FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
AMERICAN BINGO & GAMING CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 74-2723809
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(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
1440 Charleston Highway, West Columbia, South Carolina 29169
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(Address of principal executive offices) (Zip Code)
Securities Act registration statement file number to which this form relates:
(not applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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(Not Applicable)
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Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
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(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On August 4, 1998 the Board of Directors of American Bingo & Gaming Corp.
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock of the Company (the "Common
Shares"). The dividend is payable to holders of record at the close of business
on August 24, 1998 (the "Record Date") of the Company's Common Shares, and with
respect to Common Shares issued thereafter until the Distribution Date (defined
below) and, in certain circumstances, with respect to Common Shares issued after
the Distribution Date. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series B Preferred Stock (the "Preferred Shares")
at a purchase price of $15.00 per one one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. Holders of Preferred Shares will vote
together with the holders of Common Shares on all matters, with each full
Preferred Share having one thousand votes; holders of Preferred Shares will
share proportionately in any dividend or distribution declared on the Common
Shares, on a 1000-to-one basis; and if the Company is liquidated, the holders of
Preferred Shares will participate proportionately with the holders of Commons
Shares in any distributions, on a 1000-to-one basis, with the holders of the
Preferred Shares receiving some preferential distributions before the holders of
Common Shares receive any distributions.
A description of and the terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and American Stock
Transfer & Trust Company (the "Rights Agent"), dated as of August 4, 1998.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. Also, the Rights initially will not be tradable separate from the
Common Shares. The Rights will become exercisable and will separate from the
Common Shares upon the earlier of (i) ten calendar days after a Person or group
of affiliated Persons acquire ownership of 20% or more of the outstanding Common
Shares (unless such acquisition is approved by the Board of Directors); (ii) at
such time as the Board of Directors may designate after a tender offer or an
announcement of an intention to make a tender offer that would result in a
Person or group owning 20% or more of the outstanding Common Shares; or (iii)
ten calendar days after a person owning at least 15% of the Common Shares then
outstanding is declared to be an "Adverse Person" based on specified criteria.
At such time, separate Rights Certificates shall be distributed (the
"Distribution Date"). A Person or group who acquires 20% or more of the Common
Shares without the approval of the Board of Directors is referred to as an
"Acquiring Person".
Until the Distribution Date (or until the Board of Directors redeems the
Rights or the Rights expire), (i) the Rights will be evidenced by the Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after the Record Date
will contain a legend referencing the Rights Agreement, and (iii) the surrender
or transfer of any certificates for Common Shares will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. The Rights are not exercisable until the Distribution Date and
will expire at the close of business on August 23, 2008, unless earlier redeemed
or exchanged by the Company as described below. As soon as practicable after
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date, and thereafter the separate
Right Certificates alone will evidence the Rights.
In the event any Person becomes an Acquiring Person (except with the
approval of the Board of Directors, and except (in certain circumstances) for
persons who inadvertently become Acquiring Persons), each holder of a Right will
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thereafter have the right to receive, upon exercise, an amount of Preferred
Shares having a value equal to two times the Purchase Price. Further, after any
Person becomes an Acquiring Person, in the event (i) the Company consolidates,
or merges with the Acquiring Person or with any other Person if the holders of
Common Shares are not all treated equally (either being referred to as an
"Acquiring Company"), and the Company is not the surviving corporation, (ii) an
Acquiring Company engages in a share exchange, consolidation or merger with the
Company where the Company is the surviving corporation and the outstanding
Common Shares of the Company are exchanged for securities, cash or property of
the Acquiring Company, or (iii) 50% or more of the Company's assets or earning
power is sold or transferred to the Acquiring Company, then each holder of a
Right will thereafter have the right to receive, upon exercise, common stock of
the Acquiring Company having a value equal to two times the Purchase Price. The
events set forth in this paragraph are referred to as the "Triggering Events."
However, following the occurrence of any Triggering Event, all Rights that are
owned by any Acquiring Person will be null and void, and the Acquiring Person
will have no right to purchase Preferred Shares thereunder or to receive any
securities or other property of an Acquiring Company; and any such Rights shall
remain null and void, even if transferred to a person who is not an Acquiring
Person.
The number of Rights outstanding, the Purchase Price payable and the number
of Preferred Shares issuable upon exercise of the Rights are subject to
adjustments from time to time to prevent dilution in the event of certain
changes in the shares of the Company, such as a stock split. The Company may
determine not to issue fractional shares, and in lieu thereof, an adjustment in
cash (or other property) will be made based on the market value of the Common
Shares.
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (subject to adjustment), at any time the earlier to
occur of (i) the close of business ten days following the date a Person first
becomes an Acquiring Person or (ii) the expiration of the Rights. Immediately
after the Board of Directors redeems the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the redemption price.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by any Person of 50% or more of the outstanding Common Shares, the
Board of Directors may exchange the then outstanding and exercisable Rights
(other than Rights owned by an Acquiring Person, which will have become null and
void), in whole or in part, for Common Shares, each Right being exchangeable for
one Common Share.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended in order to (i) cure any
ambiguity, (ii) correct or supplement any provision which may be defective or
inconsistent with other provisions contained in the Rights Agreement, (iii)
shorten or lengthen any time periods under the Rights Agreement (except to make
the Rights redeemable at a time when they are not then redeemable), but
generally only for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights (other than the Acquiring
Person and its Associates and Affiliates).
The Rights have certain anti-takeover effects. The Rights, if exercised,
would cause substantial dilution to a Person or group that attempts to acquire
the Company without conditioning the offer on a substantial number of Rights
being acquired. Accordingly, the existence of the Rights may deter certain
acquirors from making takeover proposals or tender offers. However, the Rights
Agreement is designed to help ensure that the Company's shareholders receive
fair and equal treatment in the event of any proposed takeover of the Company,
and that the Board of Directors has sufficient time to evaluate any proposed
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transaction and, if in the best interests of the Company, to explore alternative
value-enhancing transactions. The dividend of the Rights is not in response to
any specific takeover threat or proposal.
Until separate Rights Certificates are issued, a copy of the Rights
Agreement will be available to registered holders of the Common Shares upon
written request free of charge from the Company or the Rights Agent. After the
Rights Certificates are issued, a copy of the Rights Agreement will be filed
with the Securities and Exchange Commission. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.
ITEM 2. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
<C> <S>
1. Rights Agreement dated as of August 4, 1998 between the Company and American
Stock Transfer & Trust Company as Rights Agent, which includes as Exhibit A thereto
the Form of Rights Certificate and as Exhibit C thereto the Summary of Rights to
Purchase Preferred Stock.
2. Letter from the Company's Chairman regarding adoption of rights plan sent to the
Company's stockholders on or about August 13, 1998.
3. Summary of Rights to Purchase Preferred Stock sent to the Company's stockholders on
or about August 13, 1998, included as Exhibit C to Exhibit No. 1 of this Registration
Statement on Form 8-A, and incorporated herein by reference.
</TABLE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
AMERICAN BINGO & GAMING CORP.
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(Registrant)
By: /s/ Andre M. Hilliou
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Name: Andre M. Hilliou
Title: President and Chief Executive Officer
Dated: August 13, 1998
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<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
<C> <S>
1. Rights Agreement dated as of August 4, 1998 between the Company and American
Stock Transfer & Trust Company as Rights Agent, which includes as Exhibit A thereto
the Form of Rights Certificate and as Exhibit C thereto the Summary of Rights to
Purchase Preferred Stock.
2. Letter from the Company's Chairman regarding adoption of rights plan sent to the
Company's stockholders on or about August 13, 1998.
3. Summary of Rights to Purchase Preferred Stock sent to the Company's stockholders on
or about August 13, 1998, included as Exhibit C to Exhibit No. 1 of this Registration
Statement on Form 8-A, and incorporated herein by reference.
