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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
DOUBLETREE CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 860762415
- ------------------------------------------- ----------------------------
(State of incorporation (I.R.S. Employer
or organization Identification No.)
410 North 44th Street
Suite 700
Phoenix, Arizona 85008
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to be
listed
None N/A
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights, par value $.01 per share
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(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
The following summaries of certain provisions of the Rights
Agreement do not purport to be complete and are subject, and are qualified in
their entirety by reference, to all the provisions of the Rights Agreement,
including the definition therein of certain terms.
On September 1, 1997, the Board of Directors of Doubletree
Corporation (the "Company") declared a dividend distribution of one preferred
stock purchase right (a "Right") for each outstanding share of Common Stock, par
value $.01 per share (the "Common Stock"), of the Company. Each Right entitles
the registered holder to purchase from the Company one one-hundredth of a share
of Series A Junior Preferred Stock, par value $.01 per share (the "Preferred
Stock") at a price of $180 per one one-hundredth of a share ( the "Exercise
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of September 1, 1997 (the "Rights
Agreement"), between the Company and Harris Trust Company of California, as
Rights Agent ("Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding and no separate Rights
Certificate will be distributed. The Rights will separate from the Common Stock
and a "Distribution Date" will occur upon the day 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 any class of the outstanding
voting stock of the Company (an "Acquiring Person") and (ii) the tenth business
day 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 15% or more of any class of the Company's outstanding
voting stock (even if no shares are actually purchased pursuant to such offer),
or such later date as may be determined by a majority of the Board of Directors
and the Continuing Directors (as defined below).
An Acquiring Person does not include (i) the Company, any
subsidiary of the Company, any employee benefit plan or employee stock plan of
the Company, (ii) GE Investment Management Incorporated, GE Investment Hotel
Partners I, Limited Partnership, the Trustees of GE Pension Trust or Red Lion, a
California limited partnership, (iii) Promus Hotel Corporation ("Promus") or
Parent Holding Corp. ("Parent"), solely by reason of the execution of the
Agreement and Plan of Merger, dated as of September 1, 1997, between the
Corporation, Promus and Parent (the "Merger Agreement") or the execution and
implementation of the Promus Stock Option Agreement, dated as of September 1,
1997, between the Corporation and Promus or (iv) or any person or group whose
ownership of 15% or more of the shares of any class of voting stock of the
Company then outstanding results solely from (x) any action or transaction or
transactions approved by a majority of the Board of Directors and the Continuing
Directors before such person or group became an Acquiring Person or (y) a
reduction in the number of issued and outstanding shares of voting stock of the
Company pursuant to a transaction or transactions approved by a majority of the
Board of Directors and the Continuing Directors (provided that, in the case of
the person set forth in clause (iv) does not become an Acquiring Person by
reason of clause (x) or (y) above, such persons set forth in clause (iv) shall
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nonetheless become an Acquiring Person upon acquisition of any additional shares
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 (x) or (y)).
The term Continuing Directors means any member of the Board of
Directors of the Company who was a member of the Board prior to the adoption of
the Rights Plan and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
does not include an Acquiring Person, or an affiliate or associate of an
Acquiring Person, or any representative of the foregoing entities.
In the event that, without the approval of the Board of Directors
(and the Continuing Directors), an Acquiring Person becomes the beneficial owner
of 15% or more of the then outstanding shares of Common Stock (unless such
acquisition is made pursuant to a tender or exchange offer for all outstanding
shares of the Company, at a price determined by a majority of the independent
directors of the Company who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person to be fair and otherwise in the best interest
of the Company and its stockholders), each holder of a Right will thereafter
have the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or to the securities of the Company) having a
value equal to two times the Exercise Price. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph
(the "Flip-In Event"), all Rights that are or (under certain circumstances
specified in the Rights Agreement) were beneficially owned by any Acquiring
Person will be null and void. However, Rights are not exercisable following the
occurrence of the Flip-In Event set for the above until such time as the Rights
are no longer redeemable by the Company as set forth below.
In the event that following the Stock Acquisition Date, without
the approval of the Board of Directors (and the Continuing Directors), (i) the
Company engages in a merger or business combination transaction in which the
Company is not the surviving corporation (other than a merger that follows a
tender offer determined to be fair to the stockholders of the Company, as
described in the preceding paragraph); (ii) the Company engages in a merger or
business combination transaction in which the Company is the surviving
corporation and the Common Stock is changed or exchanged; or (iii) 50% or more
of the Company's assets or earning power is sold or transferred, each holder of
a Right (except Rights which have previously been voided as set forth above)
shall thereafter have the right to receive, upon exercise of the Right, common
stock of the acquiring company having a value equal to two times the Exercise
Price.
The Exercise Price and the number of Units of Preferred Stock or
other securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the Current Market Price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
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The number of outstanding Rights and the number of Units of
Preferred Stock issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a dividend on
the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Fractions of shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share) may, at the
election of the Company, be evidenced by depositary receipts. The Company may
also issue cash in lieu of fractional shares which are not integral multiples of
one one-hundredth of a share.
The Rights are not exercisable until the Distribution Date. The
Rights will expire immediately prior to the Effective Time of the transactions
contemplated by the Merger Agreement; provided, however, that if the Merger
Agreement is terminated without consummation of the transactions contemplated
thereby, then at the close of business on September 1, 2007, unless earlier
redeemed or exchanged by the Company, in each case as described below.
Until the Distribution Date (or earlier redemption or expiration
of the Rights), new Common Stock certificates issued after September 11, 1997
will contain a legend incorporating the Rights Agreement by reference. As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Company may redeem the Right in whole, but not in part, any
time on or prior to the close of business on the earlier of (i) the tenth day
after the time that a person (or group of affiliated or associated persons) has
become an Acquiring Person (or such later date as a majority of the Board of
Directors and the Continuing Directors may determine) or (ii) September 1, 2007,
at a price of $.01 per Right (the "Redemption Price"), with the approval 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
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 require the approval of the Continuing
Directors.
