SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - SEPTEMBER 29, 1998
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(Date of Earliest Event Reported)
COMMODORE HOLDINGS LIMITED
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(Exact name of registrant as specified in its charter)
BERMUDA
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(State of Incorporation)
0-22908 N/A
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(Commission File No.) (I.R.S. Employer
Identification No.)
4000 HOLLYWOOD BOULEVARD, SUITE 385-S, SOUTH TOWER, HOLLYWOOD, FLORIDA 33021
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(Address of Principal Executive Offices) (Zip Code)
(954) 967-2100
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
ADOPTION OF STOCKHOLDER RIGHTS PLAN
On September 29, 1998, the Board of Directors of the Company declared a
dividend of one Common Stock Purchase Right (the "Right(s)") for each
outstanding share of Common Stock, par value $.01 per share (the "Common
Stock"), of the Company. The dividend is payable as of November 2, 1998 to
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one share of Common Stock at a per share price of
$28.34 (the "Exercise Price"), subject to certain adjustments. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and American Stock Transfer and Trust Company,
as Rights Agent (the "Rights Agent"), dated as of September 29, 1998.
Initially the Rights will not be exercisable, certificates will not be
sent to stockholders, and the Rights will automatically trade with the Common
Stock.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day following a public announcement that a
person or group of affiliated or associated persons, with certain exceptions set
forth below, has acquired beneficial ownership of 15% or more of the outstanding
voting stock of the Company (an "Acquiring Person") and (ii) the tenth business
day (or such later date as may be determined by the Board of Directors and the
Continuing Directors (as defined in the Rights Agreement) prior to such time as
any person or group of affiliated or associated persons becomes an Acquiring
Person) after the date of the commencement or announcement of a person's or
group's intention to commence a tender or exchange offer the consummation of
which would result in the ownership of 30% or more of the Company's outstanding
voting stock (even if no shares are actually purchased pursuant to such offer);
prior thereto, the Rights would not be exercisable, would not be represented by
a separate certificate, and would not be transferable apart from the Company's
Common Stock, but will instead be evidenced, with respect to any of the Common
Stock certificates outstanding as of November 2, 1998, by such Common Stock
certificate with a copy of a Summary of Rights attached thereto. An Acquiring
Person does not include (A) the Company, (B) any subsidiary of the Company,
(C)any employee benefit plan or employee stock plan of the Company or of any
subsidiary of the Company, or any trust or other entity organized, appointed,
established or holding Common Stock for or pursuant to the terms of any such
plan, or (D) any person or group whose ownership of 15% or more of the shares of
voting stock of the Company then outstanding results solely from (i) any action
or transaction or transactions approved by the Board of Directors before such
person or group became an Acquiring Person or (ii) a reduction in the number of
issued and outstanding shares of voting stock of the Company pursuant to a
transaction or transactions approved by the Board of Directors (provided that
any person or group that does not become an Acquiring Person by reason of clause
(i) or (ii) above shall become an Acquiring Person upon acquisition of an
additional 1% of the Company's voting stock unless such acquisition of
additional voting stock will not result in such person or group becoming an
Acquiring Person by reason of such clause (i) or (ii)) or (E) any person who, as
of November 1, 1997, together with all affiliates and associates of such person,
was the beneficial owner of 15% or more of the voting stock of the Company
outstanding as of such date; provided, however, that any person described in
this clause (E) shall no longer be an exempt
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person and shall become an Acquiring Person if such person, together with all
affiliates and associates of such person, after November 1, 1997 acquires
beneficial ownership of an additional 5% or more of the voting stock (unless
such acquisition is pursuant to a transaction described in clause (D)(i) or
(D)(ii) above).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after November 2, 1998 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Company's Common Stock certificates
outstanding as of November 2, 1998 with or without a copy of the Summary of
Rights attached, will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Company's
Common Stock as of the close of business on the Distribution Date and such
separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on November 2, 2008 (the "Final Expiration
Date"), unless earlier redeemed by the Company as described below.
The number of shares of Common Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed, in the event that, after the
time that the Rights become exercisable, the Company were to be acquired in a
merger or other business combination (in which any shares of the Company's
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Company and its subsidiaries
(taken as a whole) were to be sold or transferred in one or a series of related
transactions, the Rights Agreement provides that proper provisions will be made
so that each holder of record of a Right will from and after such date have the
right to receive, upon payment of the Exercise Price, that number of shares of
common stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price. In addition, unless the
Rights are earlier redeemed, if a person or group becomes an Acquiring Person,
the Rights Agreement provides that each holder of record of a Right, other than
the Acquiring Person (whose Rights will thereupon become null and void), will
thereafter have the right to receive, upon payment of the Exercise Price, that
number of shares of the Company's Common Stock having a market value at the time
of the transaction equal to two times the Exercise Price.
Fractions of shares of Common Stock may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares.
At any time on or prior to (i) the close of business on the tenth day
after the time that a person has become an Acquiring Person (subject to
extension by the Company in certain instances) (the "Stock Acquisition Date"),
or (ii) the Final Expiration Date, the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (the "Redemption Price"). The
Rights
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may be redeemed after the time that any person has become an Acquiring Person
only if approved by a majority of the Continuing Directors. Immediately upon the
effective time of the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of the Rights will be to receive the
Redemption Price. Notwithstanding the foregoing, following the Stock Acquisition
Date, the Company may reinstate the ability to redeem the Rights upon a majority
vote of the Continuing Directors if (a) an Acquiring Person transfers or
otherwise disposes of such number of shares of Common Stock, the occurrence of
which makes such person the beneficial owner of 10% or less of the Company's
Common Stock, and (b) there are no other persons immediately following the
occurrence of the event described in (a) above who are Acquiring Persons.
For as long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price or the Final Expiration Date, amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then redeemable,
the Company may amend the Rights in any manner that does not materially
adversely affect the interests of holders of the Rights as such. Amendments to
the Rights Agreement from and after the time that any person becomes an
Acquiring Person requires the approval of a majority of the Continuing Directors
(as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group who attempts to acquire the Company on
terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board
since they may be redeemed by the Company at $.01 per Right at any time until
the close of business on the tenth day (or such later date as described above)
after a person or group has obtained beneficial ownership of 15% or more of the
voting stock.
The form of the Rights Agreement between the Company and American Stock
Transfer and Trust Company, as rights agent, specifying the terms of the Rights,
which includes as Exhibit A the form of Summary of Rights to Purchase Common
Stock and as Exhibit B the form of Rights Certificate, is attached hereto as an
exhibit and incorporated herein by reference. The foregoing description of the
Rights is qualified by reference to the Rights Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
1. Rights Agreement, dated as of September 29, 1998 between
Commodore Holdings Limited and American Stock Transfer and Trust Company, as
Rights Agent.
2. Press Release, dated October 5, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 19, 1998
COMMODORE HOLDINGS LIMITED
By: /s/ JEFFREY I. BINDER
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Jeffrey I. Binder,
Chairman of the Board
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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1. Rights Agreement, dated as of September 29, 1998 between Commodore
Holdings Limited and American Stock Transfer and Trust Company, as
Rights Agent.
