
valuation of securities selected in good faith by the Board of Directors of the
Company, or, if no such investment banking firm is, in the good faith judgment
of the Board of Directors, available to make such determination, in good faith
by the Board of Directors of the Company. In the case of property other than
securities, the "Fair Market Value" thereof shall be determined in good faith by
the Board of Directors of the Company based upon such appraisals or valuation
reports of such independent experts as the Board of Directors of the Company
shall in good faith determine to be appropriate in accordance with good business
practices and the interests of the holders of Rights. Any such determination of
Fair Market Value shall be described in a statement filed with the Rights Agent
and shall be binding upon the Rights Agent.
(e) Unless the Company shall have exercised its election as provided in
Section 11(f), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of
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shares of Common Stock obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to the adjustment pursuant to this Section
11(e) by (y) the Exercise Price in effect immediately prior to such adjustment
of the Exercise Price and (ii) dividing the product so obtained by the Exercise
Price in effect immediately after such adjustment of the Exercise Price.
(f) The Company may elect on or after the date of any adjustment of the
Exercise Price pursuant to Section 11(b) and (c) to adjust the number of Rights
in substitution for any adjustment pursuant to Section 11(e) in the number of
shares of Common Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of shares of Common 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 obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days
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later than the date of the public announcement. If the Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(f), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights, if
any, to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required
by the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(g) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% of the Exercise
Price; provided, however, that any adjustments which by reason of this Section
11(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
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(h) Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Common Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Exercise Price and the number of shares to be issued upon exercise of the
Rights as in the initial Right Certificates issued hereunder but, nevertheless,
shall represent the Rights as so adjusted.
(i) Before taking any action that would cause an adjustment reducing
the Exercise Price per whole share of Common Stock upon exercise of the Rights
below the then par value, if any, of the shares of Common Stock, the Company
shall use its best efforts to take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of such Common Stock at such
adjusted Exercise Price per share.
(j) Anything in this Section 11 to the contrary notwithstanding, in the
event of any recapitalization, reorganization or partial liquidation of the
Company or similar transaction, the Company shall be entitled to make such
further adjustments in the number of shares of Common Stock which may be
acquired upon exercise of the Rights, and such adjustments in the Exercise Price
per share therefor, in addition to those adjustments expressly required by the
other paragraphs of this Section 11, as the Board of Directors of the Company
shall de-
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termine to be necessary or appropriate in order for the holders of the Rights in
such event to be treated equitably and in accordance with the purpose and intent
of this Rights Agreement or in order that any such event shall not, but for such
adjustment, in the opinion of counsel to the Company, result in the stockholders
of the Company being subject to any United States federal income tax liability
by reason thereof.
(k) If, at any time after the Rights first become exercisable pursuant
to the terms of this Rights Agreement, the number of shares of Common Stock that
are authorized but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights ("Available Shares") are not sufficient to
permit exercise in full of the Rights in accordance with the terms of this
Rights Agreement, including after giving effect to the adjustments provided for
in Section 11(a)(ii) hereof, then unless the Board of Directors shall have made
adequate provision in lieu thereof pursuant to Section 11(l) and subject to
Section 11(m), the number of shares of Common Stock for which each Right is
exercisable shall be adjusted by multiplying the number of shares of Common
Stock for which a Right would otherwise be exercisable without giving effect to
this Section 11(k) by a fraction, the numerator of which shall be the number of
Available Shares and the denominator of which shall be the aggregate number of
shares of Common Stock for which all outstanding Rights would otherwise be
exercisable without giving effect to this Section 11(k). In the event of an
adjustment to the number of shares of
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Common Stock for which a Right is exercisable pursuant to the preceding
sentence, the Exercise Price shall be automatically adjusted by the same
fraction appearing in the preceding sentence. The adjustment provided for in
this Section 11(k) shall be made after all other applicable adjustments to the
Exercise Price for each Right and the number of shares of Common Stock for which
each Right is exercisable shall have been made in accordance with the other
provisions of this Rights Agreement.
(l) In lieu of the adjustments provided in Section 11(k) above, the
Board of Directors may make adequate provision to substitute for the shares of
Common Stock in excess of the Available Shares to be issued upon exercise of the
Rights, upon payment of the applicable Exercise Price, other equity securities
of the Company (including, without limitation, shares, or units of shares, of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the Common Stock, are deemed in good
faith by the Board of Directors to have substantially the same value as shares
of Common Stock (such shares or units of shares of preferred stock are herein
called ("Common Stock equivalents")).