</TABLE>
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AMERICAN BINGO & GAMING CORP.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGREEMENT
Dated as of August 4, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS 3
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SECTION 2. APPOINTMENT OF RIGHTS AGENT 6
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SECTION 3. ISSUE OF RIGHT CERTIFICATES 6
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SECTION 4. FORM OF RIGHT CERTIFICATES 8
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SECTION 5. COUNTERSIGNATURE AND REGISTRATION 9
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED,
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DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES 9
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SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS 10
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SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES 12
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SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES 12
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SECTION 10. PREFERRED SHARES RECORD DATE 13
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SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS 13
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SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES 19
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SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER 20
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SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES 22
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SECTION 15. RIGHTS OF ACTION 23
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SECTION 16. AGREEMENT OF RIGHT HOLDERS 23
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SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER 24
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SECTION 18. CONCERNING THE RIGHTS AGENT 24
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SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT 24
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SECTION 20. DUTIES OF RIGHTS AGENT 25
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<PAGE>
SECTION 21. CHANGE OF RIGHTS AGENT 26
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SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES 27
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SECTION 23. REDEMPTION AND TERMINATION 27
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SECTION 24. EXCHANGE 29
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SECTION 25. NOTICE OF CERTAIN EVENTS 29
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SECTION 26. NOTICES 30
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SECTION 27. SUPPLEMENTS AND AMENDMENTS 31
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SECTION 28. SUCCESSORS 31
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SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS 31
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SECTION 30. BENEFITS OF THIS AGREEMENT 31
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SECTION 31. SEVERABILITY 32
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SECTION 32. GOVERNING LAW 32
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SECTION 33. COUNTERPARTS 32
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SECTION 34. DESCRIPTIVE HEADINGS 32
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EXHIBIT A - FORM OF CERTIFICATE OF DESIGNATION 34
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EXHIBIT B - FORM OF RIGHTS CERTIFICATE 37
EXHIBIT C - SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES 40
</TABLE>
<PAGE>
RIGHTS AGREEMENT
This Rights Agreement, dated as of August 4, 1998 (the "Agreement"), is
between AMERICAN BINGO & GAMING CORP., a Delaware corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation, as Rights
Agent (the "Rights Agent").
The Board of Directors has authorized and declared a dividend distribution
of one Preferred Share purchase right (a "Right") for each Common Share of the
Company outstanding as of the Close of Business on August 24, 1998 (the "Record
Date"), each Right initially representing the right to purchase one
one-thousandth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed (i) the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest of the
Distribution Date (as such term is defined in Section 3), the Redemption Date
(as such term is defined in Section 7) and the Final Expiration Date and (ii) in
certain circumstances provided in Section 22 and in accordance thereof, the
issuance of one Right with respect to each Common Share that shall become
outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, and intending to be legally bound hereby, the parties hereby
agree as follows:
SECTION1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Adverse Person or any Person who
or which, together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 20% or more of the Common Shares then outstanding (other
than as a result of a Permitted Offer (as hereinafter defined)) or was such
Beneficial Owner at any time after the date hereof, whether or not such person
continues to be the Beneficial Owner of 20% or more of the then outstanding
Common Shares, but shall not include any Exempt Person. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of the
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares (or securities convertible into or exchangeable for Common Shares)
outstanding, increases the percentage of Common Shares beneficially owned by
such Person (together with all Affiliates and Associates of such Person);
provided, however, that if any Person (other than Exempt Persons) shall become
an Acquiring Person by reason of share purchases by the Company and such Person
or an Affiliate or Associate of such Person shall, after such share purchases by
the Company, become the Beneficial Owner of any additional Common Shares, then
such Person shall be an "Acquiring Person." Notwithstanding the foregoing,
"Acquiring Person" shall not include any such Person who has reported or is
required to report such ownership (but less than 25% of the then outstanding
Common Shares) on schedule 13G under the Exchange Act (or any comparable or
successor report) or on Schedule 13D under the Exchange Act (or any comparable
or successor report) which Schedule does not state any intention to or reserve
the right to control or influence the management or policies of the Company or
engage in any of the actions specified in Item 4 of such Schedule (other than
the disposition of the Common Shares) and within 10 Business Days of being
requested by the Company to advise it regarding the same, certifies to the
Company that such Person acquired 20% or more of the then outstanding Common
Shares inadvertently or without knowledge of the terms of the Rights and who,
together with all Affiliates and Associates, thereafter does not acquire
additional Common Shares while the Beneficial Owner of 20% or more of the Common
Shares then outstanding; provided, however, that if any Person requested to so
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certify fails to do so within 10 Business Days, then such Person shall become an
Acquiring Person immediately after such 10 Business Day Period.
(b) "Act" means the Securities Act of 1933, as amended from time to
time.
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(c) "Adverse Person" shall mean any Person declared to be an Adverse
Person by the Board of Directors upon determination that the criteria set forth
in Section 11(a)(ii)(B) apply to such Person; provided, however, that the Board
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of Directors shall not declare any Person and to be an Adverse Person if, prior
to the time that such Person acquired 15% or more of the Common Shares, such
Person provided to the Board of Directors in writing a statement of such
Person's acquisition of Common Shares, together with any other information
reasonably requested of such Person by the Board of Directors, and the Board of
Directors, based on such statement and reasonable inquiry and investigation,
including such consultation, if any, with such persons as the directors shall
deem appropriate, determines to notify and notifies such Person in writing that
it will not declare such Person to be an Adverse Person; provided, further, that
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the Board of Directors may expressly condition in any manner a determination not
to declare a Person an Adverse Person on such conditions as the Board of
Directors may select, including, without limitation, such Person's not acquiring
more than a specified amount of stock and/or on such Person's not taking actions
inconsistent with the purposes and intentions disclosed by such Person in the
statement provided to the Board of Directors. No delay or failure by the Board
of Directors to declare a Person to be an Adverse Person shall in any way waive
or otherwise affect the power of the Board of Directors subsequently to declare
a Person to be an Adverse Person. In the event that the Board of Directors
should at any time determine, upon reasonable inquiry and investigation,
including consultation with such persons as the directors shall deem
appropriate, that such Person has not met or complied with any condition
specified by the Board of Directors, the Board of Directors may at any time
thereafter declare such Person to be an Adverse Person.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 1934, as amended from time to
time (the "Exchange Act").
(e) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own", and shall be deemed to have "beneficial ownership"
of, any securities:
(i) that such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) that such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own (1) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (2) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (3) securities issuable
upon exercise of Rights from and after the occurrence of a Triggering Event, if
such Rights were acquired by such Person or such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 or pursuant to Section 11(a)(i) in connection with an adjustment made with
respect to any of the Rights heretofore specified in this clause (3); or (B) the
right to vote or otherwise has "beneficial ownership" (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including 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, pursuant to this subparagraph (B),
any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
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(iii) that are beneficially owned, including pursuant to subparagraphs
(ii)(A) and (B) of this subsection (d), directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person (or any of
such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities) relating to the acquisition, holding, voting
(except pursuant to a revocable proxy or consent as described in the provision
in subparagraph (ii)(B) of this subsection (d)) or disposing of any securities
of the Company;
Notwithstanding anything in this definition of Beneficial Ownership 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.
(f) "Business Day" shall mean any day other than a Saturday, Sunday, or
U.S. federal holiday.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Atlanta, Georgia time, on such date; provided, however, that if such date is not
a Business Day, it shall mean 5:00 P.M., Atlanta, Georgia time, on the next
succeeding Business Day.
(h) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, $0.001 par value per share, of the Company, or in
the event of a subdivision, combination, merger or share exchange with respect
to such shares of common stock, the shares of common stock resulting from such
subdivision, combination or consolidation. "Common Shares" when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such Person or, if such
Person is a Subsidiary of another Person, the Person or Persons that ultimately
control such first-mentioned Person.
(i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(j) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or of any Subsidiary
of the Company, (iv) any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan, or (v) any Person who
or which together with all Affiliates and Associates of such Person becomes the
Beneficial Owner of 20% or more of the then outstanding Common Shares as a
result of the acquisition of Common Shares directly from the Company.
(k) "Final Expiration Date" shall mean August 23, 2008.
(l) "Interested Shareholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, such Affiliate, or Associate has an interest, or any
other Person acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, such Affiliate or Associate.
(m) "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms determined by at least
a majority of the members of the Board of Directors who are not officers of the
Company and who are not Interested Shareholders, nominees or representatives of
an Interested Shareholder to be at a price which is fair to shareholder s(taking
into account all factors that such Directors deem relevant including, without
limitation, prices that could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) and
otherwise in the best interests of the Company and its shareholders (other than
the Person or any Affiliate or Associate thereof on whose behalf the offer is
being made) taking into account all factors that such Directors may deem
relevant.
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(n) "Person" shall mean any individual, firm, partnership, corporation,
limited liability company, trust, association, joint venture or other entity,
and shall include any successor (by merger or otherwise) of such entity.
(o) "Preferred Shares" shall mean shares of Series B Preferred Stock,
with a par value of $0.01 per share, of the Company, having the relative rights,
preferences and limitations set forth in the Form of Certificate of Designation
attached to this Agreement as Exhibit A.
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(p) "Purchase Price shall have the meaning set forth in Section 7(b)
hereof, as adjusted pursuant to Section 11(a)(ii) or Section 13(a)(i), and the
initial Purchase Price shall be $15.00.