2. Press Release, dated October 5, 1998.
EXHIBIT 1
RIGHTS AGREEMENT
by and between
COMMODORE HOLDINGS LIMITED
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY
as Rights Agent
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Dated as of
September 29, 1998
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SECTION TABLE OF CONTENTS PAGE
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Section 1. Certain Definitions......................................2
Section 2. Appointment of Rights Agent.............................10
Section 3. Issuance of Right Certificates..........................11
Section 4. Form of Right Certificates..............................13
Section 5. Countersignature and Registration.......................14
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates......................................15
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights...............................................16
Section 8. Cancellation and Destruction of Right Certificates......20
Section 9. Reservation and Availability of Shares of Common Stock..20
Section 10. Common Stock Record Date................................22
Section 11. Adjustment of Exercise Price or Number of Shares........23
Section 12. Certification of Adjusted Exercise Price or Number
of Shares...............................................32
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power........................................33
Section 14. Fractional Rights and Fractional Shares.................38
Section 15. Rights of Action........................................39
Section 16. Agreement of Right Holders..............................40
Section 17. Right Certificate Holder Not Deemed a Stockholder.......40
Section 18. Concerning the Rights Agent.............................41
Section 19. Merger or Consolidation of, or Change in Name of,
the Rights Agent........................................42
Section 20. Duties of Rights Agent..................................43
Section 21. Change of Rights Agent..................................45
Section 22. Issuance of New Right Certificates......................47
Section 23. Redemption..............................................47
Section 24. Notice of Proposed Actions..............................49
Section 25. Notices.................................................50
Section 26. Supplements and Amendments..............................51
Section 27. Successors..............................................52
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SECTION TABLE OF CONTENTS PAGE
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Section 28. Benefits of this Rights Agreement.......................52
Section 29. Governing Law...........................................53
Section 30. Counterparts............................................53
Section 31. Descriptive Headings....................................53
Section 32. Severability............................................53
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT is dated as of September 29, 1998, by and between
Commodore Holdings Limited, a Bermuda corporation (the "Company"), and American
Stock Transfer and Trust Company (the "Rights Agent").
WITNESSETH:
WHEREAS, on September 29, 1998, the Board of Directors of the Company
authorized the issuance of, and declared a dividend payable in, one right (a
"Right") for each share of Common Stock, $0.01 par value per share, of the
Company outstanding as of the close of business on November 2, 1998 (the "Record
Date"), each such Right representing the right to purchase one share of Common
Stock, upon the terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Expiration Date or the Final Expiration Date (as such terms are
hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Rights Agreement,
the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the Voting Stock of the Company then outstanding; provided,
that an Acquiring Person shall not include (i) an Exempt Person (as such
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term is hereinafter defined) or (ii), any Person, together with all Affiliates
and Associates of such Person, who or which would be an Acquiring Person solely
by reason of (A) being the Beneficial Owner of shares of Voting Stock of the
Company, the Beneficial Ownership of which was acquired by such Person pursuant
to any action or transaction or series of related actions or transactions
approved by the Board of Directors before such Person otherwise became an
Acquiring Person or (B) a reduction in the number of issued and outstanding
shares of Voting Stock of the Company pursuant to a transaction or a series of
related transactions approved by the Board of Directors of the Company;
provided, further, however, that in the event such Person described in this
clause (ii) does not become an Acquiring Person by reason of subclause (A) or
(B) of this clause (ii), such Person nonetheless shall become an Acquiring
Person in the event such Person thereafter acquires Beneficial Ownership of an
additional 1% of the Voting Stock of the Company, unless the acquisition of such
additional Voting Stock would not result in such Person becoming an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii). Notwithstanding
the foregoing, if the Board of Directors of the Company within 10 Business Days
after the first date on which there shall be a public announcement by any Person
that such Person, together with all Affiliates and Associates of such Person, is
the Beneficial Owner of Voting Stock of the Company such that such Person would
be (but for this sentence) an Acquiring Person, determines in good faith (but
only if at the time of such determination by the Board of Directors there are
then in office not less than two Continuing Directors and such action is
approved by a majority of the Continuing Directors then in office) that a Person
who would otherwise be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a) has become such inadvertently, and
such Person divests as promptly as practicable as determined by the Board of
Directors a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person" as defined pursuant to the foregoing
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provisions of this paragraph (a), then such Person shall not be deemed an
"Acquiring Person" for any purposes of this Rights Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as in effect on the date of this Rights
Agreement.
(c) "Associate" of a Person (as such term is hereinafter defined)
shall mean (i) with respect to a corporation, any officer or director thereof or
of any Subsidiary (as such term is hereinafter defined) thereof, or any
Beneficial Owner (as such term is hereinafter defined) of 10% or more of any
class of equity security thereof, (ii) with respect to an association, any
officer or director thereof or of a Subsidiary thereof, (iii) with respect to a
partnership, any general partner thereof or any limited partner thereof who is,
directly or indirectly, the Beneficial Owner of a 10% ownership interest
therein, (iv) with respect to a business trust, any officer or trustee thereof
or of any Subsidiary thereof, (v) with respect to any other trust or an estate,
any trustee, executor or similar fiduciary or any Person who has a 10% or
greater interest as a beneficiary in the income from or principal of such trust
or estate, (vi) with respect to a natural person, any relative or spouse of such
person, or any relative of such spouse, who has the same home as such person,
and (vii) any Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities (and correlative terms shall have correlative
meanings):
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Regulations 13D and 13G thereunder (or any
comparable or successor law or regulation), in each case as in effect on the
date hereof; or
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(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or the fulfillment of a condition
or both) pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, other rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the " Beneficial Owner" of, or to "Beneficially Own,"
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange or (B) the right to vote, alone or in
concert with others, pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "Beneficially Own," any securities if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (2) is not at the time reportable by such
Person on a Schedule 13D report under the Exchange Act (or any comparable or
successor report), other than by reference to a proxy or consent solicitation
being conducted by such Person; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (d)) or disposing of any
securities of the Company; provided, however, that for purposes of determining
beneficial ownership of securities under this Rights Agreement, officers and
directors of the Company solely by reason of their status as such shall not
constitute a group
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(notwithstanding that they may be Associates of one another or may be deemed to
constitute a group for purposes of Section 13(d) the Exchange Act) and shall not
be deemed to own shares owned by another officer or director of the Company.
Notwithstanding anything in this paragraph (d) to the
contrary, a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any security beneficially owned by another Person solely by
reason of an agreement, arrangement or understanding with such other Person for
the purposes of: (x) soliciting the Company's stockholders for the election of
director nominees or any other stockholder resolution, the formation of and
membership in any committee for the purpose of promoting or opposing any
stockholder resolution or for electing a slate of nominees to the Company's
Board of Directors, service on such a slate of nominees, or agreement to a slate
of director nominees, provided, that such other Person retains the right at any
time to withdraw as a nominee or member of any such committee, and to withhold
or revoke any vote or proxy for or against any such stockholder resolution or
for such slate of nominees; (y) entering into revocable voting agreements or the
granting or solicitation of revocable proxies with respect to any of the matters
described in the foregoing clause (x); or (z) the sharing of expenses and the
indemnification against expenses and liabilities by any such other Person with
respect to expenses incurred or conduct occurring during the time such other
Person is a nominee or a member of any such committee described in the foregoing
clause (x). Further, notwithstanding anything in this paragraph (d) to the
contrary, a Person engaged in the business of underwriting securities shall not
be deemed the "Beneficial Owner" of, or to "Beneficially Own," any securities
acquired in good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
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(e) "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of Florida are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the Common Stock, $.01 par value, of the Company. "Common Stock" when used with
reference to any Person other than the Company which shall be organized in
corporate form shall mean the capital stock or other equity security with the
greatest per share voting power of such Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits, losses, deductions and credits of such Person
and which shall be entitled to exercise the greatest voting power per unit of
such Person.