(m) If, upon the occurrence of the event described in Section
11(a)(ii), the number of shares of Common Stock that are authorized but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof, and if the Board of Directors
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shall determine in good faith that it is likely that sufficient additional
shares of Common Stock (or Common Stock equivalents) could be authorized for
issuance upon exercise in full of the Rights, then, the Board of Directors, if
it so elects, may suspend the exercisability of the Rights for a period of time
not more than ninety (90) days after the event described in Section 11(a)(ii),
in order that the Company may seek stockholder approval or take other
appropriate action for the authorization for such additional shares. During such
time of suspension no adjustment shall be made under Section 11(k). Such
suspension may be rescinded by the Board of Directors in its sole discretion at
any time, whereupon the adjustment provided for in Section 11(k) shall be
applicable, unless the Board of Directors shall have made adequate provision in
lieu thereof pursuant to Section 11(l). In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
times as the suspension is no longer in effect.
Section 12. CERTIFICATION OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11, 13 or 23(a),
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock a copy of such certificate and
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(c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25. Notwithstanding the foregoing sentence, 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.
Any adjustment to be made pursuant to Section 11, 13 or 23(a) of this Rights
Agreement shall be effective as of the date of the event giving rise to such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of any adjustment unless and until it shall have received such
certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) Except for any transaction approved by the Board of Directors (but
only if at the time of such approval by the Board of Directors there are then in
office not less than two Continuing Directors and such action is approved by a
majority of the Continuing Directors then in office), in the event that, at any
time on or after the Distribution Date, (x) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person or
Persons (other than an Exempt Person) and the Company shall not be the surviving
or continuing corporation of such consolidation or merger, or (y) any Person or
Persons (other than an Exempt Person) shall, directly or indirectly, consolidate
with, or merge with and into, the
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Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (other than
an Exempt Person) or of the Company or cash or any other property, or (z) the
Company or one or more of its Subsidiaries shall, directly or indirectly, sell
or otherwise transfer to any other Person or any Affiliate or Associate of such
Person, in one or more transactions, or the Company or one or more of its
Subsidiaries shall sell or otherwise transfer to any Persons in one or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole), then, on the first occurrence of any such event, proper provision shall
be made so that (i) each holder of record of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof and payment of the Exercise Price in accordance with the terms
of this Rights Agreement, such number of shares of validly issued, fully paid,
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined herein), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall, based on the Fair Market Value of the Common
Stock of the Principal Party on the date of the consummation of such
consolidation, merger, sale or transfer, equal twice the Exercise Price; (ii)
such Principal
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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 Rights Agreement; (iii) the term "Company" for all
purposes of this Rights Agreement shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with the provisions of Section 9 hereof applicable to the
reservation of Common Stock) 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; PROVIDED, HOWEVER, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
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exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which shares of Common Stock of the
Company are changed or otherwise exchanged or converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer
of the Common Stock of which has the greatest market value or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger or consolidation and that survives such merger or consolidation,
or, if there is more than one such Person, the Person the Common Stock
of which has the greatest market value or (y) if the Person that is the
other party to the merger or consolidation does not survive the merger
or consolidation, the Person that does survive the merger or
consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person
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that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions,
or, if each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so transferred
or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons as is the
issuer of Common Stock having the greatest market value of shares
outstanding; PROVIDED, HOWEVER, that in any such case, 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 of
another Person the Common Stock of which is and has been so registered,
the term "Principal Party" shall refer to such other Person, or if such
Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest market
value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger or
sale or transfer of assets or earning power referred to in Section
13(a) unless the Principal Party shall
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have a sufficient number of authorized shares of its Common Stock that have not
been issued or reserved for issuance to permit exercise in full of all Rights in
accordance with this Section 13 and unless prior thereto the Company and the
Principal Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the Principal Party shall, upon consummation
of such consolidation, merger or sale or transfer of assets or earning power,
assume this Rights Agreement in accordance with Section 13(a) hereof and that
all rights of first refusal or preemptive rights in respect of the issuance of
shares of Common Stock of the Principal Party upon exercise of outstanding
Rights have been waived and that such transaction shall not result in a default
by the Principal Party under this Rights Agreement, and further providing that,
as soon as practicable after the date of any consolidation, merger or sale or
transfer of assets or earning power referred to in Section 13(a) hereof, the
Principal Party will:
(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, use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and 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 date of expiration
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of the Rights, and similarly comply with applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements
for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act. In the event that any of the transactions
described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the
Rights which have not theretofore been exercised shall, subject to the
provisions of Section 7(e) hereof, thereafter be exercisable in the
manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal
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Party at less than the then Fair Market Value per share (determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Fair Market Value (other
than to holders of Rights pursuant to this Section 13) or (ii) providing for any
special tax or similar payment in connection with the issuance to any holder of
a Right of Common Stock of such Principal Party pursuant to the provisions of
this Section 13, then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been canceled,
waived or amended, or that the authorized securities shall be redeemed, so that
the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (I.E., Rights
to acquire less than one share of Common Stock), unless such fractional Rights
result from a transaction referred to in Section 11(a)(i) hereof. If the Company
shall determine not to issue such fractional Rights, then, in lieu of such
fractional Rights, there shall be paid to the holders of record of the Right
Certificates with regard to
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which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares (other than fractions which are integral multiples of
one-hundredth of a share). In lieu of issuing fractions of shares of Common
Stock, the Company may, at its election, issue depositary receipts evidencing
fractions of shares 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 of the rights, privileges and
preferences to which they would be entitled as owners of the Common Stock. If
the Company does not issue such fractional shares or depositary receipts in lieu
thereof, there shall be paid to the holders of record of Right Certificates at
the time such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the Fair Market Value of a share of Common
Stock.