(q) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(r) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A) or (B) hereof.
(s) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(t) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such;
provided, that, if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a) hereof, then no Shares Acquisition Date shall be
deemed to have occurred.
(u) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
(v) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13 Event.
SECTION2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
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Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agent and any co-Rights Agents shall be as the
Company shall determine.
SECTION3. ISSUE OF RIGHT CERTIFICATES.
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(a) Until the earlier of (i) the Close of Business on the tenth
calendar day after the Shares Acquisition Date or (ii) at such time as the
Company's Board of Directors may designate after the date that a tender or
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exchange offer by any Person (other than an Exempt Person) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 20% or more of the Common Shares then
outstanding (including, in the case of both (i) and (ii), any date which is
after the date of this Rights Agreement and prior to the issuance of the
Rights), the earlier of (i) and (ii) being herein referred to as the
"Distribution Date", the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and the
right to receive Right Certificates will be transferable only in connection with
the transfer of Common Shares (including transfers to the Company); provided,
however, that if a tender offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender offer. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send, by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, or, with respect to
Common Shares so issued on or after the Distribution Date, to the record holder
of such Common Shares on the date of issuance, at the address of such holder
shown on the records of the Company, a Right Certificate, substantially in the
form of Exhibit B, evidencing one Right for each Common Share so held, subject
---------
to adjustments as provided herein. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
---------
by first-class, postage prepaid mail to each record holder of Common Shares as
of the Close of Business on the Record Date at the address of such holder shown
on the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates for Common Shares registered in the names of
the holders thereof. Until the earlier of the Distribution Date (or the earlier
of the Redemption Date or the Final Expiration Date), the surrender for transfer
of any certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby.
(c) Rights shall be issued in respect of all Common Shares which are
issued after the Record Date but prior to the earlier of the Distribution Date
or Final Expiration Date, or in certain circumstances provided in Section 22,
after the Distribution Date. Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common Shares referred to
in the last sentence of this paragraph (c)) after the Record Date but prior to
the earlier of the Distribution Date, the Redemption Date or the Final
Expiration Date, shall be deemed also to be certificates for Rights and shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between American Bingo & Gaming Corp.
(the "Company") and American Stock Transfer & Trust Company as Rights Agent,
dated as of August 4, 1998 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly following receipt of a written request therefor.
7
<PAGE>
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was, or becomes an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement) and
certain related persons, whether currently held by or on behalf of such Person
or by any subsequent holder, may become null and void.
With respect to such certificates bearing the foregoing legend, until the
Distribution Date the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone and the holders
of record of Common Shares shall also be the holders of record of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificates. In the event that the Company purchases or acquires any Common
Shares after the Record Date but prior to the earlier of the Distribution Date
or the Final Expiration Date, any Rights associated with such Common Shares
shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares which are no longer
outstanding.
(d) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of Common Shares or (D) issue any shares of
its capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
outstanding and the Purchase Price in effect at the time of the record date for
such event shall be proportionately adjusted so that the number of Rights
outstanding after such event shall equal the number of Common Shares outstanding
after such event, and the Purchase Price of the Rights shall be adjusted so that
the product of the number of Rights (adjusted in accord with this Section 3(d))
and the Purchase Price shall equal the product of the number of Rights and the
Purchase Price before such event; 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 that would require an adjustment
under both this Section 3(d) and Section 11(a)(ii), the adjustment provided for
in this Section 3(d) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii). Any adjustment made pursuant
to this Section 3(d) shall not be deemed a redemption pursuant to Section 23 of
this Rights Agreement and shall not require the payment or issuance of any money
or property by the Company or the Rights Agent to the holder of any Right except
upon the exercise of the Rights as adjusted by this Section 3(d).
SECTION 4. FORM OF RIGHT CERTIFICATES.
---------- ------------------------------
(a) The Right Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall be substantially in
the form of Exhibit B and may have such marks of identification or designation
---------
and such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed or any
securities association on whose interdealer quotation system the Rights may from
time to time be authorized for quotation, or to conform to usage. Subject to
the provisions of Section 22, the Right Certificates that are issued in respect
of Common Shares that were issued and outstanding as of the Record Date shall be
dated as of the Record Date, and all Right Certificates that are issued in
respect of other Common Shares shall be dated as of the respective dates of
issuance of such Common Shares, and in both cases on their faces shall entitle
the holders thereof to purchase such number of one one-thousandth Preferred
Shares as shall be set forth therein for the Purchase Price per one
one-thousandth Preferred Share, but the number of such one one-thousandth
Preferred Shares and the Purchase Price shall be subject to adjustment as
provided herein.
8
<PAGE>
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
that represents Rights which are null and void pursuant to Section 7(e) of this
Agreement, and any Right Certificate issued pursuant to Section 6 or Section 11
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to above in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or an
Associate thereof (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby are null
and void.
The absence of the foregoing legend on any Right Certificate shall in no
way affect any of the other provisions of this Agreement, including, without
limitation, the provisions of Section 7(e). The Company shall instruct the
Rights Agent in writing of the Rights which should be so legended and shall
supply the Rights Agent with such legended Right Certificates.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
---------- ------------------------------------
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board of Directors, its Chief Executive Officer, its
President, its Chief Financial Officer or any of its Vice Presidents, either
manually or by facsimile signature, and may but need not have affixed thereto
the Company's seal or a facsimile thereof. The Right Certificates shall be
countersigned by the Rights Agent (manually or by facsimile signature) and shall
not be valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the office of the Rights Agent designated for such
purposes, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights as evidenced on the face
of each of the Right Certificates and the date and certificate number of each of
the Right Certificates.
SECTION6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
--------- ------------------------------------------------------------
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
------------------------------------------------------------------------
(a) Subject to the provisions of Section 4(b), Section 7(e), Section 11
and Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of Preferred Shares (or other securities or other assets,
as the case may be) as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose.
9
<PAGE>
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e), Section 11 and
Section 14, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
--------- -------------------------------------------------------------
RIGHTS.
- -------
(a) Subject to Section 7(e), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for the total number of one one-thousandth
Preferred Shares (or other securities, cash or other assets, as the case may be)
as to which surrendered Rights are exercised, at or prior to the earliest of (i)
the Close of Business on Final Expiration Date, (ii) the time at which the
Rights are redeemed as provided in Section 23 (the "Redemption Date"), or (iii)
the time at which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a Preferred Share
pursuant to the exercise of a Right shall initially be $15.00, shall be subject
to adjustment from time to time as provided herein, including but not limited to
Sections 11 and 13(a) hereof, and shall be payable in accordance with paragraph
(c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares (or other securities or
other assets, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Sections 6(a) and 9(e) (as determined by the
Rights Agent) by certified check, cashier's check, or money order payable to the
order of the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares certificates for the
number of Preferred Shares to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depository agent depository receipts
representing such number of Preferred Shares (or fractions thereof) to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depository
agent) and the Company hereby directs the depository agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional interests in shares in accordance
10
<PAGE>
with Section 14 hereof, (iii) after receipt of such certificates or depository
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificates registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate. In the event the Company is obligated to issue other securities
(including Common Shares) of the Company or distribute other property pursuant
to Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities or property are available for distribution by the
Rights Agent, if and when appropriate. The Company reserves the right to
require, prior to the occurrence of a Triggering Event, that upon any exercise
of Rights, a number of Rights be exercised so that only whole Preferred Shares
would be issued. In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14, or the Rights Agent shall place an appropriate notation on the Right
Certificate with respect to those Rights exercised, in accordance with the last
sentence of Section 7(c).
(e) Notwithstanding anything to the contrary in this Agreement, from
and after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) any Acquiring Person (or any Associate or Affiliate of
an Acquiring Person), (ii) a transferee of an Acquiring Person (or any Associate
or Affiliate of an Acquiring Person) who or which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
any Associate or Affiliate of an Acquiring Person) who or which becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) to holders of equity interests in such Acquiring Person (or of
such Associate or Affiliate) or to any Person with whom the Acquiring Person has
any agreement, arrangement or understanding regarding the transferred Rights, or
(B) a transfer that the Board of Directors has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of its
failure to make any determination under this Section 7(e) or such Section 4(b)
with respect to any Acquiring Person or an Associate or Affiliate of an
Acquiring Person or their transferees.
(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 transfer or
exercise unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Right Certificate surrendered for such
assignment or 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.