(h) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors prior to
the time that any Person became an Acquiring Person (other than pursuant to a
Qualifying Tender Offer) or (ii) subsequently became a member of the Board of
Directors, and whose nomination for election or election to the Board of
Directors was recommended or approved by a majority of the Continuing Directors
then on the Board of Directors.
(i) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
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(j) "Exchange Act" shall have the meaning set forth in Section l(b)
hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan or employee stock plan of the
Company or any Subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Common Stock for or pursuant to the
terms of any such plan or (iv) any Person who, as of November 1, 1997, together
with all Affiliates and Associates of such Person, was the Beneficial Owner of
15% or more of the Voting Stock of the Company outstanding as of such date;
provided, however, that any Person described in this clause (iv) shall no longer
be an exempt person and shall become an Acquiring Person if such Person,
together with all Affiliates and Associates of such Person, after November 1,
1997 acquires Beneficial Ownership of an additional 5% or more of the Voting
Stock, unless such acquisition of an additional 5% or more of the Voting Stock
was pursuant to (A) any action or transaction or series of related actions or
transactions approved by the Board of Directors before such acquisition or (B) a
reduction in the number of issued and outstanding shares of Voting Stock of the
Company pursuant to a transaction or a series of related transactions approved
by the Board of Directors of the Company; provided, further, however, that in
the event such Person described in this clause (iv) does not become an Acquiring
Person by reason of clause (A) or (B), such Person nonetheless shall become an
Acquiring Person in the event such Person thereafter acquires Beneficial
Ownership of an additional 5% of the Voting Stock of the Company, unless the
acquisition of such additional Voting Stock would not result in such Person
becoming an Acquiring Person by reason of such clause (A) or (B).
(l) "Exercise Price" shall have the meaning set forth in Sections 4 and
7(b) hereof.
(m) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
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(n) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(d) hereof.
(o) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation or other
entity.
(q) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(s) "Right Certificate" shall have the meaning set forth in Section
3(d) hereof.
(t) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) or such earlier date as a majority of the Continuing Directors
shall become aware of the existence of an Acquiring Person.
(u) "Subsidiary" of a Person shall mean any corporation or other entity
of which securities or other ownership interests having voting power sufficient
to elect a majority of the board of directors or other persons performing
similar functions are Beneficially Owned, directly or indirectly, by such Person
or by any corporation or other entity that is otherwise controlled by such
Person.
(v) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
(w) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
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(x) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of any security, instrument or right,
including Rights and shares of Common Stock.
(y) "Voting Stock" shall mean (i) the Common Stock of the Company and
(ii) any other shares of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Stock
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. For purposes of this
Rights Agreement, a stated percentage of the Voting Stock shall mean a number of
shares of the Voting Stock as shall equal in voting power that stated percentage
of the total voting power of the then outstanding shares of Voting Stock in the
election of a majority of the Board of Directors or in respect of any merger,
consolidation, sale of all or substantially all of the Company's assets,
liquidation, dissolution or winding up. Any determination required to be made by
the Board of Directors of the Company for purposes of applying the definitions
contained in this Section 1 shall be made by the Board of Directors in its good
faith judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) On the Record Date (or as soon as practicable thereafter),
the Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "Summary of Rights"),
by first class mail, postage prepaid, to each
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record holder of the Common Stock as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company.
(b) Until the close of business on the day which is the earlier of (i)
the tenth day after the Stock Acquisition Date or (ii) the tenth business day
(or such later date as may be determined by action of the Board of Directors
(but only if at the time of such determination there are then in office not less
than two Continuing Directors and such action is approved by a majority of the
Continuing Directors then in office) prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Exempt Person) of, or the first public announcement of the intent of any
Person (other than an Exempt Person) to commence, a tender or exchange offer
upon the successful consummation of which such Person, together with its
Affiliates and Associates, would be the Beneficial Owner of 30% or more of the
then outstanding shares of Voting Stock of the Company (irrespective of whether
any shares are actually purchased pursuant to any such offer) (the earlier of
such dates being herein referred to as the "Distribution Date"), (x) the Rights
shall be evidenced by the certificates for Common Stock registered in the name
of the holders of Common Stock (together with, in the case of certificates for
Common Stock outstanding as of the Record Date, the Summary of Rights) and not
by separate Right certificates and the record holders of such certificates for
Common Stock shall be the record holders of the Rights represented thereby and
(y) each Right shall be transferable only simultaneously and together with the
transfer of a share of Common Stock (subject to adjustment as hereinafter
provided). Until the Distribution Date (or, if earlier, the Expiration Date or
Final Expiration Date), the surrender for transfer of any certificate for Common
Stock shall constitute the surrender for transfer of the Right or Rights
associated with the Common Stock evidenced thereby, whether or not accompanied
by a copy of the Summary of Rights.
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(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock issued (including, without limitation,
certificates issued upon original issuance, disposition from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earliest of the Distribution Date, the Expiration Date, or the
Final Expiration Date (or in certain circumstances as provided in Section 22
hereof, after the Distribution Date) shall have impressed, printed, written or
stamped thereon or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the
holder hereof to the same number of Rights (subject to
adjustment) as the number of shares of Common Stock
represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between Commodore
Holdings Limited and American Stock Transfer and Trust Company
(the "Rights Agent"), dated as of September 29, 1998 (as it
may be amended from time to time) (the "Rights Agreement"),
the terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive offices of
Commodore Holdings Limited. Under certain circumstances, as
set forth in the Rights Agreement, such Rights shall be
evidenced by separate certificates and shall no longer be
evidenced by this certificate. Commodore Holdings Limited
shall mail to the registered holder of this certificate a copy
of the Rights Agreement without charge within five days after
receipt of a written request therefor. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN SECTION 7(E) OF THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED
TO ANY PERSON.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Distribution Date, as
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shown by the records of the Company, at the address of such holder shown on such
records, a certificate in the form provided by Section 4 hereof (a "Right
Certificate"), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by Right Certificates and may be
transferred by the transfer of the Right Certificate as permitted hereby,
separately and apart from any transfer of one or more shares of Common Stock.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares, certificate and assignment to be printed
on the reverse thereof), when, as and if issued, shall be substantially in the
form set forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Common
Stock or the Rights may from time to time be listed or as the Company may deem
appropriate to conform to usage or otherwise and as are not inconsistent with
the provisions of this Rights Agreement. Subject to the provisions of Section 22
hereof, Right Certificates evidencing Rights whenever issued, (i) shall be dated
as of the date of issuance of the Rights they represent and (ii) subject to
adjustment from time to time as provided herein, on their face shall entitle the
holders thereof to purchase such number of shares of Common Stock as shall be
set forth therein at the price payable upon exercise of a Right provided by
Section 7(b) hereof as the same may from time to time be adjusted as provided
herein (the "Exercise Price").