The Company may exchange, in whole or in part, the Rights (other
than Rights owned by an Acquiring Person) at any time after a person (or group
of affiliated or associated
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persons) becomes an Acquiring Person and prior to the acquisition by any such
person or group of 50% or more of any class of outstanding voting stock of the
Company, at an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
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.
Item 2. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1 Rights Agreement, dated as of September 1,
1997, between Doubletree Corporation and
Harris Trust Company of California, as Rights
Agent. The Rights Agreement includes the Form
of Certificate of Designations of Series A
Junior Preferred Stock as Exhibit A, the
Summary of Rights as Exhibit B and the form of
Rights Certificate as Exhibit C.
</TABLE>
5
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Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized.
DOUBLETREE CORPORATION
By: /s/ David Stivers
----------------------------
Name: David Stivers
Title: Senior Vice President and
General Counsel
Date: September 5, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
<S> <C> <C>
1 Rights Agreement, dated as of
September 1, 1997, between
Doubletree Corporation and Harris
Trust Company of California, as
Rights Agent. The Rights
Agreement includes the Form of
Certificate of Designations of
Series A Junior Preferred Stock
as Exhibit A, the Summary of
Rights as Exhibit B and the form
of Rights Certificate as Exhibit
C.
</TABLE>
7
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PRIVILEGED AND CONFIDENTIAL
ATTORNEY WORK PRODUCT
FOR DISCUSSION PURPOSES ONLY
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DOUBLETREE CORPORATION
and
HARRIS TRUST COMPANY OF CALIFORNIA
As Rights Agent
------------
Rights Agreement
Dated as of September 1, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
Section 1. Certain Definitions...............................................1
Section 2. Appointment of Rights Agent.......................................8
Section 3. Issuance of Rights Certificates...................................8
Section 4. Form of Rights Certificates......................................11
Section 5. Countersignature and Registration................................12
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates..............................................12
Section 7. Exercise of Rights; Exercise Price; Expiration
Date of Rights...................................................14
Section 8. Cancellation and Destruction of Rights Certificates..............17
Section 9. Reservation and Availability of Shares of Preferred Stock........18
Section 10. Preferred Stock Record Date......................................20
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights.................................................21
Section 12. Certification of Adjusted Exercise Price or Number of Shares.....33
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................33
Section 14. Fractional Rights and Fractional Shares..........................39
Section 15. Rights of Action.................................................40
Section 16. Agreement of Right Holders.......................................40
Section 17. Rights Certificate Holder Not Deemed a Stockholder...............41
Section 18. Concerning the Rights Agent......................................42
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.....................................................43
Section 20. Duties of Rights Agent...........................................44
Section 21. Change of Rights Agent...........................................48
</TABLE>
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<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
Section 22. Issuance of New Rights Certificates..............................49
Section 23. Redemption.......................................................50
Section 24. Exchange.........................................................51
Section 25. Notice of Proposed Actions.......................................54
Section 26. Notices..........................................................55
Section 27. Supplements and Amendments.......................................56
Section 28. Successors.......................................................57
Section 29. Benefits of this Rights Agreement................................57
Section 30. Determinations and Actions by the Board; etc.....................57
Section 31. Delaware Contract................................................58
Section 32. Counterparts.....................................................58
Section 33. Descriptive Headings.............................................59
Section 34. Severability.....................................................59
</TABLE>
Exhibit A -- Form of Certificate of Designations of Series A
Junior Preferred Stock
Exhibit B -- Summary of Rights
Exhibit C -- Form of Rights Certificate
ii
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RIGHTS AGREEMENT
Agreement, dated as of September 1, 1997 by and between
DOUBLETREE CORPORATION, a Delaware corporation (the "Company"), and HARRIS TRUST
COMPANY OF CALIFORNIA (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on September 1, 1997, the Board of Directors of the
Company authorized the issuance, and declared a dividend, of one right (a
"Right") for each share of Common Stock, $.01 par value per share, of the
Company outstanding as of the close of business on September 11, 1997 (the
"Record Date"), each such Right representing the right to purchase one
one-hundredth of a share of Series A Junior Preferred Stock of the Company
("Preferred Stock") having the rights and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit A authorized by the Board
of Directors on September 1, 1997 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 Redemption 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:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter
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defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the shares of any class of
Voting Stock (as such term is hereinafter defined) of the Company then
outstanding; provided that, an Acquiring Person shall not include (i) an Exempt
Person (as such term is hereinafter defined), (ii) GE Investment Management
Incorporated, GE Investment Hotel Partners I, Limited Partnership, the Trustees
of GE Pension Trust or Red Lion, a California limited partnership, (iii) Promus
Hotel Corporation ("Promus") or Parent Holding Corp. ("Parent"), solely by
reason of the execution of the Agreement and Plan of Merger, dated as of
September 1, 1997, between the Corporation, Promus and Parent (the "Merger
Agreement") or the execution and implementation of the Promus Stock Option
Agreement, dated as of September 1, 1997, between the Corporation and Promus or
(iv) any Person, together with all Affiliates and Associates of such Person, who
or which would be an Acquiring Person solely by reason of (x) 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 (y) 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 (upon approval, in the case of
subclauses (x) and (y), by a majority of the Continuing Directors (as such term
is hereinafter defined)) (provided that, in the case of the person set forth in
clause (iv) does not become an Acquiring Person by reason of clause (x) or (y)
above, such persons set forth in clause (iv) shall nonetheless become an
Acquiring Person upon acquisition of any additional shares of the Company's
Voting Stock unless such acquisition of additional Voting
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Stock will not result in such person or group becoming an Acquiring Person by
reason of such clause (x) or (y)). Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith (upon approval by a
majority of the Continuing Directors) that a Person who would otherwise be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a) has become such inadvertently, and such Person divests as promptly
as practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person" 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" and "Associate" shall have the respective
meanings ascribed to such terms 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) 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, directly or indirectly, "beneficially owns" (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act); or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, 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",
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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 not at the time
reportable by such Person on a Schedule 13D report under the Exchange Act (or
any comparable or successor report); 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 (c)) or disposing of any
securities of the Company.