11
<PAGE>
SECTION8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
--------- --------------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement, including but not limited to
Section 7(c), Section 7(d), and Section 11(p). The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
--------- ------------------------------------------------------
(a) The Company covenants and agrees that at all times prior to a
Section 11(a)(ii) Event, it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
pursuant to the terms of this Agreement and, after the occurrence of a Section
11(a)(ii) Event, shall, to the extent reasonably practicable, so reserve and
keep available a sufficient number of Common Shares (and/or other securities)
which may be required to permit the exercise in full of the Rights pursuant to
this Agreement; provided, however, that such action need not be taken with
respect to Preferred Shares (or other securities) issuable upon exercise of the
Rights until after such time as the Rights become exercisable, and with respect
to Preferred Shares (or other securities) issuable upon occurrence of a
Triggering Event, until the occurrence of such event.
(b) So long as the Preferred Shares (and, after the occurrence of a
Section 11(a)(ii) Event, Common Shares or any other securities) issuable upon
the exercise of Rights may be listed on any national securities exchange or
authorized for quotation on any interdealer quotation system of any securities
association, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as is
practicable following the Shares Acquisition Date, a registration statement
under the Act with respect to the Rights and the Preferred Shares or other
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statements to become effective as soon as practicable
after such filing and (iii) cause such registration statements to remain
effective (with a prospectus at all times meeting the requirements of the Act
and the rules and regulations thereunder) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities or (B) the
Final Expiration Date. The Company will also take such action as may be
appropriate under the blue sky laws of the various states. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this paragraph, the
exercisability of the Rights in order to prepare and file such registration
statements and permit them to become effective and to take such actions under
such other securities or blue sky laws and permit them to become effective.
Upon 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.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise thereof shall not
be permitted under applicable law or a registration statement shall not have
been declared effective.
12
<PAGE>
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares or other securities
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and non-assessable shares or
securities.
(e) The Company further covenants and agrees that, subject to Sections
6(a) and 7(c), it will pay when due and payable any and all foreign, federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any Preferred Shares (or other
securities or property) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depository receipts for the Preferred
Shares (or other securities or property) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise, or to issue or deliver any certificates or depository receipts for
Preferred Shares (or other securities or property) upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
SECTION10. PREFERRED SHARES RECORD DATE. Each person in whose name any
---------- ----------------------------
certificate for Preferred Shares (or other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares (or other securities) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
other securities) transfer books of the Company are closed or a date on which
the exercisability of the Rights is suspended pursuant to Section 9(c), such
person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, as applicable, the next succeeding Business Day
on which the Preferred Shares (or other securities) transfer books of the
Company are open, or the next succeeding Business Day on which such suspension
is no longer in effect, as the case may be.
SECTION11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
---------- ------------------------------------------------------------
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities covered
- ----------------
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e) hereof, then
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books (or other capital
stock transfer books, as the case may be) of the Company were open, such holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event occurs that would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
13
<PAGE>
(ii) In the event (A) any Person shall, at any time after the
Record Date, become an Acquiring Person, unless the event causing the person to
become an Acquiring Person is a transaction set forth in Section 13(a) hereof,
or is an acquisition of Common Shares pursuant to a Permitted Offer, or (B) the
Board of Directors shall declare any Person to be an Adverse Person, upon a
determination that such Person, alone or together with its Affiliates and
Associates, has, at any time after this Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a filing under the Exchange
Act, become the Beneficial Owner of a number of Common Shares which the Board of
Directors determines to be substantial (which number of shares shall in no event
represent less than 15% of the outstanding Common Shares) and a determination by
the Board of Directors, after reasonable inquiry and investigation, including
such consultation, if any, with such persons as such directors shall deem
appropriate and consideration of such factors as are permitted by applicable
law, that (a) such Beneficial Ownership by such Person is intended to cause the
Company to repurchase the Common Shares beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions intended to provide such Person with short-term financial
gain under circumstances where the Board of Directors determines that the best
long-term interests of the Company would not be served by taking such action or
entering into such transaction or series of transactions at the time, or (b)
such Beneficial Ownership is causing or reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of relationships with
customers or impairment of the Company's ability to maintain its competitive
position) on the business or prospects of the Company to the detriment of the
Company's shareholders, then, promptly following the occurrence of such Section
11(a)(ii) Event, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall, for a period of 60
days after the later of the occurrence of any such event or the effective date
of an appropriate registration statement under the Act pursuant to Section 9
hereof, have a right to receive, upon exercise thereof at the then current
Purchase Price, in accordance with the terms of this Agreement, such number of
one one-thousandths of a Preferred Share as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and
dividing that product (y) by 50% of the then current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
date of such first occurrence (such number of shares is herein called the
"Adjustment Shares"); provided, however, that the Purchase Price and number of
Adjustment Shares shall be further adjusted as provided in this Agreement to
reflect any event occurring after the date of such first occurrence; and further
provided 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 the event that there shall not be sufficient authorized
but unissued (and unreserved) Preferred Shares (or fractions thereof) to permit
the exercise in full of the Rights in accordance with the foregoing subparagraph
(ii) and the Rights become so exercisable, notwithstanding any other provision
of this Agreement, to the extent necessary and permitted by applicable law, each
Right shall thereafter represent the right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of this Agreement,
(x) a number of (or fractions of) Common Shares (up to the maximum number of
Common Shares which may permissibly be issued) and (y) a number of (or fractions
of) other equity securities of the Company (or, in the discretion of the Board
of Directors, debt) including but not limited to one one-thousandths of a
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Preferred Share, which the Board of Directors has determined to have the same
aggregate current market value (determined pursuant to Section 11(d)(i) and (ii)
hereof, to the extent applicable) as one one-thousandths of a Preferred Share
(such number of, or fractions of, equity securities or debt of the Company)
being referred to as a "capital stock equivalent"), equal in the aggregate to
the number of Adjustment Shares; provided, however, if there are unavailable
sufficient Preferred Shares, Common Shares and/or capital stock equivalents, and
the Board of Directors has determined not to cover such shortfall by having the
Company issue debt in the amount of such shortfall, then the Company shall, to
the extent permitted by applicable law, take all such action as may be necessary
to authorize additional Preferred Shares, Common Shares or capital stock
equivalents for issuance upon exercise of the Rights, including the calling of a
meeting of shareholders; and provided, further, that if the Company is unable to
cause sufficient Preferred Shares, Common Shares and/or capital stock
equivalents to be available for issuance upon exercise in full of the Rights,
then each Right shall thereafter represent the right to receive the Adjusted
Number of Shares upon exercise at the Adjusted Purchase Price (as such term is
hereinafter defined). As used herein, the term "Adjusted Number of Shares"
shall be equal to that number of (or fractions of) Preferred Shares (and/or
capital stock equivalents) equal to the product of (x) the number of Adjustment
Shares and (y) a fraction, the numerator of which is the number of Preferred
Shares (and/or capital stock equivalents) available for issuance upon the
exercise of the Rights and the denominator of which is the aggregate number of
Adjustment Shares otherwise issuable upon exercise in full of all Rights
(assuming there were a sufficient number of Preferred Shares available)(such
fraction being referred to as the "Proration Factor"). The "Adjusted Purchase
Price shall mean the product of the Purchase Price and the Proration Factor.
The Board of Directors may, but shall not be required to, establish procedures
to allocate the right to receive Preferred Shares, Common Shares and capital
stock equivalents upon exercise of the Rights among holders of Rights.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as Preferred Shares, ("Equivalent
Preferred Shares")), or securities convertible into Preferred Shares or
Equivalent Preferred Shares at a price per Preferred Share or per equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or Equivalent Preferred Shares) less than the
current per share market price of the Preferred Shares (as determined pursuant
to Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or Equivalent Preferred Shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current per share market price and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or Equivalent
Preferred Shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. In case such subscription
price may be paid in consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price that 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 Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular scheduled cash dividend or a dividend payable in Preferred
Shares but including a dividend payable in stock other than Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current per share
market price of the Preferred Shares (as determined pursuant to Section 11(d)
hereof) on such record date less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares (as determined pursuant
to Section 11(d) hereof); 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 the Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
that would then be in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the "current per share market price" of Preferred Shares on any date
shall be deemed to be the average of the daily closing prices per share of such
Preferred Shares for the ten (10) consecutive Trading Days immediately following
such date; provided, however, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of thirty (30)
Trading Days, or ten (10) Trading Days, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal United States national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any United States
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the United States
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 on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
United States professional market maker making a market in the Security selected
by the Board of Directors. If on any such date no such market maker is making a
market in the Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors shall be used. The term
"Trading Day" shall mean a day on which the principal United States national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any United States national securities exchange, a
Business Day.