(c) The holder of a Right by the acceptance of a Right expressly waives
his right to receive any fractional Right or any fractional shares of Common
Stock upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the
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respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the holders of record of the Common Stock); and any holder of
record of any Right Certificate (or, prior to the Distribution Date, of the
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Rights Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Rights Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Each 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 shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together, as
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applicable, with the Summary of Rights), which certificates for Common Stock
shall also constitute certificates for Rights, and not by separate Right
Certificates, and each Right shall be transferable only simultaneously and
together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock or any other
securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
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Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including
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the cost and expenses of defending against any claim of liability relating to
the Rights or this Rights Agreement.
(b) The Rights Agent 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 Rights Agreement in reliance upon any
Right 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.
Section 19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF, THE
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from 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 stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Rights
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, PROVIDED that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
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Agent shall succeed to the agency created by this Rights 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 Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; in case at that time any
of the Right Certificates shall not have been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name or in its
changed name; in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates by their acceptance thereof shall be bound:
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(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President
or any Vice President and by the Treasurer or the Secretary of the Company and
delivered to the Rights Agent. Any 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 Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
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(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any 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 Right Certificates after receipt of a certificate describing any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Common Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of the Rights Agreement.
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(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
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Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified mail. The Company
may remove the Rights Agent or any successor Rights Agent (with or without
cause) 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 the Preferred Stock by registered or certified 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. Notwithstanding the
foregoing provisions of this Section 21, in no event shall the resignation or
removal of a Rights Agent be effective until a successor Rights Agent shall have
been appointed and have accepted such appointment. If the Company shall fail to
make such appointment within a period of 30 days after such removal or after it
has been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by the holder of a Right Certificate (who
shall, with such notice, submit his Right Certificate for inspection by the
Company), then the incumbent Rights Agent or the holder of record of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
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business under the laws of the United States or of any state thereof, in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination in the
conduct of its corporate trust or stock transfer business by federal or state
authorities and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $5,000,000 or (b) an Affiliate
controlled by a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed, but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be. Notwithstanding the foregoing provisions, in the event of
resignation, removal or incapacity of the Rights Agent, the Company shall have
the
60
<PAGE>
authority to act as the Rights Agent until a successor Rights Agent shall have
assumed the duties of the Rights Agent hereunder.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Exercise Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Rights Agreement.
Section 23. REDEMPTION.
(a) The Company may, at its option, but only by the vote of a majority
of the Board of Directors, redeem all but not less than all of the then
outstanding Rights, at any time prior to the Close of Business on the earlier of
(i) the tenth day following the Stock Acquisition Date (subject to extension by
the Company as provided in Section 26 hereof) or (ii) the Final Expiration Date,
at a redemption price of $.01 per Right, subject to appropriate adjustment to
reflect any stock split, combination or reclassification involving the Common
Stock or any stock dividend on the Common Stock occurring after the date hereof
(the "Redemption Price"); PROVIDED, HOWEVER, that from and after the time that
any Person shall become an Acquiring Person, the Company may redeem the Rights
only if at the time of the action
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of the Board of Directors there are then in office not less than two Continuing
Directors and such redemption is approved by a majority of the Continuing
Directors then in office. Notwithstanding anything contained in this Agreement
to the contrary, the Rights shall not be exercisable pursuant to Section
11(a)(ii) prior to the expiration of the Company's right of redemption
hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the effective time of the action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 days after the effective time of the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made. At the option of the
Board of Directors, the Redemption Price may be paid in cash to each Rights
holder or by the issuance of shares (and, at the Company's election pursuant to
Section 14(b) hereof, cash or
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depositary receipts in lieu of fractions of shares) of Common Stock having a
Fair Market Value equal to such cash payment.