Notwithstanding anything in this paragraph (c) to
the contrary, if a Person, who together with any other
stockholders of the Company holds, in the aggregate, greater
than 50% of the Voting Stock of the Company, approves any
action of the stockholders by written consent in lieu of a
stockholders meeting, such Person shall be deemed to be the
"Beneficial Owner" of all of the Voting Stock that is voted
pursuant to such written consent. Further, notwithstanding
anything in this paragraph (c) to the contrary, a Person
engaged in the business of underwriting securities shall not
be deemed the "Beneficial
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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.
Notwithstanding anything in this paragraph (c) to
the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of
the Company, shall mean the number of such securities then
issued and outstanding together with the number of such
securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Illinois are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., New York or Chicago time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York or Chicago time, on
the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company
shall mean the Common Stock (presently $.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 or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned 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,
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deductions and credits of such Person and which shall be entitled to exercise
the greatest voting power per unit of such Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(g) "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 on the date
of this Agreement or (ii) subsequently 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.
(h) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(j) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company or (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.
(k) "Exercise Price" shall have the meaning set forth in
Section 4 and 7(b) hereof.
(l) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with Section 11(d)
hereof.
(m) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
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(n) "Person" shall mean any individual, firm, corporation or
other entity and shall include any successor (by merger of otherwise) of such
entity.
(o) "Preferred Stock" shall mean shares of Series A Junior
Preferred Stock, $.01 par value, of the Company and, to the extent that there is
not a sufficient number of shares of Series A Junior Preferred Stock authorized
to permit the full exercise of the Rights, any other series of Preferred Stock,
$.01 par value, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Preferred Stock.
(p) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(q) "Record Date" shall have the meaning set forth in the
recital.
(r) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(t) "Rights Certificate" shall have the meaning set forth in
Section 3(d) hereof.
(u) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(v) "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.
(w) "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
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such Person.
(x) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(y) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(z) "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.
(aa)"Triggering Event" shall mean any event described in
Section 11(a)(ii) or Section 13(a).
(bb)"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.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates
(a) On the Record Date (or as soon as practicable thereafter),
the Company or the Rights Agent, at the expense of the Company, shall send a
copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit B (the "Summary of Rights"), by first class
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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 (or such later date
as may be determined by action of the Board of Directors, upon approval by a
majority of the Continuing Directors) which is the earlier of (i) the tenth day
after the Stock Acquisition Date or (ii) the tenth business day 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 15% or more of any class 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 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
Rights 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 Redemption 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
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<PAGE> 13
outstanding after the Record Date but prior to the earliest of
the Distribution Date, the Redemption 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 issued (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 Redemption Date, or the
Final Expiration Date (or, in certain circumstances as provided in Section 22
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 Doubletree
Corporation and Harris Trust Company of California (the
"Rights Agent"), dated as of September 1, 1997, 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
Doubletree Corporation. 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. Doubletree Corporation shall mail to the
registered holder of this certificate a copy of the Rights
Agreement without charge 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
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<PAGE> 14
(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 "Rights Certificate"), evidencing one Right (subject to
adjustment as provided herein) for each share of Common Stock so held. As of and
after the Distribution Date, the rights shall be evidenced solely by Rights
Certificates and may be transferred by the transfer of the Rights Certificate as
permitted hereby, separately and apart from any transfer of one or more shares
of Common Stock.
Section 4. Form of Rights Certificates.
(a) The Rights 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 C 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, Rights
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 (including fractional shares which are
integral multiples of one-hundredth of a share) of Preferred 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
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<PAGE> 15
herein (the "Exercise Price").
Section 5. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by its Chairman of the Board, President, any Vice President or its
Treasurer, either manually or by facsimile signature. Each Rights Certificate
shall be countersigned by the Rights Agent manually and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any Rights 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 Rights 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 Rights Certificates had not
ceased to be such officer of the Company. Any Rights Certificate may be signed
on behalf of the Company by any person who, on the date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(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 Rights Certificates upon
exercise or transfer, and in such other locations as may be required by law,
books for registration and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates;
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<PAGE> 16
Mutilated, Destroyed, Lost or Stolen Rights Certificates
(a) Subject to the provisions of Sections 7(e), 7(f), 14 and
24 hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the earlier of the Redemption Date or
the Final Expiration Date, any Rights Certificate may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Rights Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Rights Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Rights
Certificate shall surrender the Rights Certificate at the office of the Rights
Agent designated for the surrender of Rights Certificates with the form of
certificate and assignment on the reverse side thereof duly endorsed (or
enclosed with such Rights Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate 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 Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any Transfer Tax that may be imposed in connection with any transfer,
split up, combination or exchange of any Rights Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f), 14 and
24 hereof, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of
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<PAGE> 17
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 Rights Certificate if mutilated, the Company shall issue and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration 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
Sections 7(e), 23 and 24 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 Rights 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,
prior to the earliest of (i) the Effective Time of the transactions contemplated
by the Merger Agreement; provided, however, that if the Merger Agreement is
terminated without consummation of the transactions contemplated thereby, then
at or prior to the Close of Business on September 1, 2007 (the "Final Expiration
Date"), (ii) the Close of Business on the date on which the Rights are redeemed
as provided in Section 23 hereof (the "Redemption Date"), (iii) the date on
which such Rights are exchanged as provided in Section 24 hereof or (iv) the
time at which the Rights expire pursuant to Section 13(e) hereof.