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<PAGE>
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in accordance
with the method set forth in Section 11(d)(i). If the Preferred Shares are not
publicly traded, the "current per share market price" of the Preferred Shares
shall be conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i), (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one thousand (1000). If neither
the Common Shares nor the Preferred Shares are publicly held or so listed or
traded, "current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes and binding on the holders of Rights. For all purposes of this
Agreement, the "current per share market price" of one one-thousandth of a
Preferred Share shall be equal to the "current per share market price" of one
Preferred Share divided by 1000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments that by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one hundred-thousandth of a Preferred Share or other
share, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with respect
to the Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-thousandths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record immediately prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one hundred-thousandth) obtained by (i) first multiplying (x) the number
of one-one thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) then dividing the product so obtained
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
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<PAGE>
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(h), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights on such record date Right Certificates evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and may bear, at
the option of the Company, the adjusted Purchase Price, and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares issuable upon exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Preferred Shares that were expressed in the
initial Right Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the Preferred Shares issuable
upon exercise of the Rights, the Company shall take any corporate action that
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares, Common
Shares or other securities at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing, to the holder of any Right exercised after such record date,
of the Preferred Shares or other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon exercise on
the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its sole discretion the Board of Directors shall determine to
be advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the
current market price, (iii) issuance wholly for cash of Preferred Shares or
other securities that by their terms are convertible into or exchangeable for
Preferred Shares, (iv) stock dividends, or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such shareholders.
(m) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(n)
hereof), (ii) merge with or into or engage in a share exchange with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(n) hereof), or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
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<PAGE>
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(n) hereto), if (x) at the
time of or immediately after such consolidation, merger, share exchange or sale
there are any rights, warrants, or other instruments or securities outstanding
or agreements in effect which would materially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, share
exchange or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates or Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the Distribution Date,
it shall not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action, the purpose of which
is, or if at the time such action is taken it is reasonably foreseeable that the
effect of such action will be, to materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date consolidate with, or merge with or into, any
other Person for the primary purpose of a change of domicile of the Company,
and, in connection with such consolidation or merger, all of the outstanding
Common Shares shall be changed into or exchanged for Common Shares of the
surviving corporation of such consolidation or merger (the "Surviving
Corporation"), then proper provision shall be made so that Rights shall be
associated with each Common Share of the Surviving Corporation, except as
provided in Section 7(e) hereof, such that the number of Rights associated with
each Common Share of the Surviving Corporation following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction the numerator of
which shall be the total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which shall be the total
number of Common Shares of the Surviving Corporation which the Common Shares
were changed into or exchanged for pursuant to the consolidation or merger.
Following such a consolidation or merger, this Agreement shall remain in effect
and all references to the Company shall be deemed to be references to the
Surviving Corporation.
(p) The exercise of Rights under Section 11(a)(ii) shall only result in
the loss of rights under Section 11(a)(ii) to the extent so exercised and shall
not otherwise affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
SECTION12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
---------- ------------------------------------------------------------
Whenever an adjustment is made as provided in Sections 11 or 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares and the
Preferred Shares a copy of such certificate, and (c) mail a brief summary
thereof to each holder of record of a Right Certificate (or, if prior to the
Distribution Date, to each holder of record of a certificate representing Common
Shares) in accordance with Section 26 hereof. The Rights Agent shall be fully
protected in relying on such certificate and on any adjustment contained therein
and shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.
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SECTION13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
---------- ------------------------------------------------------------
EARNING POWER.
----------
(a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly, (x) the Company shall engage in a share exchange with,
consolidate with, or merge with and into, any Interested Shareholder or, if in
such merger, share exchange or consolidation all holders of Common Share are not
treated alike (and the holders of Preferred Shares do not receive at least as
much per one one-thousandth of a Preferred Share as holders of Common Shares
receive for each Common Share so held), any other Person, (y) the Company shall
engage in a share exchange with, consolidate with, or merge with, any Interested
Shareholder or, if in such merger, share exchange or consolidation all holders
of Common Shares and are not treated alike (and the holders of Preferred Shares
do not receive at least as much per one one-thousandth of a Preferred Share as
holders of Common Shares receive for each Common Share so held), any other
Person, and the Company shall be the continuing or surviving corporation of such
share exchange, consolidation or merger (other than, in a case of any
transaction described in (x) or (y), a share exchange, consolidation or merger
which would result in all of the securities generally entitled to vote in the
election of directors ("voting securities") of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity) all
of the voting securities of the Company or such surviving entity outstanding
immediately after such share exchange, consolidation or merger and the holders
of such securities not having changed as a result of such share exchange,
consolidation or merger), or (z) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Interested Shareholder or Shareholders
or, if in such transaction all holders of Common Shares are not treated alike
(and the holders of Preferred Shares do not receive at least as much per one
one-thousandth of a Preferred Share as holders of Common Shares receive for each
Common Share so held), any other Person or Persons (other than the Company or
any Subsidiary of the Company in one or more transactions each of which complies
with Section 11(n) hereof), then, and in each such case (except as provided in
Section 13(d) hereof) proper provision shall be made so that
(i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement and
in lieu of Preferred Shares, such number of validly authorized and issued, fully
paid, nonassessable and freely tradable Common Shares of the Principal Party (as
such term is hereinafter defined), not subject to any liens, encumbrances,
rights of call, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (A) multiplying the then current Purchase Price
by the number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event (or,
if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the Purchase Price in effect immediately prior to
the first occurrence of a Section 11(a)(ii) Event by the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such first occurrence of a Section 11(a)(ii) Event), and
(B) dividing that product by 50% of the current per share market price of the
Common Shares of such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event;
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(iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares) in
connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter deliverable upon
the exercise of the Rights; and
If, in the case of a transaction of the kind described in clause (z) of the
first sentence of this Section 13(a), the Person or Persons to whom assets or
earning power are sold or otherwise transferred are individuals, then the
preceding sentences of this Section 13(a) shall be inapplicable, and the Company
shall require as a condition to such sale of transfer that such Person or
Persons pay to each holder of a Right Certificate, upon its surrender to the
Rights Agent and in exchange therefor (without requiring payment by such
holder), cash in the amount determined by multiplying the then current Purchase
Price by the number of one one-thousandths of a Preferred Share for which a
Right is then exercisable.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the issuer of any
securities for or into which Common Shares of the Company are converted in such
share exchange, merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation (including, if
applicable, the Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
twelve (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
Shares of which are and have been so registered, then "Principal Party" shall
refer to such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value; and (3) in case such Person is owned, directly or indirectly, by
the same Person, the rules set forth in (1) and (2) above shall apply to each of
the chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and the
Principal Party in each such chain shall bear the obligations set forth in this
Section 13 in the same ratio as their direct and indirect interests in such
Person bear to the total of such interests.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized shares of Common
Shares which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any such Section 13 Event, the
Principal Party will
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Final Expiration Date;
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<PAGE>
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the securities or
blue sky laws of such jurisdictions as may be necessary or appropriate and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive share
exchanges, mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if: (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a Permitted Offer (or a wholly
owned Subsidiary of any such Person or Persons); (ii) the price per Common
Share offered in such transaction is not less than the price per Common Share
paid to all holders of Common Shares whose shares were purchased pursuant to
such Permitted Offer; and (iii) the form of consideration offered in such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
SECTION14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
---------- --------------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that evidence fractional Rights unless the
required by Section 11(h) hereof and the Company made the election described in
Section 11(h) hereof. In lieu of any adjustment in the number of Rights, the
Purchase Price and the number of Preferred Shares or other securities to be
issued upon the exercise of the Rights shall be adjusted as provided in this
Rights Agreement.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are one one-thousandth or integral multiples
of one one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates that evidence fractions of Preferred Shares (other than
fractions which are one one-thousandth or integral multiples of one
one-thousandth of a Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-thousandth of a Preferred Share may, at the election of the
Company, be evidenced by depository receipts, pursuant to an appropriate
agreement between the Company and a depository selected by it; provided, that
such agreement shall provide that the holders of such depository receipts shall
have the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depository
receipts. In lieu of fractional interests in Preferred Shares that are not one
one-thousandth or integral multiples of one one-thousandth of a Preferred Share,
the Company shall pay to the holders of record of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current per share market price of one one-thousandth of a
Preferred Share (determined pursuant to Section 11(d) hereof).
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive Common Shares,
capital stock equivalents (other than Preferred Shares) or other securities upon
the exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such Common Shares, capital stock equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractions of such Common Shares, capital stock equivalents or other
securities. In lieu of fractional shares or units of such Common Shares,
capital stock equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
per share market price of a share or unit of such Common Shares, capital stock
equivalents or other securities (determined pursuant to Section 11(d) hereof).