Section 24. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall propose (i)
to effect any of the transactions referred to in Section 11(a)(i) or 11(g) or
(ii) to offer to the holders of record of its Common Stock options, warrants, or
other rights to subscribe for or to purchase shares of Common Stock (including
any security convertible into or exchangeable for Common Stock) or shares of
stock of any class or any other securities, options, warrants, convertible or
exchangeable securities or other rights, or (iii) to effect any reclassification
of its Common Stock or any recapitalization or reorganization of the Company, or
(iv) to effect any consolidation or merger with or into, 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 Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 25,
notice of such proposed action, which shall specify the record date for the
purposes of such transaction referred to in Section 11(a)(i) or such dividend or
distribution, or the date on which such reclassification, recapitalization,
reorganization, consolidation,
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merger, sale or transfer of assets, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by the
holders of record of Common Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of
record of the Common Stock for purposes of such action, and in the case of any
such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock, whichever shall be the earlier. The failure to give notice
required by this Section 24 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.
(b) In case any of the transactions referred to in Section 11(a)(i) or
13 of this Rights Agreement are proposed, then, in any such case, the Company
shall give to each holder of Rights, in accordance with Section 25 hereof,
notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(i) or 13
hereof, as the case may be, and, upon consummating such transaction, shall
similarly give notice thereof to each holder of Rights.
Section 25. NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or
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<PAGE>
by the holder of record of any Right Certificate or Right to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Big Entertainment, Inc.
2255 Glades Road
Suite 237W
Boca Raton, Florida 33431
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attn: Wilbert Myles or Herbert Lemmer
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. For as long as the Rights are
then redeemable and except as provided in the last sentence of this Section 26,
the Company may in its sole and
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<PAGE>
absolute discretion, and the Rights Agent shall if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of the Rights. At any time when the Rights are not then redeemable and
except as provided in the last sentence of this Section 26, the Company may, and
the Rights Agent shall if the Company so directs, supplement or amend this
Rights Agreement without the approval of any holders of Right Certificates (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
or (iii) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable, provided that no such supplement or
amendment pursuant to this clause (iii) shall materially adversely affect the
interest of the holders of Right 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
26, the Rights Agent shall execute such supplement or amendment. This Agreement
may be amended or supplemented at any time with the approval of a majority of
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock). Notwithstanding anything contained in this Rights
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price or the Final Expiration Date and supplements or
amendments may be made after the time that any Person becomes an Acquiring
Person only if at the time
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of the action of the Board of Directors approving such supplement or amendment
there are then in office not less than two Continuing Directors and such
supplement or amendment is approved by a majority of the Continuing Directors
then in office.
Section 27. SUCCESSORS. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the holders of Common Stock in their
capacity as holders of the Rights) any legal or equitable right, remedy or claim
under this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the holders of record of
the Right Certificates (and, prior to the Distribution Date, the holders of
Common Stock in their capacity as holders of the Rights).
Section 29. FLORIDA CONTRACT. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Florida and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
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Section 30. COUNTERPARTS. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 31. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 32. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
BIG ENTERTAINMENT, INC.
By: /s/ MITCHELL RUBENSTEIN
-----------------------
Mitchell Rubenstein
Chairman of the Board and
Chief Executive Officer
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/ HERBERT LEMMER
----------------------
Herbert Lemmer
Senior Vice President
<PAGE>
EXHIBIT A
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
BIG ENTERTAINMENT, INC.
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On August 23, 1996, the Board of Directors of Big Entertainment, Inc.