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Each Right Certificate shall be executed on behalf of the
Company by its Chairman of the Board or any Vice Chairman of the Board, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be
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attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. Each Right Certificate shall be
countersigned by the Rights Agent either manually or by facsimile signature and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any Right Certificate shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery of the certificate by the Company, such Right Certificate,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any person who, on the
date of the execution of such Right Certificate, shall be a proper officer of
the Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Right Certificates upon
exercise or transfer, and in such other locations as may be required by law,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 7(e), 7(f) and 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Right Certificate, may be (i)
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transferred or (ii) split up, combined or exchanged for one or more other Right
Certificates, entitling the registered holder to purchase a like number of
shares of Common Stock as the Right Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer any Right Certificate shall surrender the Right Certificate
at the office of the Rights Agent designated for the surrender of Right
Certificates with the form of certificate and assignment on the reverse side
thereof duly endorsed (or enclosed with such Right Certificate a written
instrument of transfer in form satisfactory to the Company and the Rights
Agent), duly executed by the registered holder thereof or his attorney duly
authorized in writing, and with such signature duly guaranteed. Any registered
holder desiring to split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate to be split up, combined or exchanged at the office of the
Rights Agent designated therefor. Thereupon, the Rights Agent shall countersign
and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any Transfer Tax that may be imposed in
connection with any transfer, split up, combination or exchange of any Right
Certificates.
(b) Subject to the provisions of Section 7(e), 7(f) and 14
hereof, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall issue and deliver a new
Right Certificate of like tenor to the Rights
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Agent for delivery to the registered owner in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall not be exercisable until, and shall
become exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e) and 23(a) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York, New York, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earlier of (i) November 2, 2008 (the
"Final Expiration Date") or (ii) the date on which the Rights are redeemed as
provided in Section 23 hereof (such earlier date being herein referred to as the
"Expiration Date").
(b) The Exercise Price shall initially be $28.34 for each
share of Common Stock issued pursuant to the exercise of a Right. The Exercise
Price and the number of shares of Common Stock or other securities to be
acquired upon exercise of a Right shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof. The Exercise Price shall be
payable in lawful money of the United States of America, in accordance with
paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable
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to the Company or the Rights Agent of the Exercise Price for the shares to be
purchased and an amount equal to any applicable Transfer Tax required to be paid
by the holder of the Right Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Common Stock of the Company one or more certificates representing
the number of shares of Common Stock to be so purchased, and the Company hereby
authorizes and directs such transfer agent to comply with all such requests,
(ii) as provided in Section 14(b), at the election of the Company, cause
depositary receipts to be issued in lieu of fractional shares of Common Stock,
(iii) if the election provided for in the immediately preceding clause (ii) has
not been made, requisition from the Company the amount of cash to be paid in
lieu of the issuance of fractional shares in accordance with Section 14(b)
hereof, (iv) after receipt of such Common Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate; provided, however, that in the case of a purchase of
securities, other than Common Stock, pursuant to Section 13 hereof, the Rights
Agent shall promptly take the appropriate actions corresponding in such case to
that referred to in the foregoing clauses (i) through (v) of this Section 7(c).
Notwithstanding the foregoing provisions of this Section 7(c), the Company may
suspend the issuance of shares of Common Stock upon exercise of a Right for a
reasonable period, not in excess of 90 days, during which the Company seeks to
register under the Securities Act of 1933, as amended (the "Act"), and any
applicable securities law of any other jurisdiction, the shares of Common Stock
to be issued pursuant to the Rights; provided, however, that nothing contained
in this Section 7(c) shall relieve the Company of its obligations under Section
9(c) hereof.
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<PAGE>
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or his assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to
the contrary, from and after the time (the "Invalidation Time") when any Person
first becomes an Acquiring Person, any Rights that are beneficially owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the Invalidation Time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Invalidation Time pursuant to either (i) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (ii) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) are complied with, but shall
have no liability to any holder of Right Certificates or any other Person as a
result of its failure to make any determination with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued pursuant to Section 3 hereof that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant to
the provisions of this Section 7(e) or any Associate or Affiliate thereof; no
Right Certificate shall be
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issued at any time upon the transfer of any Rights to an Acquiring Person whose
Rights would be void pursuant to the provisions of this Section 7(e) or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person whose Rights would be void pursuant to the
provisions of this Section 7(e) shall be cancelled.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall cancel
and retire, any Right Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.
(a) The Company covenants and agrees that from and after the
time that the Rights become exercisable it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock or out of
authorized and issued shares of Common Stock held in its treasury, such number
of shares of Common Stock as will from time to time be sufficient to permit the
exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Common Stock
issued or reserved for issuance in accordance with this Rights Agreement to be
listed, upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in the Nasdaq Stock Market ("Nasdaq") or any successor
thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all shares of Common Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as
soon as practicable following the occurrence of an event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Common Stock purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus
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at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for Common Stock, and (b)
the date of the expiration of the Rights. The Company may temporarily suspend,
for a period of time not to exceed ninety (90) days, the issuance of shares of
Common Stock upon exercise of a Right in order to prepare and file a
registration statement under the Act and permit it to become effective. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. Notwithstanding any provision
of this Rights Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement under the Act (if
required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due
and payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Common Stock issued or delivered upon the exercise of Rights. The Company
shall not, however, be required to pay any Transfer Tax which may be payable in
respect of any transfer or delivery of a Right Certificate to a Person other
than, or the issuance or delivery of certificates for Common Stock upon exercise
of Rights in a name other than that of, the registered holder of the Right
Certificate, and the Company shall not be required to issue or deliver a Right
Certificate or certificate for Common Stock to a Person other than such
registered holder until any such Transfer Tax shall have been paid (any such
Transfer Tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such Transfer Tax is due.