(b) The Exercise Price shall initially be $180 for each one
one-hundredth (1/100)
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<PAGE> 18
of a share of Preferred Stock issued pursuant to the exercise of a Right. The
Exercise Price and the number of shares of Preferred 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 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
Rights Certificate representing exercisable Rights with the form of election to
purchase and the certificate contained therein duly executed, accompanied by
payment by certified check, cashier's check, bank draft or money order payable
to the Company 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 Rights Certificate in accordance with Section 9(e) hereof, the Rights Agent
shall thereupon promptly (i) requisition from any transfer agent of the
Preferred Stock of the Company one or more certificates representing the number
of shares of Preferred Stock to be so purchased, and the Company hereby
authorizes 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 Preferred 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 Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Rights Certificate; provided, however, that in the case of a purchase of
securities, other than Preferred
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<PAGE> 19
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
exercisability of the Rights for a period not in excess of ninety (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 Preferred Stock to be issued pursuant to the Rights.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Rights
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 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) (upon approval
by a majority of the Continuing Directors) and subsequent transferees of such
Persons referred to in
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<PAGE> 20
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 Rights 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 Rights 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 hereof; no Rights 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 Rights 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 Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights
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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 Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall cancel and retire, any Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of its authorized and issued shares of Preferred Stock
held in its treasury, such number of shares of Preferred Stock as will from time
to time be sufficient to permit the exercise in full of all outstanding Rights
and, after the occurrence of a Triggering Event, shall, to the extent reasonably
practicable, so reserve and keep available a sufficient number of shares of
Common Stock (and/or other securities) which may be required to permit the
exercise in full of all outstanding Rights.
(b) If the Preferred Stock (or, following the occurrence of a
Triggering Event, the Common Stock and/or other securities) is at any time
listed on a national securities exchange or included for quotation on any
transaction reporting system, then so long as the Preferred Stock (and,
following the occurrence of any such Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange
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<PAGE> 22
or included for quotation on any such transaction reporting system, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable (but only to the extent that it is reasonably likely that the
Rights will be exercised), all shares reserved for such issuance to be listed on
such exchange or included for quotation on any such transaction reporting system
upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all shares of Preferred Stock
delivered upon the exercise of Rights (or, following the occurrence of a
Triggering Event, shares of Common Stock and/or other securities) shall, at the
time of delivery of the certificates for such shares or other securities
(subject to payment of the Exercise Price in respect thereof), be duly and
validly authorized and issued and fully paid and nonassessable.
(d) The Company shall use its best efforts to (i) file, as
soon as practicable following the occurrence of an 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
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (b) the date of the expiration of the
Rights. The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days, the exercisability of the Rights in order to prepare and file
a registration statement under the Act and permit it to become effective. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with
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<PAGE> 23
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 is 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 U.S. federal and state Transfer Taxes which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) 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
Rights Certificate to a Person other than, or the issuance or delivery of
certificates for Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) upon exercise of Rights in a name
other than that of, the registered holder of the Rights Certificate, and the
Company shall not be required to issue or deliver a Rights Certificate or
certificate for Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) 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 Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the securities
represented thereby on, and such certificate shall be dated as
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<PAGE> 24
of, the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) 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 applicable transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall
not be entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of
Shares or Number of Rights. 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.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares of Preferred Stock
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Exercise
Price in effect at the time of the
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<PAGE> 25
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to this Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in
the event that any Person (other than an Exempt Person), alone
or together with its Affiliates and Associates, shall become
an Acquiring Person, unless the event causing such Person to
become an Acquiring Person is an acquisition of shares of
Common Stock pursuant to a cash tender offer made pursuant to
Section 14(d) of the Exchange Act for all outstanding shares
of Common Stock (other than shares of Voting Stock
beneficially owned by the Person making the offer or by its
Affiliates or Associates) at a price and on terms determined
by at least a majority of the Continuing Directors to be (a)
at a price which is fair to stockholders (taking into account
all factors which such members of the Board deem relevant,
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<PAGE> 26
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders, then, 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 at a price equal to the
then current Exercise Price multiplied by the number of one
one-hundredths of a share of Preferred Stock for which a Right
is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Exercise
Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable and
dividing that product by (y) 50% of the Fair Market Value of
the Company's Common Stock (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event;
provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing Common Stock in accordance
with Section 11(a)(ii) hereof, the Company may, if the Board
of Directors of the Company, upon approval by a majority of
the Continuing Directors, determines that such action is
necessary or appropriate and not contrary to the interest of
holders of Rights (and, in the event that the number of shares
of Common Stock
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<PAGE> 27
which are authorized by the Company's Restated Certificate of
Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights, the
Company shall): (A) determine the excess of (1) the value of
the Common Stock issuable upon the exercise of a Right (the
"Current Value") over (2) the Exercise Price (such excess
being referred to as the "Spread") and (B) with respect to
each Right, make adequate provision to substitute for such
Common Stock, upon exercise of the Rights, (1) cash, (2) a
reduction in the Exercise Price, (3) other equity securities
of the Company (including, without limitation, shares or units
of shares of any series of preferred stock which the Board of
Directors of the Company, upon approval by a majority of the
Continuing Directors, has deemed to have the same value as
Common Stock (such shares or units of shares of preferred
stock are herein called "common stock equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company, upon
approval by a majority of the Continuing Directors; provided,
however, if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty
(30) days following the occurrence of an event described in
Section 11(a)(ii), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Exercise Price, Common Stock
(to the extent available), and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors, upon
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<PAGE> 28
approval by a majority of the Continuing Directors, shall
determine in good faith that it is likely that sufficient
additional Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set
forth above may be extended to the extent necessary, but not
more than ninety (90) days after the occurrence of an event
described in Section 11(a)(ii), in order that the Company may
seek stockholder approval for the authorization of such
additional shares. To the extent that the Company determines
that some action need be taken pursuant to the preceding
sentences of this Section 11(a)(iii), the Company may suspend
the exercisability of the Rights until the expiration of any
such period, as extended, in order to seek any authorization
of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to this Section 11(a)(iii)
and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect and shall
promptly notify the Rights Agent of such suspension. For
purposes of this Section 11(a)(iii), the value of the Common
Stock shall be the Fair Market Value (as determined pursuant
to Section 11(d) hereof) per share of the Common Stock at the
Close of Business on the date of the occurrence of an event
described in Section 11(a)(ii) and the value of any "common
stock equivalent" shall be deemed to have the same value as
the Common Stock on such date.