22
<PAGE>
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
(except as provided by this Section 14) upon exercise of a Right.
SECTION15. RIGHTS OF ACTION. All rights of action in respect of this
---------- -------------------
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and 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 Agreement.
SECTION16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
---------- ------------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully completed and duly executed;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to Section 7(e), 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; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
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<PAGE>
SECTION17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
---------- --------------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
SECTION18. 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 Agreement and
the exercise and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
SECTION19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
---------- ------------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or all or substantially all of the corporate trust business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
24
<PAGE>
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name, and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
SECTION20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
---------- --------------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity or existence of any Acquiring
Person and the determination of "current per share market price" of any
security) be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the
Board of Directors, the Chief Executive Officer, the Chief Financial Officer,
any Vice President, the Secretary, an Assistant Secretary or the Treasurer of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof) or for any adjustment
required under the provisions of Section 11 or Section 13 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 change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
25
<PAGE>
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board of Directors, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
SECTION21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
---------- -------------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 60 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and the Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares and the Preferred Shares
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the holder of record of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
any state of the United States so long as such corporation is authorized to do
business as a banking institution, is in good standing, is authorized under such
laws to exercise corporate trust powers, and is subject to supervision or
examination by federal or state authority, and has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
26
<PAGE>
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 with the predecessor
Rights Agent and each transfer agent of the Common Shares and the Preferred
Shares, and mail a notice thereof in writing to the holders of record of the
Right Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
SECTION22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
---------- ------------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) the
Company shall not be obligated to issue any such Right Certificate if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or to the Person to whom such Right Certificate would be issued, and
(ii) no such Right Certificate shall be issued if, and to the extent that,
appropriate adjustments shall otherwise have been made in lieu of the issuance
thereof.
SECTION23. REDEMPTION AND TERMINATION.
---------- -----------------------------
(a)(i) The Board of Directors may, at its option, redeem all but not
less than all of the then outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being referred to as the "Redemption Price"), at any time prior
to the earlier of (x) the Close of Business on the tenth calendar day following
the Shares Acquisition Date or (y) the Close of Business on the Final Expiration
Date. Notwithstanding the foregoing, in the event payment of the Redemption
Price to a holder of Rights would result in the payment of an amount not equal
to $.01 or an integral multiple of $.01, the amount to be paid shall be rounded
upward to the next $.01. Notwithstanding anything contained in this Agreement
to the contrary, the Rights shall not be exercisable after the first occurrence
of a Section 11(a)(ii) Event until such time as the Company's right of
redemption set forth in the first sentence of this Section 23(a) has expired.
The Company, may, at its option, pay the Redemption Price in cash, Common Shares
(based on the current market price per share at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors
provided, that if the Company elects to pay the Redemption Price in Common
Shares, the Company shall not be required to issue any fractional Common Shares
and the number of Common Shares issuable to each holder of Rights shall be
rounded to the next whole share.
(ii) In addition, the Board of Directors may, at its option, at any
time following the occurrence of a Section 11(a)(ii) Event and the expiration of
any period during which the holder of Rights may exercise the rights under
Section 11(a)(ii) but prior to any Section 13 Event redeem all but not less than
all of the then outstanding Rights at the Redemption Price (x) in connection
with any merger, consolidation or sale or other transfer (in one transaction or
in a series of related transactions) of assets or earning power aggregating 50%
27
<PAGE>
or more of the earning power of the Company and its subsidiaries (taken as a
whole) in which all holders of Common Shares are treated alike and not involving
(other than as a holder of Common Shares being treated like all other such
holders) an Interested Shareholder or (y)(aa) if and for so long as the
Acquiring Person is not thereafter the Beneficial Owner of 20% of the Common
Shares, and (bb) at the time of redemption no other Persons are Acquiring
Persons.
(ii) Notwithstanding any other provisions of this Section 23, the Board
of Directors may not redeem the Rights following the determination pursuant to
Section 11(a)(ii)(B) that any Person is an Adverse Person.
(b) In the case of a redemption permitted under Section 23(a),
immediately upon the date for redemption set forth or determined in the manner
specified in a resolution of the Board of Directors ordering the redemption of
the Rights, evidence of which shall be filed with the Rights Agent, and without
any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. In the case of a
redemption permitted only under Section 23(a)(ii), evidence of which shall have
been filed with the Rights Agent, the right to exercise the Rights will
terminate and represent only the right to receive the Redemption Price upon the
later of ten Business Days following giving of such notice or the expiration of
any period during which the rights under Section 11(a)(ii) may be exercised.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within ten (10) days after action of
the Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Shares. Any notice
that is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and Section 24 hereof and other than
in connection with the purchase of Common Shares prior to the Distribution Date.
(c) The Company may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the manner
of redemption of the Rights in accordance with this Agreement, and (ii) mailing
payment of the Redemption price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent of
the Common Shares, and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by the Company.
SECTION24. EXCHANGE.
---------- ---------
(a) The Board of Directors may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for Common Shares, at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such number of Common Shares issuable in exchange for one Right being
referred to herein as the "Exchange Shares"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than any Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
28
<PAGE>
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24, without
any further action and without any notice the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive the Exchange Shares. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or Equivalent Preferred Shares, as such
term is defined in Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one one-thousandth Preferred
Share (or equivalent preferred share) for each Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Shares
pursuant to the terms thereof, so that the fractions of a Preferred Share
delivered in lieu of each Common Share shall have the same voting rights as one
Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding, or authorized but unissued, to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of the
Rights , or shall take such other action specified in Section 11(a)(iii) hereof.
SECTION25. NOTICE OF CERTAIN EVENTS.
---------- ----------------------------
(a) In case the Company shall propose, (i) to pay any dividend payable
in stock of any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other than a
regularly scheduled cash dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(n) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions, each of which complies with Section 11(n) hereof),
or (v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action to the extent feasible that shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever shall be
the earlier.
29
<PAGE>
(b) In case of a Triggering Event shall occur, then (i) the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26, a notice of the occurrence of such
event, which shall describe such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) or Section 13 hereof, and (ii) all
references in the preceding paragraph to Preferred Shares shall be deemed
thereafter to also refer to Common Shares and/or other securities, if
appropriate.
(c) 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 on any such action.
SECTION26. NOTICES. Notices or demands authorized by this Agreement to
---------- --------
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
American Bingo & Gaming Corp.
1440 Charleston Hwy.
West Columbia, SC 29169
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Compliance Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Right Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares) 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.
SECTION27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date,
---------- ---------------------------
the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement (including supplements or
amendments that may be deemed to affect the interests of the holders of Right
Certificates adversely) without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date, the Company
may and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with the other
provisions contained herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided,
however, that this Agreement shall not be supplemented or amended to lengthen
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable,
or (B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or, the benefits to, the
30
<PAGE>
holders of Rights (other than an Acquiring Person or any Affiliate or Associate
of an Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company that 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, provided that the proposed supplement or amendment
does not adversely affect the rights or obligations of the Rights Agent under
Section 18 or Section 20 of this Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares.
SECTION28. SUCCESSORS. All the covenants and provisions of this
---------- -----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The
---------- -------------------------------------------------------
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement. For all purposes of this
Agreement, any calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board of Directors to any
liability to the holders of the Rights.
SECTION30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
---------- ---------------------------
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares).
SECTION31. SEVERABILITY. If any term, provision, covenant or
---------- -------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors determines in its good faith judgment that severing the invalid
language of this Agreement would adversely affect the purpose or effect of this
Agreement, then the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors.
SECTION32. GOVERNING LAW. This Agreement, each Right and each Right
---------- ---------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state.
31
<PAGE>
SECTION33. COUNTERPARTS. This Agreement may be executed in any number
---------- -------------
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
---------- ----------------------
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
(CONTINUED ON NEXT PAGE)
32
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
AMERICAN BINGO & GAMING CORP.
By: /s/ Andre M. Hilliou
-----------------------
Andre M. Hilliou, Chief Executive Officer
AMERICAN STOCK
TRANSFER & TRUST COMPANY
By: /s/ Herbert J. Lemmer
-----------------------
Name: Herbert J. Lemmer
Title: Vice President
33
<PAGE>
Exhibit A
---------
FORM OF CERTIFICATE OF DESIGNATION
----------------------------------
FOR
---
AMERICAN BINGO & GAMING CORP.
-----------------------------
CERTIFICATE OF DESIGNATION
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN BINGO & GAMING CORP.