Section 10. COMMON STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Common Stock is issued upon the exercise of Rights
shall for all
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purposes be deemed to have become the holder of record of the Common Stock
represented thereby on, and such certificate shall be dated as of, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable Transfer Taxes) was made;
provided, however, that, if the date of such surrender and payment is a date
upon which the Common Stock transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated as of, the next succeeding Business Day on which
the Common Stock transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate, as such,
shall not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF EXERCISE PRICE OR NUMBER OF SHARES. The
Exercise Price, the number and kind of shares which may be purchased upon
exercise of a Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (B) subdivide or split the outstanding shares
of Common Stock into a greater number of shares or (C) combine or consolidate
the outstanding shares of Common Stock into a smaller number of shares or effect
a reverse split of the outstanding shares of Common Stock, then and in each such
event the number of shares of Common Stock issuable upon the exercise of a Right
after the record date for such event (if one shall have been established or, if
not, after
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the date of such event) shall be the number of shares of Common Stock issuable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of Rights outstanding immediately prior to such event and the
denominator of which is the number of Rights outstanding immediately after such
event and the Exercise Price after such event shall be the Exercise Price in
effect immediately prior to such event multiplied by such fraction. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event that any Person (other than an
Exempt Person), alone or together with its Affiliates and Associates, shall
become an Acquiring Person, then, subject to the last sentence of Section 23(a)
and except as otherwise provided in this Section 11, each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right to
receive upon exercise of such Right in accordance with the terms of this Rights
Agreement and payment of the Exercise Price, the greater of (1) the number of
shares of Common Stock for which such Right was exercisable immediately prior to
the first occurrence of the event described in this Section 11(a)(ii) or (2)
such number of shares of Common Stock, based on the per share Fair Market Value
of the Common Stock (determined pursuant to Section 11(d) hereof) on the date of
such first occurrence, having a value equal to twice the Exercise Price;
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Stock or securities
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convertible into Common Stock at a price per share of Common Stock (or having a
conversion price per share, if a security convertible into shares of Common
Stock) less than the then current per share Fair Market Value of the Common
Stock (as defined in Section 11(d)) on such record date, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent. Shares of Common Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed and in the event that such rights, options or
warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend not
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in excess of 150% of the previous regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in shares of Common Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the then current per share market price of the Common Stock on
such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Common Stock and the denominator of which shall be
such current per share market price of the Common Stock. Such adjustment shall
be made successively whenever such a record date is fixed and in the event that
such distribution is not so made, the Exercise Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Common Stock or any other stock or any Right or other
security or any other property on any date shall be determined as provided in
this Section 11(d). In the case of a publicly-traded stock or other security,
the Fair Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such stock or per unit of such other security for
the thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Fair Market Value per share of any share of Common Stock is determined during a
period which includes any date that is within thirty (30) Trading Days after (i)
the ex-dividend date for a dividend or distribution on such stock payable in
shares of Common Stock or securities convertible into shares of Common Stock, or
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(ii) the effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in each such
case, the Fair Market Value shall be appropriately adjusted by the Board of
Directors of the Company to take into account ex-dividend or post-effective date
trading. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way (in either case, as reported in the
applicable transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange), or, if the securities are
not listed or admitted to trading on the New York Stock Exchange, as reported in
the applicable transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if not listed or admitted to trading on any national
securities exchange, the last quoted price (or, if not so quoted, the average of
the high bid and low asked prices) in the over-the-counter market, as reported
by Nasdaq or such other system then in use; or, if no bids for such security are
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such security
selected by the Board of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which such
security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. If a security is not publicly held
or not so listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of securities
selected in good faith by the Board of Directors of the Company, or, if no such
investment banking firm is, in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the Board of
Directors of the Company. In the case of
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property other than securities, the "Fair Market Value" thereof shall be
determined in good faith by the Board of Directors of the Company based upon
such appraisals or valuation reports of such independent experts as the Board of
Directors of the Company shall in good faith determine to be appropriate in
accordance with good business practices and the interests of the holders of
Rights. Any such determination of Fair Market Value shall be described in a
statement filed with the Rights Agent and shall be binding upon the Rights
Agent.
(e) Unless the Company shall have exercised its election as
provided in Section 11(f), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(b) and (c) each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of shares of
Common Stock obtained by (i) multiplying (x) the number of shares covered by a
Right immediately prior to the adjustment pursuant to this Section ii(e) by
(y)the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise Price
in effect immediately after such adjustment of the Exercise Price.
(f) The Company may elect on or after the date of any
adjustment of the Exercise Price pursuant to Section 11(b) and (c) to adjust the
number of Rights in substitution for any adjustment pursuant to Section 11(e) in
the number of shares of Common Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of shares of common Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for
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the adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Exercise Price is adjusted
or any day thereafter, but, if the Right Certificates have been issued, shall be
at least 10 days later than the date of the public announcement. If the Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(f), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights, if any, to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(g) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% of
the Exercise Price; provided, however, that any adjustments which by reason of
this Section 11(g) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be.
(h) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Common Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price and the
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number of shares to be issued upon exercise of the Rights as in the initial
Right Certificates issued hereunder but, nevertheless, shall represent the
Rights as so adjusted.
(i) Before taking any action that would cause an adjustment
reducing the Exercise Price per whole share of Common Stock upon exercise of the
Rights below the then par value, if any, of the shares of Common Stock, the
Company shall use its best efforts to take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Exercise Price per share.
(j) Anything in this Section 11 to the contrary
notwithstanding, in the event of any recapitalization, reorganization or partial
liquidation of the Company or similar transaction, the Company shall be entitled
to make such further adjustments in the number of shares of Common Stock which
may be acquired upon exercise of the Rights, and such adjustments in the
Exercise Price per share therefor, in addition to those adjustments expressly
required by the other paragraphs of this Sectio 11, as the Board of Directors of
the Company shall determine to be necessary or appropriate in order for the
holders of the Rights in such event to be treated equitably and in accordance
with the purpose and intent of this Rights Agreement or in order that any such
event shall not, but for such adjustment, in the opinion of counsel to the
Company, result in the stockholders of the Company being subject to any United
States federal income tax liability by reason thereof.
(k) If, at any time after the Rights first become exercisable
pursuant to the terms of this Rights Agreement, the number of shares of Common
Stock that are authorized but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights ("Available Shares") is not
sufficient to permit exercise in full of the Rights in accordance with the terms
of this Rights Agreement, including after giving effect to the adjustments
provided for
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in Section 11(a)(ii) hereof, then unless the Board of Directors shall have made
adequate provision in lieu thereof pursuant to Section 11(l) and subject to
Section 11(m), the number of shares of Common Stock for which each Right is
exercisable shall be adjusted by multiplying the number of shares of Common
Stock for which a Right would otherwise be exercisable without giving effect to
this Section 11(k) by a fraction, the numerator of which shall be the number of
Available Shares and the denominator of which shall be the aggregate number of
shares of Common Stock for which all outstanding Rights would otherwise be
exercisable without giving effect to this Section 11(k). In the event of an
adjustment to the number of shares of Common Stock for which a Right is
exercisable pursuant to the preceding sentence, the Exercise Price shall be
automatically adjusted by the same fraction appearing in the preceding sentence.
The adjustment provided for in this Section 11(k) shall be made after all other
applicable adjustments to the Exercise Price for each Right and the number of
shares of Common Stock for which each Right is exercisable shall have been made
in accordance with the other provisions of this Rights Agreement.
(l) In lieu of the adjustments provided in Section 11(k)
above, the Board of Directors may make adequate provision to substitute for the
shares of Common Stock in excess of the Available Shares to be issued upon
exercise of the Rights, upon payment of the applicable Exercise Price, other
equity securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock which, by virtue of having dividend, voting
and liquidation rights substantially comparable to those of the Common Stock,
are deemed in good faith by the Board of Directors to have substantially the
same value as shares of Common Stock (such shares or units of shares of
preferred stock are herein called ("Common Stock Equivalents")).
(m) If, upon the occurrence of an event described in Section
11(a)(ii), the number of shares of Common Stock that are authorized but not
outstanding or reserved for
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issuance for purposes other than upon exercise of the Rights are not sufficient
to permit exercise in full of the Rights in accordance with Section 11(a)(ii)
hereof, and if the Board of Directors shall determine in good faith that it is
likely that sufficient additional shares of Common Stock (or Common Stock
Equivalents) could be authorized for issuance upon exercise in full of the
Rights, then, the Board of Directors, if it so elects, may suspend the
exercisability of the Rights for a period of time not more than ninety (90) days
after the event described in Section 11 (a) (ii), in order that the Company may
seek stockholder approval or take other appropriate action for the authorization
for such additional shares. During such time of suspension no adjustment shall
be made under Section 11(k). Such suspension may be rescinded by the Board of
Directors in its sole discretion at any time, whereupon the adjustment provided
for in Section 11(k) shall be applicable, unless the Board of Directors shall
have made adequate provision in lieu thereof pursuant to Section 11(l). In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such times as the suspension is no longer in
effect.