(b) In the event that the Company shall, after the Record
Date, fix a record date for the issuance of rights, options or warrants to all
holders of Preferred Stock entitling them (for
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<PAGE> 29
a period expiring within 45 calendar days after such record date) to subscribe
for or purchase Preferred Stock (or shares having the same rights, privileges
and preferences as the Preferred Stock ("equivalent preferred stock")) or
securities convertible into Preferred Stock or equivalent preferred stock at a
price per share of Preferred Stock or equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the Fair Market Value per share of the
Preferred 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 Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or the equivalent preferred stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of additional shares of Preferred Stock and/or equivalent
preferred stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.
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(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) or evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred 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
Fair Market Value per share of the Preferred Stock on such record date, less the
Fair Market Value 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 Preferred Stock and the denominator of which shall be the Fair Market
Value per share of the Preferred Stock; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Exercise Price shall again be adjusted to be the Exercise 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 Preferred Stock, Common Stock or any other stock or any
Rights 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
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prior to such date; provided, however, that in the event that the Fair Market
Value per share of any security 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 security payable in shares of such security or
securities convertible into shares of such security, or (ii) the effective date
of any subdivision, split, combination, consolidation, reverse stock split or
reclassification of such security, 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 (upon approval by a majority of the Continuing
Directors). The term "Trading Day" shall mean a day on which the principal
national securities exchange on which such security is listed or admitted to
trading is open for the transaction of business or, if such security is not
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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 in good faith by the Board of Directors of the
Company (upon approval by a majority of the Continuing Directors); provided,
however, that, if the Preferred Stock is not publicly traded, the Fair Market
Value of a share of Preferred Stock shall be conclusively deemed to be the Fair
Market Value of a share of Common Stock (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. 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 (upon approval by a majority of the
Continuing Directors). 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 and the holders of the Rights.
(e) All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-hundredth of a share, as the case may
be. No adjustment in the Exercise Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. Notwithstanding the preceding sentence, any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates the adjustment or (ii) the
date of the expiration of the right to exercise the Rights.
(f) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of
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<PAGE> 33
shares to be issued upon exercise of the Rights as in the initial Rights
Certificates issued hereunder but, nevertheless, shall represent the Rights as
so adjusted.
(g) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon exercise of
the Rights below the then par value, if any, of the shares of Preferred 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 Preferred
Stock at such adjusted purchase price per share.
(h) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (f), (g), (i), (j) and (k), and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Stock shall apply on like terms to any
such other shares.
(i) Unless the Company shall have exercised its election as
provided in Section 11(j), upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
one one-hundredth of a share of Preferred Stock (calculated to the nearest one
one-millionth of a share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Exercise Price in effect immediately prior to such
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<PAGE> 34
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.
(j) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a share of Preferred
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 one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) 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 Rights Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(j), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the
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Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.
(k) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it, in its sole discretion, shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.
(l) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock) into
a greater or lesser number of shares of Common Stock, then in any such case (A)
the number of one one-hundredths of a share of Preferred Stock purchasable after
such event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a share of Preferred Stock so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of shares of
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Common Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately after such
event, and (B) each share of Common Stock outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
share of Common Stock outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(l) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. Certification of Adjusted Exercise Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13, 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
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights 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 or Section 13 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 obligated or responsible for
calculating any adjustment nor shall it 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 (upon approval by a majority of the Continuing Directors), in the
event that, at any time on or after the Stock Acquisition Date, (x) the Company
shall, directly or indirectly, consolidate with, or merge with
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and into, any other Person or Persons and the Company shall not be the surviving
or continuing corporation of such consolidation or merger, or (y) any Person or
Persons shall, directly or indirectly, consolidate with, or merge with and into,
the Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or 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 (except as may be contemplated by Section 13(e)
hereof), 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 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
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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) 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; 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). The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
(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 its survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to
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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 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
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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 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 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 Party at less than the then Fair
Market Value per share
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(determined pursuant to Section 11(b) 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 on the benefits intended to be afforded by the Rights in
connection with, or as a consequence of, the consummation of the proposed
transaction.
(e) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons (or a wholly-owned subsidiary of any such
Person or Persons) who acquired shares of Common Stock pursuant to a cash tender
offer for all outstanding shares of Common Stock which complies with the
provisions of Section 11(a)(ii) hereof relating to fair price determination by a
majority of the Continuing Directors, (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of Common Stock
paid to all holders of Common Stock whose shares were purchased pursuant to such
cash tender offer and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such cash tender offer. Upon
consummation of any such transaction contemplated by this Section 13(e), all
Rights hereunder shall expire.
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-hundredth of a share of Preferred
Stock). 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 Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one-hundredth of a share) 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 Preferred 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 Preferred Stock. With respect to fractional shares that are not
integral multiples of one-hundredth of a share, 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 Rights Certificates at the time such Rights
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred 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 Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share) upon exercise of a Right.
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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 respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the holders of record
of the Common Stock); and any holder of record of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her 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 or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights 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 applicable, with the Summary of Rights),
which certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Rights Certificates, and each Right shall be
transferable only simultaneously and together with the transfer of shares of
Common Stock;
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(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Preferred
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
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or
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upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. 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 gross 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 the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The indemnification provided for hereunder shall
survive the expiration of the Rights and termination of this Agreement. The
costs and expenses of enforcing this right of indemnification shall also be paid
by the Company.
(b) The Rights Agent may conclusively rely upon and shall be
protected against, and shall incur no liability for or in respect of, any action
taken, suffered or omitted by it in connection with its administration of this
Rights Agreement in reliance upon any Rights Certificate or certificate for
Preferred Stock or for other securities of the Company, instrument of
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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
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 Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights
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<PAGE> 47
Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; in all
such cases such Rights Certificates shall have the full force provided in the
Rights 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, and no implied duties or obligations shall be
read into this Agreement against the Rights Agent, by all of which the Company
and the holders of Rights Certificates by their acceptance thereof shall be
bound:
(a) Before the Rights Agent acts or refrains from acting, 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, including without
limitation, the identity of any Acquiring Person (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President, any Vice President, 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.
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<PAGE> 48
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Rights Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent is serving as an administrative agent and
accordingly 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 Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Rights Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11 or 13
hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt of a certificate 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 Preferred Stock to be
issued pursuant to this Rights Agreement or any Rights Certificate or as to
whether any shares of Preferred 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
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<PAGE> 49
out or performing by the Rights Agent of the provisions of the Rights Agreement.