(the "Company") declared a dividend distribution of one Common Stock Purchase
Right for each outstanding share of Common Stock, par value $.01 per share (the
"Common Stock"), of the Company. The distribution is payable as of September 4,
1996 to stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one share of common stock of the Company at
a per share price of $25.00 ("Exercise Price"). The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and American Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
AS DISCUSSED BELOW, INITIALLY THE RIGHTS WILL NOT BE EXERCISABLE,
CERTIFICATES WILL NOT BE SENT TO STOCKHOLDERS AND THE RIGHTS WILL AUTOMATICALLY
TRADE WITH THE COMMON STOCK.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day following a public announcement that a
person or group of affiliated or associated persons, with certain exceptions set
forth below, has acquired beneficial ownership of 15% or more of the outstanding
voting stock of the Company (an "Acquiring Person") and (ii) the tenth business
day (or such later date as may be determined by the Board of Directors and the
Continuing Directors (as defined in the Rights Agreement) prior to such time as
any person or group of affiliated or associated persons becomes an Acquiring
Person) after the date of the commencement or announcement of a person's or
group's intention to commence a tender or exchange offer the consummation of
which would result in the ownership of 30% or more of the Company's outstanding
voting stock (even if no shares are actually purchased pursuant to such offer);
prior thereto, the Rights would not be exercisable, would not be represented by
a separate certificate, and would not be transferable apart from the Company's
Common Stock, but will instead be
<PAGE>
evidenced, with respect to any of the Common Stock certificates outstanding as
of September 4, 1996, by such Common Stock certificate with a copy of this
Summary of Rights attached thereto. An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan, (D) any person or group whose
ownership of 15% or more of the shares of voting stock of the Company then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person or (ii) a reduction in the number of issued and outstanding
shares of voting stock of the Company pursuant to a transaction or transactions
approved by the Board of Directors (provided that any person or group that does
not become an Acquiring Person by reason of clause (i) or (ii) above shall
become an Acquiring Person upon acquisition of an additional 1% of the Company's
voting stock unless such acquisition of additional voting stock will not result
in such person or group becoming an Acquiring Person by reason of such clause
(i) or (ii)) or (E) any Person who, as of March 16, 1996, together with all
Affiliates and Associates of such Person, was the Beneficial Owner of 15% or
more of the Voting Stock of the Company outstanding as of such date; PROVIDED,
HOWEVER, that any Person described in this clause (E) shall no longer be an
exempt person and shall become an Acquiring Person if such Person, together with
all Affiliates and Associates of such Person, from May 16, 1996 acquires
Beneficial Ownership of an additional 5% or more of the Voting Stock (unless
such acquisition is pursuant to a transaction described in clause (D)(i) or
(D)(ii) above).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after September 4, 1996 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as of
September 4, 1996 with or without a copy of this Summary of Rights attached
thereto, 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 ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate certificates alone
will evidence the Rights from and after the Distribution Date.
<PAGE>
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on September 4, 2006, unless earlier
redeemed by the Company as described below.
The number of shares of Common Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed, in the event that, after the
time that the Rights become exercisable, the Company were to be acquired in a
merger or other business combination (in which any shares of Common Stock are
changed into or exchanged for other securities or assets) or more than 50% of
the assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred in one or a series of related
transactions, except in any such case pursuant to a transaction approved by the
Board of Directors and Continuing Directors (as defined in the Rights Agreement)
the Rights Agreement provides that proper provision will be made so that each
holder of record of a Right will from and after such date have the right to
receive, upon payment of the Exercise Price, that number of shares of common
stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price. In addition, unless the
Rights are earlier redeemed, in the event that a person or group becomes an
Acquiring Person, the Rights Agreement provides that proper provisions will be
made so that each holder of record of a Right, other than the Acquiring Person
(whose Rights will thereupon become null and void), will thereafter have the
right to receive, upon payment of the Exercise Price, that number of shares of
the Common Stock having a market value at the time of the transaction equal to
two times the Exercise Price.
Fractions of shares of Common Stock may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares.
At any time on or prior to the close of business on the earlier of (i)
the tenth day after the time that a person has become an Acquiring Person (or
such later date as a majority of the Board of Directors and a majority of the
Continuing Directors may determine) or (ii) September 4, 2006, the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price").
<PAGE>
The Rights may be redeemed after the time that any Person has become an
Acquiring Person only if approved by a majority of the Continuing Directors.
Immediately upon the effective time of the action of the Board of Directors of
the Company authorizing 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.
For as long as the Rights are then redeemable, the Company may, except
with respect to the redemption price or date of expiration of the Rights, amend
the Rights in any manner, including an amendment to extend the time period in
which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement from and after the time that any Person
becomes an Acquiring Person requires the approval of a majority of the
Continuing Directors (as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K, dated August
23, 1996. 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 in this summary description herein by reference.
<PAGE>
Exhibit B
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER SEPTEMBER 4, 2006 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND
UNDER CERTAIN OTHER CIRCUMSTANCES, AT $.01 PER RIGHT (SUBJECT TO
ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS
AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY
OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY
PERSON.