Section 12. CERTIFICATION OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11, 13 or 23 (a),
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11, 13 or 23 (a) of this Rights Agreement shall be effective
as of the date of the event giving rise to such adjustment. The Rights Agent
shall be
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fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment unless and
until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) Except for any transaction approved by the Board of
Directors (but only if at the time of such approval by the Board of Directors
there are then in office not less than two Continuing Directors and such action
is approved by a majority of the Continuing Directors then in office), in the
event that, at any time on or after the Distribution Date, (x) the Company
shall, directly or indirectly, consolidate with, or merge with and into, any
other Person or Persons (other than an Exempt Person) and the Company shall not
be the surviving or continuing corporation of such consolidation or merger, or
(y) any Person or Persons (other than an Exempt Person) shall, directly or
indirectly, consolidate with, or merge with and into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person (other than an Exempt Person) or
of the Company or cash or any other property, or (z) the Company or one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer to
any other Person or any Affiliate or Associate of such Person, in one or more
transactions, or the Company or one or more of its Subsidiaries shall sell or
otherwise transfer to any Persons in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that (i) each
holder of record of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon
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the exercise thereof and payment of the Exercise Price in accordance
with the terms of this Rights Agreement, such number of shares of validly
issued, fully paid, non-assessable and freely tradeable Common Stock of the
Principal Party (as defined herein), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall, based an the Fair
Market Value of the Common Stock of the Principal Party on the date of the
consummation of such consolidation, merger, sale or transfer, equal twice the
Exercise Price; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Rights Agreement; (iii)
the term "Company" for all purposes of this Rights Agreement shall thereafter be
deemed to refer to such Principal Party; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with the provisions of
Section 9 hereof applicable to the reservation of Common Stock) in connection
with such consolidation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
its shares of Common Stock thereafter deliverable upon the exercise of the
Rights; provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Exercise Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other
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property and (v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the occurrence of any event described in clause (x), (y) or (z)
above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x)
or (y) of the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Company are
changed or otherwise exchanged or converted in such merger or consolidation, or,
if there is more than one such issuer, the issuer of the Common Stock of which
has the greatest market value or (B) if no securities are so issued, (x) the
Person that is the other party to the merger or consolidation and that survives
such merger or consolidation, or, if there is more than one such Person, the
Person the Common Stock of which has the greatest market value or (y) if the
Person that is the other party to the merger or consolidation does not survive
the merger or consolidation, the Person that does survive the merger or
consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in (z)
of the first sentence in Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case, if the Common Stock of
such Person is not at such time and has not been continuously over the preceding
12 month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or if such Person is a Subsidiary, directly or indirectly, of
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more than one Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Company shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under
the Act with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after such
filing and use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the date of expiration of the Rights, and similarly comply with applicable
state securities laws;
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(ii) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility requirements
for quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act. In the event that any of the transactions described in Section
13(a) hereof shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have not theretofore
been exercised shall, subject to the provisions of Section 7(e) hereof,
thereafter be exercisable in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or
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amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one share of Common Stock), unless such
fractional Rights result from a transaction referred to in Section 11(a)(i)
hereof. If the Company shall determine not to issue such fractional Rights,
then, in lieu of such fractional Rights, there shall be paid to the holders of
record of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares. In lieu of issuing fractions of shares of
Common Stock, the Company may, at its election, issue depositary receipts
evidencing fractions of shares pursuant to an appropriate agreement between the
Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all of the
rights, privileges and preferences to which they would be entitled as owners of
the Common Stock. If the Company does not issue such fractional shares or
depositary receipts in lieu thereof, there shall be paid to the holders of
record of Right Certificates at the time such Right Certificates are exercised
as herein provided an amount in cash equal to the same fraction of the Fair
Market Value of a share of Common Stock.
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(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares of Common Stock upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for Common Stock registered in the name of the
holders of Common Stock (together, as applicable, with the Summary of Rights),
which certificates for Common Stock shall also
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constitute certificates for Rights, and not by separate Right Certificates, and
each Right shall be transferable only simultaneously and together with the
transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock or any other
securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof (except as provided herein), or to give or withhold consent to
any corporate action (except as provided herein), or to receive notice of
meetings or other actions affecting stockholders (except as provided in Section
24 hereof) , or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
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Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement.
(b) The Rights Agent shall be protected against, and shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it in connection with its administration of this Rights Agreement in reliance
upon any Right Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons.
Section 19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF, THE
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this
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Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Rights Agreement any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; in case at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates by their acceptance thereof shall be bound:
(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
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authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board or any Vice Chairman of the Board and by the Treasurer or the
Secretary of the Company and delivered to the Rights Agent. Any such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the
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ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate describing any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Rights Agreement or any Right Certificate or as to whether any shares of
Common Stock will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board or any Vice Chairman of the Board or the Secretary or
the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
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(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.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified mail. The Company
may remove the Rights Agent or any successor Rights Agent (with or without
cause) upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
by registered or certified mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. Notwithstanding the foregoing provisions of this
Section 21, in no event shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
incumbent Rights Agent or the holder of record of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized and doing business under the laws of
the United States or of any state
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thereof, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination in the conduct of its corporate trust or stock transfer business by
federal or state authorities and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $5,000,000 or (b) an
Affiliate controlled by a corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed, but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock,
and mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be. Notwithstanding the foregoing provisions, in
the event of resignation, removal or incapacity of the Rights Agent, the Company
shall have the authority to act as the Rights Agent until a successor Rights
Agent shall have assumed the duties of the Rights Agent hereunder.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Exercise Price per share and the
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number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Rights Agreement.
Section 23. REDEMPTION.
(a) (i) The Company may, at its option, but only by the vote
of a majority of the Board of Directors, redeem all but not less than all of the
then outstanding Rights, at any time prior to the Close of Business on the
earlier of (i) the tenth day following the Stock Acquisition Date (subject to
extension by the Company as provided in Section 26 hereof) or (ii) the Final
Expiration Date, at a redemption price of $.01 per Right, subject to appropriate
adjustment to reflect any stock split, combination or reclassification involving
the Common Stock or any stock dividend on the Common Stock occurring after the
date hereof (the "Redemption Price"); provided, however, that from and after the
time that any Person shall become an Acquiring Person, the Company may redeem
the Rights only if at the time of the action of the Board of Directors there are
then in office not less than two Continuing Directors and such redemption is
approved by a majority of the Continuing Directors then in office.
Notwithstanding anything contained in this Rights Agreement to the contrary, the
Rights shall not be exercisable pursuant to Section 11(a)(ii) prior to the
expiration of the Company's right of redemption hereunder.
(ii) Following the occurrence of a Stock Aquisition
Date and the expiration of the right of redemption set forth above in section
23(a)(i), the right of redemption may be reinstated by a majority vote of the
Continuing Directors; provided that there shall be no less than two Continuing
Directors at the time of the action if (A) an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in one
or a series of transactions the occurrence of which shall make such Person the
Beneficial Owner of 10% or
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<PAGE>
less of the outstanding shares of Common Stock, and (B) there are no other
persons, immediately following the occurrence of the event described in (A)
above, who are Acquiring Persons.