(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 or for any delay in acting while waiting for
these instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with the proposal
included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application subject to the proposed action or omission and/or specifying the
action to be taken or omitted.
Notwithstanding anything in this Agreement to the contrary, in
no event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
(h) The Rights Agent and any shareholder, director, officer or
employee of the
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<PAGE> 50
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.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate following the form of
election to purchase set forth on the reverse side of such Rights Certificate
has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take further action with respect to
the requested exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(l) The Rights Agent shall not be required to take notice or
be deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events
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<PAGE> 51
defined in this Agreement or the designation of any Person as an Acquiring
Person, Affiliate or Associate) under this Agreement unless and until the Rights
Agent shall be specifically notified in writing by the Company of such fact,
event or determination.
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 and the Preferred Stock by registered or
certified mail and, at the expense of the Company, to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent (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 and at the expense of the Company, to the holders of the rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. 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 Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then the
incumbent Rights Agent or the holder of record of any Rights Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized and doing business under the
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<PAGE> 52
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 $50,000,000 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 Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Company shall have the 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 Rights 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 Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors or
Executive Committee thereof to reflect any adjustment or change in the
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<PAGE> 53
Exercise Price per share and the number or kind or class of shares of stock or
other securities or property purchasable under the Rights 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 (upon approval by a majority of the
Continuing 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; provided, however, that, during
the time period relating to when the Rights may be redeemed, the Board of
Directors of the Company (upon approval of a majority of the Continuing
Directors) may extend the time during which the Rights may be redeemed to be at
any time as may be determined by the Board of Directors of the Company and the
Continuing Directors or (ii) the Final Expiration Date, at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction after the date hereof (the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of the event described in
Section 11(a)(ii) until such time as the Company's right of redemption hereunder
has expired.
(b) Without any further action and without any notice, the
right to exercise the Rights will terminate at the effective time of the action
of the Board of Directors and the Continuing 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 and the Continuing Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the
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<PAGE> 54
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; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. 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 depositary receipts in lieu of fractions of shares
other than fractions which are integral multiples of one one-hundredth (1/100)
of a share) of Preferred Stock having a Fair Market Value equal to such cash
payment.
Section 24. Exchange.
(a) By the vote of a majority of the Board of Directors (upon
approval by a majority of the Continuing Directors), the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights which have become void pursuant to Section 7(e) hereof) for shares of
Common Stock at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of any class of voting stock of the Company then
outstanding.
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(b) Without any further action and without any notice, the
right to exercise the Rights to be so exchanged will terminate at the effective
time of the action of the Board of Directors and the Continuing Directors
ordering the exchange and the only right thereafter of each holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give notice of the exchange to the holders of such Rights
then outstanding 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; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such exchange. Each such notice shall state the method by which the
exchange for rights will be effected and, in the event of a partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute shares of Preferred Stock for shares of Common
Stock exchangeable for the Rights, at the initial rate of one one-hundredth of a
share of Preferred Stock for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or
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<PAGE> 56
Preferred Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall either take such action as may be necessary to authorize
additional Common Stock or Preferred Stock for issuance upon exchange of the
Rights or, alternatively, by the vote of a majority of the Board of Directors
(upon approval by a majority of the Continuing Directors) with respect to each
Right, (i) pay cash in an amount equal to the Exercise Price, in lieu of issuing
Common Stock or Preferred Stock in exchange therefor, or (ii) issue debt or
equity securities, or a combination thereof, having a value equal to the Current
Value (as hereinafter defined) of the Common Stock or Preferred Stock
exchangeable for each such Right, where the value of such securities shall be
determined in good faith by the Board of Directors (upon approval by a majority
of the Continuing Directors), or (iii) deliver any combination of cash,
property, Common Stock, Preferred Stock and/or other securities having a value
equal to the Current Value in exchange for each Right. The term "Current Value,"
for purposes of this Section 24, shall mean the product of the per share market
price of the Common Stock (determined pursuant to Section 11(d) on the date of
the occurrence of the event described above in subparagraph (a)), multiplied by
the number of shares of Common Stock for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent that the
Company determines that some action need be taken pursuant to clauses (i), (ii)
or (iii) of this Section 24(d), the Board of Directors (upon approval by a
majority of the Continuing Directors) may temporarily suspend the exercisability
of the Rights for a period of up to sixty (60) days following the date on which
the event described in Section 24(a) shall have occurred, in order to seek any
authorization of additional Common Stock or Preferred Stock and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. In
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the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to each registered holder of a Rights Certificate with regard
to which a fractional share of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the fair market value of a whole
share of Common Stock. For the purposes of this paragraph (e), the fair market
value of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), (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
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Company, then, in each such case, the Company shall give to each holder of
record of a Rights Certificate, in accordance with Section 26, notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale or transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of record of Common Stock or Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of record of the Preferred 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 or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case an event described in Section 11(a)(ii) hereof
shall occur, then the Company shall, as soon as practicable thereafter, give to
each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder of
record of any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by registered or certified mail and shall be deemed given
upon receipt and addressed (until another address is filed in writing with the
Rights Agent) as follows:
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Doubletree Corporation
410 North 44th Street, Suite 700
Phoenix, Arizona 85008
Attention: Secretary
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 Rights Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by registered or certified mail and shall be
deemed given upon receipt and addressed (until another address is filed in
writing with the Company) as follows:
Harris Trust Company of California
601 S. Figueroa , Suite 4900
Los Angeles, California 90017
Attention: Stock Transfer Administration
Notices or demand authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Rights 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 27. Supplements and Amendments. For as long as the
Rights are then redeemable and except as provided in the last sentence of this
Section 27, the Company may in its sole and 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 27, 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 Rights 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
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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 Rights Certificates. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Rights Agreement to the contrary, supplements or amendments may be made
only upon approval by a majority of the Continuing Directors. Further,
notwithstanding anything in this Agreement to the contrary, no supplement or
amendment that changes the rights and duties of the Rights Agent under this
Agreement shall be effective without the written consent of the Rights Agent.