(Pursuant to Section 151 of the of the Delaware General Corporation Law)
American Bingo & Gaming Corp., a Delaware corporation (the
"Corporation"), in accordance with the provisions of Section 103 of the
General Corporation Law of the State of Delaware (the "DGCL") DOES HEREBY
CERTIFY:
That pursuant to authority vested in the Board of Directors of the
Corporation (the "Board of Directors" or the "Board") by the Certificate of
Incorporation, as amended, of the Corporation, the Board of Directors, by
at a meeting held August 4, 1998, adopted a resolution providing for the
creation of a series of the Corporation's Preferred Stock, $.01 par value,
which series is designated "Series B Preferred Stock", which resolution is
as follows:
RESOLVED, that pursuant to authority vested in the Board of Directors by
the Certificate of Incorporation, as amended, the Board of Directors does hereby
provide for the creation of a series of the Preferred Stock, $.01 par value
(hereafter called the "Preferred Stock"), of the Corporation, and to the extent
that the voting powers and the designations, preferences and relative,
participating, optional or other special rights thereof and the qualifications,
limitations or restrictions of such rights have not been set forth in the
Certificate of Incorporation, as amended, of the Corporation, does hereby fix
the same as follows:
The rights, preferences, privileges, and limitations granted to and imposed
on the Series B Preferred Stock (the "Series B Preferred Stock"), which series
shall consist of 300,000 shares, are as set forth below. The following rights,
preferences, privileges, and limitations are subject to the designation,
description, and terms of one or more subsequent series of Preferred Stock by
the Board of Directors of American Bingo & Gaming Corp. (the "Corporation")
pursuant to authority granted by the Certificate of Incorporation. To the extent
that the rights, preferences, privileges, and limitations of any such subsequent
series conflict or are inconsistent with any of the rights, preferences,
privileges, and limitations of the Series B Preferred Stock, the designation and
description of terms of the subsequent series which is the latest so designated
shall control and prevail over the rights, preferences, privileges, and
limitations of the Series B Preferred Stock.
34
<PAGE>
SECTION 1. SERIES B PREFERRED STOCK. There shall be a series of
Preferred Stock referred to "Series B Preferred Stock."
SECTION 2. DESIGNATION, PAR VALUE AND AMOUNT. The shares of Series B
Preferred Stock shall be with par value of $0.01 per share, and the number of
shares constituting such series shall be 300,000; provided, however, that, if
more than a total of 300,000 shares of Series B Preferred Stock shall be
issuable upon the exercise of Rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of August 4, 1998, between the Corporation and
American Stock Transfer Company, as Rights Agent, as amended from time to time
(the "Rights Agreement"), the Board of Directors of the Corporation, pursuant to
Section 151 of the Delaware General Corporation Law, shall direct by resolution
or resolutions that a Certificate of Designation be properly executed and filed
providing for the total number of shares of Series B Preferred Stock authorized
to be issued to be increased (to the extent that the Certificate of
Incorporation then permits) to the largest number of whole shares (rounded up to
the nearest whole number) issuable upon exercise of the Rights.
SECTION 3. VOTING RIGHTS. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Except as required by applicable law, the holders of shares of
Series B Preferred Stock and the holders of shares of the Corporation's Common
Stock, $0.001 par value (the "Common Stock"), shall vote together as one class
on all matters submitted to a vote of shareholders of the Corporation.
(B) Each share of Series B Preferred Stock shall entitle the
holder thereof to 1000 votes on all matters submitted to a vote of the
shareholders of the Corporation.
(C) The Certificate of Incorporation of the Corporation shall not
be further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series B 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 B Preferred Stock, voting
separately as a class.
(D) Except as set forth herein (or as otherwise required by
applicable law), holders of Series B Preferred Stock shall have no general or
special voting rights and their consent shall not be required for taking any
corporate action.
SECTION 4. DIVIDENDS. The holders of Series B Preferred Stock shall
share ratably in any dividend or distribution declared by the Corporation on
shares of Common Stock in a ratio of 1000 to one with respect to a share of
Series B Preferred Stock and a share of Common Stock, respectively.
SECTION 5. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Subject to the prior and superior rights of holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series B Preferred Stock with respect to rights upon liquidation, dissolution
or winding up (voluntary or otherwise), no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock unless
prior thereto the holders of shares of Series B Preferred Stock shall have
received $0.01 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, if any, to the date of such payment (the "Series B
Liquidation Preference"). Following the payment of the full amount of the
Series B Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series B Preferred Stock unless, prior thereto, the
35
<PAGE>
holders of shares of Common Stock shall have received an amount per share (the
"Capital Adjustment") equal to the quotient obtained by dividing (i) the Series
B Liquidation Prefer-ence by (ii) 1000. Following the payment of the full
amount of the Series B Liquidation Preference and the Capital Adjustment in
respect of all outstanding shares of Series B Preferred Stock and Common Stock,
respectively, holders of Series B Preferred Stock and holders of Common Stock
shall receive a ratable and proportionate share of the remaining assets to be
distributed in the ratio of 1000 to one (1) with respect to Series B Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) If there are not sufficient assets available to permit payment
in full of the Series B Liquidation Preference and the liquidation preferences
of all other series of preferred stock, if any, which rank on a parity with the
Series B Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of Series B Preferred Stock and the holders of such
parity shares in proportion to their respective liquidation preferences. If
there are not sufficient assets available to permit payment in full of the
Capital Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
SECTION 6. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series B Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 1000 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.
SECTION 7. NO REDEMPTION. The shares of Series B Preferred Stock
shall not be redeemable.
SECTION 8. RANKING. The Series B Preferred Stock shall rank junior
to the Series A Convertible Preferred Stock and to all other series of the
Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
SECTION 9. REACQUIRED SHARES. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, in any other Certificate of Designation creating a
series of Preferred Stock or as otherwise required by law.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by its Chief Executive Officer as of August 4, 1998.
----------------------------------
Andre M. Hilliou, Chairman and
Chief Executive Officer
36
<PAGE>
Exhibit B
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
-----------------
NOT EXERCISABLE AFTER AUGUST 23, 2008 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF THE
RIGHTS AGREEMENT.]
Right Certificate
AMERICAN BINGO & GAMING CORP.
This certifies that , or registered assigns, is the
--------------------
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of August 4, 1998 (the "Rights Agreement"), between American
Bingo & Gaming Corp., a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Atlanta, Georgia time) on August 23, 2008,
unless the Rights evidenced hereby shall have been previously redeemed by the
Company, at the office of the Rights Agent designated for such purpose, or at
the office of its successor as Rights Agent, one one-thousandth of a fully-paid,
non-assessable share of Series B Preferred Share, $0.01 par value per share (the
"Preferred Shares"), of the Company, (or in certain circumstances, cash,
property or other securities of the Company), at a purchase price of $15.00 per
one one-thousandth Preferred Share (the "Purchase Price"), per Right represented
by this Right Certificate, upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate and the number of one one-thousandths
of a Preferred Share which may be purchased upon exercise thereof set forth
above, and the Purchase Price set forth above, are the number and Purchase Price
as of August 4, 1998 based on the Preferred Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is described
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate who
becomes a transferee after the Acquiring Person becomes such, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such, then such Rights shall
become null and void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-thousandth Preferred Shares or other securities that may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
The portion of the legend shall be modified to apply to an Acquiring Person as
applicable and shall replace the preceding sentence.
37
<PAGE>
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may, but are not required to, be redeemed by the Company at a
redemption price of $.01 per Right (subject to adjustment as provided in the
Rights Agreement), payable in cash (or, in certain circumstances, Common Shares
or any other form of consideration deemed appropriate by the Company's Board of
Directors).
The Company shall not be required to issue any fractional Preferred Shares
will be issued upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are one one-thousandth or integral multiples of one
one-thousandth of a Preferred Share, which may, at the election of the Company,
be evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or other
distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of ______________ .
AMERICAN BINGO & GAMING CORP.
By:
------------------------------------
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------------------
Authorized Officer
38
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and
------------------------------
transfers unto this Right
-------------------------------------------
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint Attorney to transfer
---------------
the within Right Certificate on the books of the within-named Company, with full
power of substitution.
Dated:
----------------------- -----------------------------------------
Signature
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to exercise
Rights represented by the Right Certificate.)
To: American Stock Transfer & Trust Company
The undersigned hereby irrevocably elects to exercise Rights
--------------
represented by this Right Certificate to purchase the Preferred Shares (or such
other securities of the Company or of any other person which may be issuable
upon exercise of the Rights) issuable upon the exercise of such Rights and
requests that certificates for such securities be issued in the name of and
delivered to:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
(Please insert social security or other identifying number)
Dated:
----------------------- -----------------------------------------
Signature
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement),
(2) Rights evidenced by this Rights Certificate are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), and
(3) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person.