(b) Without any further action and without any notice, the
right to exercise the Rights will terminate effective at the effective time of
the action of the Board of Directors ordering the redemption of the Rights and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the effective time of the action of the
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each notice of redemption will state the
method by which the payment of the Redemption Price will be made. At the option
of the Board of Directors, the Redemption Price may be paid in cash to each
Rights holder or by the issuance of shares (and, at the Company's election
pursuant to Section 14(b) hereof, cash or depositary receipts in lieu of
fractions of shares) of Common Stock having a Fair Market Value equal to such
cash payment.
Section 24. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i) or
11(g) or (ii) to offer to the holders of record of its Common Stock options,
warrants, or other rights to subscribe for or to purchase shares of Common Stock
(including any security convertible into or exchangeable for Common Stock) or
shares of stock of any class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Common Stock or any recapitalization or reorganization
of the Company, or (iv) to effect any consolidation or
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<PAGE>
merger with or into, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or Persons,
or (v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of record of a
Right Certificate, in accordance with Section 25, notice of such proposed
action, which shall specify the record date for the purposes of such transaction
referred to in Section 11(a)(i) or such dividend or distribution, or the date on
which such reclassification, recapitalization, reorganization, consolidation,
merger, sale or transfer of assets, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by the
holders of record of Common Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of
record of the Common Stock for purposes of such action, and in the case of any
such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock, whichever shall be the earlier. The failure to give notice
required by this Section 24 or any defect therein shall not affect the legality
or validity of the action taken by the Company or the vote upon any such action.
(b) In case any of the transactions referred to in Section
11(a)(i) or 13 of this Rights Agreement are proposed, then, in any such case,
the Company shall give to each holder of Rights, in accordance with Section 25
hereof, notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(i) or 13
hereof, as the case may
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<PAGE>
be, and, upon consummating such transaction, shall similarly give notice thereof
to each holder of Rights.
Section 25. NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Commodore Holdings Limited
4000 Hollywood Boulevard
Suite 385-S, South Tower
Hollywood, Florida 33021
Attn: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer and Trust Company
40 Wall Street
New York, NY 10005
Attn: Karen Lazar
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. For as long as the Rights are then
redeemable and except as provided in the last sentence of this Section 26, the
Company may in its sole and absolute discretion, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Rights
Agreement without the approval of any
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<PAGE>
holders of the Rights. At any time when the Rights are not then redeemable and
except as provided in the last sentence of this Section 26, the Company may, and
the Rights Agent shall if the Company so directs, supplement or amend this
Rights Agreement without the approval of any holders of Right Certificates (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein
or (iii) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable, provided that no such supplement or
amendment pursuant to this clause (iii) shall materially adversely affect the
interest of the holders of Right Certificates. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. This Rights
Agreement may be amended or supplemented at any time with the approval of a
majority of the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock). Notwithstanding anything contained in this
Rights Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price or the Final Expiration Date and supplements or
amendments may be made after the time that any Person becomes an Acquiring
Person only if at the time of the action of the Board of Directors approving
such supplement or amendment there are then in office not less than two
Continuing Directors and such supplement or amendment is approved by a majority
of the Continuing Directors then in office.
Section 27. SUCCESSORS. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
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<PAGE>
Section 28. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the holders of Common Stock in their
capacity as holders of the Rights) any legal or equitable right, remedy or claim
under this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the holders of record of
the Right Certificates (and, prior to the Distribution Date, the holders of
Common Stock in their capacity as holders of the Rights).
Section 29. GOVERNING LAW. This Rights Agreement, each right and each
Right Certificate issued hereunder shall be governed by and construed in
accordance with the laws of Bermuda.
Section 30. COUNTERPARTS. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 31. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 32. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
COMMODORE HOLDINGS LIMITED
By: /s/ JEFFREY I. BINDER
-----------------------------------------
Jeffrey I. Binder
Chairman of the Board
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By: /s/ HERBERT J. LEMMER
-----------------------------------------
Name: Herbert J. Lemmer
---------------------------------
Title: Vice President
--------------------------------
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<PAGE>
EXHIBIT A
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL
AND VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
COMMODORE HOLDINGS LIMITED
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On September 29, 1998, the Board of Directors of Commodore Holdings
Limited (the "Company") declared a dividend distribution of one Common Stock
Purchase Right (a "Right") for each outstanding share of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company. The distribution is payable
as of November 2, 1998 to stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one share of Common
Stock of the Company at a per share price of $28.34 (the "Exercise Price"). The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer and Trust
Company, as Rights Agent (the "Rights Agent").
AS DISCUSSED BELOW, INITIALLY THE RIGHTS WILL NOT BE EXERCISABLE,
CERTIFICATES WILL NOT BE SENT TO STOCKHOLDERS AND THE RIGHTS WILL AUTOMATICALLY
TRADE WITH THE COMMON STOCK.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day following a public announcement that a
person or group of affiliated or associated persons, with certain exceptions set
forth below, has acquired beneficial ownership of 15% or more of the outstanding
voting stock of the Company (an "Acquiring Person") and (ii) the tenth business
day (or such later date as may be determined by the Board of Directors and the
Continuing Directors (as defined in the Rights Agreement) prior to such time as
any person or group of affiliated or associated persons becomes an Acquiring
Person) after the date of the commencement or announcement of a person's or
group's intention to commence a tender or exchange offer the consummation of
which would result in the ownership of 30% or more of the Company's outstanding
voting stock (even if no shares are actually purchased pursuant to such offer);
prior thereto, the Rights would not be exercisable, would not be represented by
a separate certificate, and would not be transferable apart from the Company's
Common Stock, but will instead be evidenced, with respect to any of the Common
Stock certificates outstanding as of November 2, 1998, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto. An Acquiring
Person does not include (A) the Company, (B) any subsidiary of the Company, (C)
any employee benefit plan or employee stock plan of the Company or of any
subsidiary of the Company, or any trust or other entity organized, appointed,
established or holding Common Stock for or pursuant to
A-1
<PAGE>
the terms of any such plan, (D) any person or group whose ownership of 15% or
more of the shares of voting stock of the Company then outstanding results
solely from (i) any action or transaction or transactions approved by the Board
of Directors before such person or group became an Acquiring Person or (ii) a
reduction in the number of issued and outstanding shares of voting stock of the
Company pursuant to a transaction or transactions approved by the Board of
Directors (provided that any person or group that does not become an Acquiring
Person by reason of clause (i) or (ii) above shall become an Acquiring Person
upon acquisition of an additional 1% of the Company's Voting Stock unless such
acquisition of additional Voting Stock will not result in such person or group
becoming an Acquiring Person by reason of such clause (i) or (ii)) or (E) any
person who, as of November 1, 1997, together with all affiliates and associates
of such person, was the beneficial owner of 15% or more of the voting stock of
the Company outstanding as of such date; provided, however, that any person
described in this clause (E) shall no longer be an exempt person and shall
become an Acquiring Person if such person, together with all affiliates and
associates of such person, after November 1, 1997 acquires beneficial ownership
of an additional 5% or more of the voting stock (unless such acquisition is
pursuant to a transaction described in clause (D)(i) or (D)(ii) above).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after November 2, 1998 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as of
November 2, 1998 with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate certificates alone
will evidence the Rights from and after the Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on November 2, 2008 (the "Final Expiration
Date"), unless earlier redeemed by the Company as described below.