Section 28. 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 29. 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 Rights
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 Rights Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
Section 30. Determinations and Actions by the Board; etc. The
Board of Directors (upon approval by a majority of the Continuing Directors)
shall have the exclusive power and
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authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith (and with the approval of a majority of the
Continuing Directors then in office) in accordance with the preceding sentence,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and (y) not subject any director to
any liability to the holders of the Rights. Notwithstanding anything contained
in this Agreement to the contrary, whenever any action, calculation,
interpretation or determination made pursuant to this Agreement requires the
approval of a majority of the Continuing Directors, and no Continuing Directors
are then in office, such action, calculation, interpretation or determination
may not be made.
Section 31. Delaware Contract. This Rights Agreement and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state, except as to
Sections 18, 20 and 21 which shall be governed by and construed in accordance
with the laws of the State of Illinois.
Section 32. Counterparts. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original,
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and all such counterparts shall together constitute but one and the same
instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. 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.
DOUBLETREE CORPORATION
By: /s/ DAVID STIVERS
--------------------------------
HARRIS TRUST COMPANY OF
CALIFORNIA
By: /s/ NEIL ROSSO
--------------------------------
Name:
Title:
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<PAGE> 64
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PREFERRED STOCK
of
DOUBLETREE CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------------------------------------------
DOUBLETREE CORPORATION., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Corporation"), DOES HEREBY CERTIFY that pursuant to the authority vested in
the Board of Directors by the Restated Certificate of Incorporation of the
Corporation and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors on September 1,
1997 adopted a resolution providing for the authorization of a series of
Preferred Stock, as follows:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Restated
Certificate of Incorporation, the Board of Directors hereby creates a series of
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Section 1.EE Designation and Amount. The shares of such series
shall be designated as "Series A Junior Preferred Stock" (the "Series A Junior
Preferred Stock") and the number of shares constituting the Series A Junior
Preferred Stock shall be Nine Hundred Thousand (900,000). Such number of shares
may be increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series A
<PAGE> 65
Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Junior Preferred Stock.
Section 2.EE Dividends and Distributions. Subject to the rights
of the holders of any shares of any series of Preferred Stock (or any similar
stock) ranking prior and superior to the Series A Junior Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Preferred Stock,
in preference to the holders of Common Stock, par value $.01 per share (the
"Common Stock"), of the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Junior Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Junior Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(A) The Corporation shall declare a dividend or distribution on
the Series A Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to
2
<PAGE> 66
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Junior Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3.EE Voting Rights. The holders of shares of Series A
Junior Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Junior Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Junior Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Junior Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
3
<PAGE> 67
Section 4.EE Certain Restrictions. Whenever quarterly dividends
or other dividends or distributions payable on the Series A Junior Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Preferred Stock, except dividends paid ratably on the
Series A Junior Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Junior
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior (as
to dividends and upon dissolution, liquidation and winding up) to the
Series A Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(A) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Company unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
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<PAGE> 68
Section 5.EE Reacquired Shares. Any shares of Series A Junior
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Restated Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 6.EE Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A Junior
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Junior Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Preferred Stock, except distributions made ratably on the Series
A Junior Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Junior Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7.EE Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Junior Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of
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which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8.EE No Redemption. The shares of Series A Junior
Preferred Stock shall not be redeemable.
Section 9.EE Rank. The Series A Junior Preferred Stock shall
rank, with respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred Stock.
Section 10.EE Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least a majority of the outstanding shares
of Series A Junior Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed
on behalf of the Corporation by its Chairman of the Board and Chief Executive
Officer and attested by its Secretary this 1st day of September, 1997.
DOUBLETREE CORPORATION
By: _______________________________
Name:
Title:
Attest:
By:_______________________
Name:
Title:
6
<PAGE> 70
EXHIBIT B
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.
DOUBLETREE CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On September 1, 1997, the Board of Directors of Doubletree
Corporation. (the "Company") declared a dividend distribution of one preferred
stock purchase right (a "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 11, 1997 to stockholders of record on that date. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth (1/100) of a share of preferred stock of the Company, designated
as Series A Junior Preferred Stock (the "Preferred Stock") at a price of $180
per one one-hundredth (1/100) of a share ("Exercise Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of September 1, 1997 (the "Rights Agreement"), between the
Company and Harris Trust Company of California, 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 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 any class of the outstanding voting stock
of the Company (an "Acquiring Person") and (ii) the tenth business day 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 15% or more of any class of the Company's outstanding voting
stock (even if no shares are actually purchased pursuant to such offer), or such
later date as may be determined by a majority of the Board of Directors and the
Continuing Directors (as defined in the Rights Agreement); prior thereto, the
Rights will not be exercisable, will not be represented by a separate
certificate, and will 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 11, 1997, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto. An Acquiring
Person
<PAGE> 71
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) GE
Investment Management Incorporated, GE Investment Hotel Partners I, Limited
Partnership, the Trustees of GE Pension Trust or Red Lion, a California limited
partnership, (E) Promus Hotel Corporation ("Promus") or Parent Holding Corp.
("Parent") solely by reason of the execution of the Agreement and Plan of
Merger, dated as of September 1, 1997, between the Corporation, Promus and
Parent (the "Merger Agreement") or the execution and implementation of the
Promus Stock Option Agreement dated as of September 1, 1997 between the Company
and Promus or (F) any person or group whose ownership of 15% or more of the
shares of any class of voting stock of the Company then outstanding results
solely from (i) any action or transaction or transactions approved by a majority
of the Board of Directors and the Continuing 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 a majority of the Board of Directors and the Continuing
Directors (provided that, in the case of the person set forth in clause (F) does
not become an Acquiring Person by reason of clause (i) or (ii) above, such
persons set forth in clause (F) shall nonetheless become an Acquiring Person
upon acquisition of any additional shares 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)).
Until the Distribution Date (or earlier redemption or expiration
of the Rights), new Common Stock certificates issued after September 11, 1997
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 11, 1997 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 ("Rights
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.