Right Certificate
BIG ENTERTAINMENT, INC.
This certifies that ___________________ , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of August 23, 1996 (as such agreement may be amended from
time to time, the "Rights Agreement") between Big Entertainment, Inc., a Florida
corporation (the "Company"), and American Stock Transfer & Trust Company (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(New York City time) on September 4, 2006 at the office of the Rights Agent
designated in the Rights Agreement for such purpose, or its successor as Rights
Agent, New York,
<PAGE>
New York, one share of Common Stock of the Company at a purchase price of
$25.00, as the same may from time to time be adjusted in accordance with the
Rights Agreement (the "Exercise Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase attached hereto duly
executed.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Common Stock which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Common Stock, or other property, may be acquired
upon exercise of the Rights evidenced by this Right Certificate, as provided in
the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
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 of the Rights Agent,
the Company and the holders of record of Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
<PAGE>
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Common Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right.
No fractional shares of Common Stock are required to be issued upon the
exercise of any Right or Rights evidenced hereby, and in lieu thereof the
Company may cause depositary receipts to be issued and/or a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock or
of any other securities of the Company which may at any time be issuable
<PAGE>
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 meeting thereof, or to
give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of
_________________, ____.
ATTEST: BIG ENTERTAINMENT, INC.
_______________________ By___________________________
Secretary Title:
Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By__________________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED_____________________________________________
hereby sells, assigns and transfers unto______________________________________
______________________________________________________________________________
(Please print name and address of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint Attorney to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ________________, ____
_____________________________
Signature
Signature Guaranteed:
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [____] is not being sold,
assigned or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Associate or an Affiliate thereof (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
Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement).
Dated: ____________, ____ Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO BIG ENTERTAINMENT, INC.:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to purchase the
shares of Common Stock issuable upon the exercise of such Rights and requests
that certificates for such share(s) be issued in the following name:
Please insert social security
or other identifying number:__________________________________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
<PAGE>
Please insert social security
or other identifying number:__________________________________________________
______________________________________________________________________________
Dated: _____________, ____
____________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the fact of this
Right Certificate)
EXHIBIT 2
[FORM OF PRESS RELEASE]
BIG ENTERTAINMENT, INC. BOARD ADOPTS RIGHTS PLAN
August 29, 1996, -- Big Entertainment, Inc. (NASD:BIGE)
announced today that its Board of Directors has adopted a shareholder rights
plan designed to protect company stockholders in the event of takeover action
that would deny them the full value of their investment.
Terms of the rights plan provide for a dividend distribution
of one right for each share of Common Stock of the Company to holders of record
at the close of business on September 4, 1996. The rights will become
exercisable only in the event, with certain exceptions, that an acquiring party
accumulates 15 percent or more of the Company's voting stock, or if a party
announces an offer to acquire 30 percent or more. Holders of in excess of 15% of
the Company's voting stock as of March 16, 1996 (the date the Board of Directors
approved the Rights Plan in principle) generally will not trigger the rights
unless and until they acquire an additional 5% of the voting stock. The rights
will expire on September 4, 2006. Each right, once exercisable, will entitle the
holder to buy one share of common stock at a price of $25.00. In addition, upon
the occurrence of certain events, holders of the rights will be entitled to
purchase either stock of the Company or shares in an "acquiring entity" at half
of market value.
<PAGE>
The shareholder rights plan was adopted by the board following
the approval by stockholders of an increase in the number of authorized shares
of the Company's common stock at the annual shareholders' meeting on August 23,
1996.
The Company will generally be entitled to redeem the rights at
$.01 per right at any time until the tenth day following the acquisition of a 15
percent position in its voting stock.
Commenting on the Rights Plan, Mitchell J. Rubenstein, the
Company's Chairman and Chief Executive Officer, said "the Board of Directors
believes that the Rights Plan represents a sound and reasonable means of
safeguarding the interests of all stockholders." Mr. Rubenstein said "the plan
is similar to those adopted by a number of other companies."
Details of the new Rights Plan will be outlined in a letter to
be mailed to stockholders.
BIG Entertainment is a publicly held, diversified
entertainment company which owns exclusive rights in all media to various
entertainment properties created by certain best-selling authors and media
celebrities. The Company also operates a book licensing and packaging division
and an entertainment super-kiosk retail division.
Contact: Denise Treco
BIG Entertainment
(561) 998-8000, ext. 219