The number of shares of Common Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed, in the event that, after the
time that the Rights become exercisable, the Company were to be acquired in a
merger or other business combination (in which any shares of Common Stock are
changed into or exchanged for other securities or assets) or more than 50% of
the assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred in one or a series of related
transactions, except in any such case pursuant to a transaction approved by the
Board of Directors and Continuing Directors (as defined in the Rights Agreement)
the Rights Agreement provides that proper provision will be made so that each
holder of record of a Right will from and after such date have the right to
receive, upon payment of the Exercise Price, that number of shares of common
stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price. In addition, unless the
Rights are earlier redeemed, in the event that a person or group becomes an
A-2
<PAGE>
Acquiring Person, the Rights Agreement provides that each holder of record of a
Right, other than the Acquiring Person (whose Rights will thereupon become null
and void), will thereafter have the right to receive, upon payment of the
Exercise Price, that number of shares of the Common Stock having a market value
at the time of the transaction equal to two times the Exercise Price.
Fractions of shares of Common Stock may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares.
At any time on or prior to the close of business on the earlier of (i)
the tenth day after the time that a person has become an Acquiring Person (or
such later date as the Company may determine in certain instances) or (ii) the
Final Expiration Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The Rights may be
redeemed after the time that any Person has become an Acquiring Person only if
approved by a majority of the Continuing Directors. Immediately upon the
effective time of the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
For as long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price or the Final Expiration Date, amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then redeemable,
the Company may amend the Rights in any manner that does not materially
adversely affect the interests of holders of the Rights as such. Amendments to
the Rights Agreement from and after the time that any person becomes an
Acquiring Person requires the approval of a majority of the Continuing Directors
(as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement filed on Form 8-K,
dated September 29, 1998. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated in this summary description herein by
reference.
A-3
<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R-___ ________ Rights
NOT EXERCISABLE AFTER NOVEMBER 2, 2008 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND
UNDER CERTAIN OTHER CIRCUMSTANCES, AT $.01 PER RIGHT (SUBJECT TO
ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS
AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY
OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY
PERSON.
Right Certificate
COMMODORE HOLDINGS LIMITED
This certifies that _______________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of September 29, 1998 (as such
agreement may be amended from time to time, the "Rights Agreement") between
Commodore Holdings Limited, a Bermuda corporation (the "Company"), and American
Stock Transfer and Trust Company (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M. (New York City time) on November 2,
2008 at the office of the Rights Agent designated in the Rights Agreement for
such purpose, or its successor as Rights Agent, in New York, New York, one share
of Common Stock of the Company at a purchase price of $28.34 as the same may
from time to time be adjusted in accordance with the Rights Agreement (the
"Exercise Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Common Stock which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Common Stock, or other property, may be acquired
upon exercise of the Rights evidenced by this Right Certificate, as provided in
the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the
<PAGE>
rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of record of Right Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company. This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Common Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right.
No fractional shares of Common Stock are required to be issued upon the
exercise of any Right or Rights evidenced hereby, and in lieu thereof the
Company may cause depositary receipts to be issued and/or a cash payment to be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at a meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________, 1998.
ATTEST: COMMODORE HOLDINGS LIMITED,
By:
- ------------------------------- ------------------------
Secretary Title:
Countersigned:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:
- -------------------------------
Authorized Signature
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED_____________________________________________________
hereby sells, assigns and transfers unto________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the within Right Certificate on the books of
the within-named Company, with full power of substitution.
Dated:_______________, 199_
---------------------------------
Signature
Signature Guaranteed:
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Dated: ____________, 199_
-------------------------------------------
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO COMMODORE HOLDINGS LIMITED:
The undersigned hereby irrevocably elects to exercise ___________
Rights represented by this Right Certificate to purchase the shares of Common
Stock issuable upon the exercise of such Rights and requests that certificates
for such share(s) be issued in the following name:
_______________________________________________________________________________
Please insert social security or other identifying number: ____________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
_____________________________________________________________________________
Please insert social security or other identifying number: ____________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: ____________________, 199_
--------------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate)
Signature Guaranteed:
EXHIBIT 2
COMMODORE HOLDINGS LIMITED
ADOPTS RIGHTS PLAN
HOLLYWOOD, FL --- (October 5, 1998) The board of directors of Commodore Holdings
Limited (Nasdaq: CCLNF) has adopted a Rights Plan designed to protect
stockholders in the event of takeover action. The Rights Plan is designed to
prevent an acquirer from gaining control of the company without offering a fair
price to all stockholders.
"The board of directors believes the common stock is undervalued in terms of the
company's true worth. As a result, we retained Josephthal & Co., Inc., an
investment banker and a New York Stock Exchange member to advise us. The board
of directors, with the advice and assistance of Josephthal, determined the
exercise price of the Rights. The Rights Plan represents a sound and reasonable
means of safeguarding the stockholders' value of their investment in the
company," said Jeffrey I. Binder, chairman of the board of Commodore Holdings
Ltd.
The terms of the Rights Plan call for a dividend distribution of one Right for
each share of common stock, to be issued to all holders of record at the close
of business on November 2, 1998. All shares of common stock issued thereafter
during the terms of the Rights Plan, which begins November 2, 1998 and ends
November 2, 2008, will also be accompanied by a Right. Each right will entitle
the holder to purchase one share of common stock at a price of $28.34.
These Rights will become exercisable only in the event, with certain exceptions,
than an acquiring party accumulates 15% or more of the voting stock, or if a
party announces an offer to acquire 30% or more of the company's stock. Holders
of 15% or more of the company's voting stock as of the date the board of
directors approved the Rights Plan in principle, November 1, 1997, and will not
trigger the Rights unless and until they acquire an additional 5% of the voting
stock.
In addition, holders of the Rights will be entitled to purchase a number of
additional shares of common stock in an "acquiring entity" having a market value
of twice the exercise price of each Right. The company will generally have the
ability to redeem the Rights at $.01 per Right at any time until the tenth day
following the acquisition of a 15% position in its voting stock. The Rights
expire November 2, 2008.
Commodore's current fleet of three vessels is experiencing record passenger
bookings which continue through 1998 and beyond. Recently the company announced
an exclusive docking agreement with the owners of a soon-to-be completed pier in
Rosarito Mexico and Commodore's intention to bring in another vessel to operate
between San Diego, California and Rosarito, Mexico.
A veteran of the cruise business Commodore began operations in 1966 and is known
for pioneering new routes and innovative cruise packages. South Florida based
Commodore Holdings Limited, with over $60 million in assets, operates Commodore
Cruise Line which was selected by TRAVEL HOLIDAY magazines as "the best cruise
for the money."
<PAGE>
This press release contains forward-looking statements which are subject to
change. These forward-looking statements may be significantly impacted, either
positively or negatively by various factors, including without limitation,
competing in a saturated industry against modern and larger fleets, the ability
of the company to obtain financing for the acquisition of additional vessels,
the potential for additional government regulations, the need for expensive
upgrades and/or maintenance to aging vessels and general economic conditions in
the cruise and gaming industries and the markets in which the company operates.
Additional information concerning potential factors that could affect the
company's financial results is included in, but not limited to, its form 10-K
and other filings with the Securities and Exchange Commission.