Dated:
----------------------- -----------------------------------------
Signature
WARNING
The signatures in the foregoing Election to Purchase, Assignment and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever. In the event the Certificate set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate of such
Acquiring Person (as defined in the Rights Agreement), and such Assignment or
Election to Purchase will not be honored.
39
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On August 4, 1998 the Board of Directors of American Bingo & Gaming Corp.
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock of the Company (the "Common
Shares"). The dividend is payable to holders of record at the close of business
on August 24, 1998 (the "Record Date") of the Company's Common Shares, and with
respect to Common Shares issued thereafter until the Distribution Date (defined
below) and, in certain circumstances, with respect to Common Shares issued after
the Distribution Date. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series B Preferred Stock (the "Preferred Shares")
at a purchase price of $15.00 per one one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. Holders of Preferred Shares will vote
together with the holders of Common Shares on all matters, with each full
Preferred Share having one thousand votes; holders of Preferred Shares will
share proportionately in any dividend or distribution declared on the Common
Shares, on a 1000-to-one basis; and if the Company is liquidated, the holders of
Preferred Shares will participate proportionately with the holders of Commons
Shares in any distributions, on a 1000-to-one basis, with the holders of the
Preferred Shares receiving some preferential distributions before the holders of
Common Shares receive any distributions.
A description of and the terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and American Stock
Transfer & Trust Company (the "Rights Agent"), dated as of August 4, 1998.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. Also, the Rights initially will not be tradable separate from the
Common Shares. The Rights will become exercisable and will separate from the
Common Shares upon the earlier of (i) ten calendar days after a Person or group
of affiliated Persons acquire ownership of 20% or more of the outstanding Common
Shares (unless such acquisition is approved by the Board of Directors); (ii) at
such time as the Board of Directors may designate after a tender offer or an
announcement of an intention to make a tender offer that would result in a
Person or group owning 20% or more of the outstanding Common Shares; or (iii)
ten calendar days after a person owning at least 15% of the Common Shares then
outstanding is declared to be an "Adverse Person" based on specified criteria.
At such time, separate Rights Certificates shall be distributed (the
"Distribution Date"). A Person or group who acquires 20% or more of the Common
Shares without the approval of the Board of Directors is referred to as an
"Acquiring Person".
Until the Distribution Date (or until the Board of Directors redeems the
Rights or the Rights expire), (i) the Rights will be evidenced by the Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after the Record Date
will contain a legend referencing the Rights Agreement, and (iii) the surrender
or transfer of any certificates for Common Shares will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. The Rights are not exercisable until the Distribution Date and
will expire at the close of business on August 23, 2008, unless earlier redeemed
or exchanged by the Company as described below. As soon as practicable after
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date, and thereafter the separate
Right Certificates alone will evidence the Rights.
40
<PAGE>
In the event any Person becomes an Acquiring Person (except with the
approval of the Board of Directors, and except (in certain circumstances) for
persons who inadvertently become Acquiring Persons), each holder of a Right will
thereafter have the right to receive, upon exercise, an amount of Preferred
Shares having a value equal to two times the Purchase Price. Further, after any
Person becomes an Acquiring Person, in the event (i) the Company consolidates,
or merges with the Acquiring Person or with any other Person if the holders of
Common Shares are not all treated equally (either being referred to as an
"Acquiring Company"), and the Company is not the surviving corporation, (ii) an
Acquiring Company engages in a share exchange, consolidation or merger with the
Company where the Company is the surviving corporation and the outstanding
Common Shares of the Company are exchanged for securities, cash or property of
the Acquiring Company, or (iii) 50% or more of the Company's assets or earning
power is sold or transferred to the Acquiring Company, then each holder of a
Right will thereafter have the right to receive, upon exercise, common stock of
the Acquiring Company having a value equal to two times the Purchase Price. The
events set forth in this paragraph are referred to as the "Triggering Events."
However, following the occurrence of any Triggering Event, all Rights that are
owned by any Acquiring Person will be null and void, and the Acquiring Person
will have no right to purchase Preferred Shares thereunder or to receive any
securities or other property of an Acquiring Company; and any such Rights shall
remain null and void, even if transferred to a person who is not an Acquiring
Person.
The number of Rights outstanding, the Purchase Price payable and the number
of Preferred Shares issuable upon exercise of the Rights are subject to
adjustments from time to time to prevent dilution in the event of certain
changes in the shares of the Company, such as a stock split. The Company may
determine not to issue fractional shares, and in lieu thereof, an adjustment in
cash (or other property) will be made based on the market value of the Common
Shares.
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (subject to adjustment), at any time the earlier to
occur of (i) the close of business ten days following the date a Person first
becomes an Acquiring Person or (ii) the expiration of the Rights. Immediately
after the Board of Directors redeems the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the redemption price.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by any Person of 50% or more of the outstanding Common Shares, the
Board of Directors may exchange the then outstanding and exercisable Rights
(other than Rights owned by an Acquiring Person, which will have become null and
void), in whole or in part, for Common Shares, each Right being exchangeable for
one Common Share.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended in order to (i) cure any
ambiguity, (ii) correct or supplement any provision which may be defective or
inconsistent with other provisions contained in the Rights Agreement, (iii)
shorten or lengthen any time periods under the Rights Agreement (except to make
the Rights redeemable at a time when they are not then redeemable), but
generally only for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights (other than the Acquiring
Person and its Associates and Affiliates).
The Rights have certain anti-takeover effects. The Rights, if exercised,
would cause substantial dilution to a Person or group that attempts to acquire
the Company without conditioning the offer on a substantial number of Rights
being acquired. Accordingly, the existence of the Rights may deter certain
acquirors from making takeover proposals or tender offers. However, the Rights
Agreement is designed to help ensure that the Company's shareholders receive
fair and equal treatment in the event of any proposed takeover of the Company,
and that the Board of Directors has sufficient time to evaluate any proposed
transaction and, if in the best interests of the Company, to explore alternative
value-enhancing transactions. The dividend of the Rights is not in response to
any specific takeover threat or proposal.
Until separate Rights Certificates are issued, a copy of the Rights
Agreement will be available to registered holders of the Common Shares upon
written request free of charge from the Company or the Rights Agent. After the
Rights Certificates are issued, a copy of the Rights Agreement will be filed
with the Securities and Exchange Commission. 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.
41
<PAGE>
[Letterhead of American Bingo]
August 13, 1998
To the Stockholders of American Bingo & Gaming Corp.:
On August 4, 1998, your Board of Directors adopted a Rights Agreement and
declared a dividend of one Right for each outstanding share of American Bingo &
Gaming Corp. stock that you own as of the close of business on August 24, 1998.
A summary of the principal features of the Rights Agreement is enclosed with
this letter. You are not required to take action at this time.
The Rights Agreement was adopted to protect you against attempts by a third
party to acquire control of the Company by means of a creeping accumulation of
shares in the open market, a two-tier tender offer, an offer less than a full
and fair price or other takeover tactics which the Board believes may not be in
your best interests. Such takeover tactics may deprive the Board of Directors
of the time and information to represent effectively the best interests of the
Company and its stockholders.
The Rights Agreement was not adopted in response to any specific threat of
takeover of the Company or any subsidiary or affiliate company, nor is
management aware of any such intention. However, the Board has studied various
anti-takeover provisions for some time as the general level of takeover
activity, including hostile takeovers, has significantly increased in recent
years. In adopting the Rights Agreement, the Company joins more than 1,700 U.S.
corporations that have considered it prudent to adopt stockholder rights plans.
The Rights will not interfere with any legitimate merger, acquisition or
business combination that is in the best interests of the Company and its
stockholders, but will encourage any potential acquiror to negotiate with the
Board of Directors of the Company. The Rights will only be exercisable if and
when a situation arises which the plan is intended to address.
Adoption of the Rights Agreement will not weaken the financial strength of the
Company or interfere with its business plans. Issuance of the Rights will have
no dilutive effect, will not change reported earnings per share, is not taxable
presently to American Bingo & Gaming Corp. or to you, and will not change the
way in which our common stock is traded.
We consider the Rights Agreement to be a valuable protection of your rights. In
declaring the Rights dividend, the Board has expressed confidence in the future
of the Company and its determination that you, the stockholders, receive the
value of your investment.
Very truly yours,
Andre M. Hilliou
Chairman and Chief Executive Officer
enclosure