The Rights are not exercisable until the Distribution Date. The
Rights will expire immediately prior to the Effective Time of the transactions
contemplated by the Merger Agreement; provided, however, that if the Merger
Agreement is terminated without consummation of the transactions contemplated
thereby, then at or prior to the Close of Business on September 2, 2007, unless
earlier redeemed or exchanged by the Company, in each case as described below.
The Preferred Stock is nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, subordinate to any other series of the Company's preferred stock. Each
share of Preferred Stock will be entitled to a minimum quarterly dividend
payment of $1.00 per share but will be entitled to an aggregate dividend of 100
times the dividend declared on the Company's Common Stock. In the event of the
liquidation of the Company, the holders of Preferred Stock will be entitled to
receive a payment of the greater of (i) $100 per share or (ii) 100 times the
payment made per share of
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<PAGE> 72
Common Stock. Each share of Preferred Stock will have 100 votes, voting together
with the Common Stock. In the event of any merger, consolidation or other
transaction in which Common Stock is exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount received per share of Common
Stock. The rights of Preferred Stock as to dividends, liquidation and voting are
protected by anti-dilution provisions.
The Exercise Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Unless the transaction is approved by a majority of the Board of
Directors and the Continuing Directors, in the event that, after the time 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) (other than a merger that follows a
cash tender offer for all outstanding shares of the Company, at a price
determined by a majority of the Continuing Directors to be fair and otherwise in
the best interests of the Company and its stockholders) 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, 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 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, in the event
that a person or group of affiliated or associated persons becomes an Acquiring
Person (unless such acquisition is made pursuant to a cash tender offer
determined to be fair to the stockholders of the Company, as described in the
preceding sentence), 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 Common Stock (or cash, other securities or property) having a market value
at the time of the transaction equal to two times the Exercise Price (such
market value to be determined with reference to the market value of the
Company's Common Stock as provided in the Rights Agreement).
3
<PAGE> 73
Fractions of shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share) may, at the
election of the Company, be evidenced by depositary receipts. The Company may
also issue cash in lieu of fractional shares which are not integral multiples of
one one-hundredth of a share.
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 (or group of affiliated or
associated persons) has become an Acquiring Person (or such later date as a
majority of the Board of Directors and the Continuing Directors may determine)
or (ii) September 1, 2007, the Company may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (the "Redemption Price"), with the
approval 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
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 require the approval of the Continuing
Directors.
At any time after a person (or group of affiliated or associated
persons) becomes an Acquiring Person and prior to the acquisition by any such
person or group of 50% or more of any class of outstanding voting stock of the
Company, the Board of Directors of the Company (with the approval of the
Continuing Directors) may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock (or a fraction of a share of Preferred Stock
or other consideration having equivalent market value) per Right (subject to
adjustment).
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 Registration Statement on Form 8-A
dated September ___, 1997. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement which is incorporated herein by reference.
4
<PAGE> 74
EXHIBIT C
[Form of Rights Certificate]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AT OR AFTER THE EFFECTIVE DATE OF THE TRANSACTIONS
CONTEMPLATED BY THE AGREEMENT AND PLAN OF MERGER, DATED AS OF SEPTEMBER
1, 1997, AMONG PARENT HOLDING CORP., THE COMPANY AND PROMUS HOTEL
CORPORATION; PROVIDED, HOWEVER, THAT IF SUCH AGREEMENT IS TERMINATED
WITHOUT CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, THEN NOT
EXERCISABLE AFTER THE CLOSE OF BUSINESS ON SEPTEMBER 1, 2007 OR EARLIER
IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION
AT THE OPTION OF THE COMPANY AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH 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.
Rights Certificate
DOUBLETREE CORPORATION
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of September 1, 1997 (the "Rights Agreement") between Doubletree
Corporation, a Delaware corporation (the "Company"), and Harris Trust Company of
California (the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to the Effective Date of the Agreement and Plan of Merger, dated as of
September 1, 1997, between Parent Holding Corp., the Company and Promus Hotel
Corporation (the "Merger Agreement") or if the Merger Agreement is terminated
without consummation of the transactions contemplated thereby then prior to 5:00
P.M. (New York time) on September 1, 2007 at the office of the Rights Agent
designated in the Rights Agreement for such purpose, or its successor as Rights
Agent, one one-hundredth (1/100) of a fully paid nonassessable share of Series A
Junior Preferred Stock (the "Preferred Stock") of the Company at a purchase
price of $180, as the same may from time to time be adjusted in accordance with
the Rights Agreement (the "Exercise Price"), upon
<PAGE> 75
presentation and surrender of this Rights 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 Preferred Stock which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Rights
Certificate, as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are 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 Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated in the
Rights Agreement for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder of record to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof, another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right, subject to adjustment or (ii) may be exchanged in whole
or in part for shares of the Company's Common Stock, par value $.01 per share,
shares of Preferred Stock or substantially equivalent rights or other
consideration as determined by the Company.
No fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth (1/100) of a share) 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 Rights Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at 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
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<PAGE> 76
subscription rights, or otherwise, until the Right or Rights evidenced by this
Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company. Dated as of ____________.
DOUBLETREE CORPORATION
By:_________________________
Name:
Title:
Countersigned:
HARRIS TRUST COMPANY OF
CALIFORNIA
By: __________________________
Name:
Title:
3
<PAGE> 77
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificates.)
FOR VALUE RECEIVED______________________________________________
hereby sells, assigns and transfers unto_______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
Rights evidenced by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint____________
_________________________________________ Attorney to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _____________
__________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
Signature Guaranteed:
4
<PAGE> 78
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights 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 Rights
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
(Signature must conform in all
respects to name of holder as
specified on the face of this
Rights Certificate)
5
<PAGE> 79
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Rights Certificate.)
TO DOUBLETREE CORPORATION:
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock (or other securities) 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 Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:___________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: ________________
___________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
Signature Guaranteed:
6
<PAGE> 80
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being exercised 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 Rights
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
(Signature must conform in all respects
to name of holder as specified on the
face of this Rights Certificate)
7
