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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CONTINENTAL AIRLINES, INC.
(Exact Name of registrant as specified in its charter)
Delaware 74-2099724
(State of Incorporation or organization) (IRS Employer
Identification No.)
1600 Smith Street, Dept. HQSEO
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of
the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Series A Junior Participating New York Stock Exchange
Preferred Stock Purchase Rights
If this form relates to the registration of securities
pursuant to Section 12(b) of the Exchange Act and is effective
pursuant to General Instruction A.(c), check the following box.
[X]
If this form relates to the registration of securities
pursuant to Section 12(g) of the Exchange Act and is effective
pursuant to General Instruction A.(d), check the following box. [ ]
Securities Act registration statement file number to which
this form relates:
_______________ (if applicable)
Securities to be registered pursuant to Section 12(g) of
the Act:
None
(Title of Class)
Item 1. Description of Securities To Be Registered.
Effective November 20, 1998, the Board of Directors of
Continental Airlines, Inc. (the "Company") declared a dividend of
one preferred share purchase right (a "Right") for each
outstanding share of Class A Common Stock, par value $.01 per
share (the "Class A Common Shares"), Class B Common Stock, par
value $.01 per share (the "Class B Common Shares"), and Class D
Common Stock, par value $.01 per share (the "Class D Common
Shares" and together with the Class A Common Shares and the Class
B Common Shares, the "Common Shares"), of the Company. The
dividend is payable on December 2, 1998 (the "Record Date") to
the stockholders of record on that date. Each Right entitles the
registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company, at
a price of $200 per one one-thousandth of a Preferred Share (the
"Exercise Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agent").
Until the earlier of (i) the tenth day following a public
announcement or public disclosure of facts indicating that a
person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or
more of the total number of votes entitled to be cast generally
by the holders of the Common Shares of the Company then
outstanding, voting together as a single class (the "Voting
Power"), or (ii) the tenth business day (or such later date as
may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would
result in any Person becoming an Acquiring Person (the earlier of
such dates being called the "Distribution Date"), the Rights will
be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common
Share certificates with a copy of this Summary of Rights attached
thereto.
Certain "exempt persons" are excluded from the definition
of Acquiring Person including: (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company or any Subsidiary of the Company, (iv) any entity holding
Common Shares for or pursuant to the terms of any such employee
benefit plan, (v) Air Partners, L.P., a Texas limited partnership
("Air Partners"), and its Controlled Affiliates so long as (A)
the general partner of Air Partners is either Newbridge Parent
Corporation, a Delaware corporation ("Newbridge"), or a
Controlled Affiliate of Newbridge (including, without limitation,
Northwest Airlines Corporation, a Delaware corporation ("NWA"))
or a Person who is an Exempt Person under clause (ix) below and
(B) a majority of the limited partnership interests of Air
Partners are beneficially owned by NWA or a Controlled Affiliate
of Newbridge (including, without limitation, NWA) or any Person
who is an Exempt Person under clause (ix) below and (C)
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(1) until the earlier of the sixth anniversary of the closing of the
transactions contemplated by the Investment Agreement, dated as
of January 25, 1998, as amended, among NWA, Newbridge, Air
Partners, the partners of Air Partners and certain of its
affiliates (the "Investment Agreement") and the Purchase
Agreement dated as of March 2, 1998 among NWA, Newbridge, Barlow
Investors III, LLC and the Guarantors that are signatory thereto,
and such time as NWA and its affiliates cease to beneficially own
voting securities representing at least 10% of the Fully Diluted
Voting Power (as defined in the Rights Agreement) (the
"Governance Agreement Termination Time"), Air Partners does not
acquire Beneficial Ownership of Common Shares other than as
permitted by and in compliance with the terms of the Governance
Agreement, dated as of January 25, 1998, as amended, among the
Company, NWA and Newbridge, (the "Governance Agreement") or, (2)
at or after the Governance Agreement Termination Time while any
provision of the Supplemental Agreement, dated as of November 20,
1998, by and among the Company, NWA and Newbridge (the
"Supplemental Agreement"), remains in effect, Air Partners does
not acquire any Common Shares other than in a transaction that is
either (a) an Approved Purchase (as defined in the Rights
Agreement), (b) otherwise approved by a majority of the
"Independent Directors" (as defined in the Governance Agreement
or the Supplemental Agreement as the case may be) or (c) a
transaction that, if the Governance Agreement had been in effect,
NWA or Newbridge would have been permitted to take under Section
1.01(a) thereof, (vi) NWA, Newbridge and any Controlled Affiliate
of NWA or Newbridge (A) prior to the Governance Agreement
Termination Time, so long as they do not take any action
prohibited by the Governance Agreement, and (B) at or after the
Governance Agreement Termination Time, so long as they do not
take any action prohibited by the Supplemental Agreement;
provided, however, that in the case of either (A) or (B) in this
clause (vi), no action taken by NWA, Newbridge or any Controlled
Affiliate of either of them shall be a violation of clause (vi)
of the definition of exempt person in the Rights Agreement until
the Company shall have delivered to Newbridge notice of the
violation and, if such violation is capable of being remedied,
the Company's proposed remedy, in which case no violation shall
have occurred for purposes of such clause (vi) unless the
violation shall not have been remedied within 30 days following
the Company's delivery to Newbridge of such notice, delivered in
accordance with the Governance Agreement or the Supplemental
Agreement (as the case may be), (vii) NWA, Newbridge and any
Controlled Affiliate of NWA or Newbridge after the Governance
Agreement Termination Time and while any provision of the
Supplemental Agreement remains in effect so long as none of them
acquires any Common Shares other than in a transaction that
either (A) is an Approved Purchase, (B) is otherwise approved by
a majority of the "Independent Directors" (as defined in the
Governance Agreement or the Supplemental Agreement as the case
may be), (C) results in the percentage of Fully Diluted Voting
Power of the Common Shares beneficially owned by NWA, Newbridge
and their Controlled Affiliates not exceeding the highest
percentage of Fully Diluted Voting Power of the Common Shares
previously beneficially owned by them, including as "beneficially
owned" for purposes of such
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calculation any Common Shares with respect to which NWA,
Newbridge or their Controlled Affiliates have been granted a
proxy pursuant to the Investment Agreement, or (D) a transaction
that, if the Governance Agreement had been in effect, NWA or
Newbridge would have been permitted to take under Section 1.01(a)
thereof, (viii) David Bonderman, James Coulter or William S.
Price, III, or any Person with respect to which one or more of
them (A) directly or indirectly controls at least 50.1% of the
voting power, (B) directly or indirectly controls at least 50.1%
of the equity, or (C) directly or indirectly controls in a manner
substantially similar to the control that the general partner of
Air Partners has over Air Partners pursuant to and as provided in
the "Partnership Agreement" (as defined in the Investment
Agreement), which Persons described in clause (C) shall include
1998 CAI Partners, L.P., a Texas limited partnership, under its
partnership agreement and ownership structure in effect on the
date hereof (the "B/C/P Group"), (ix) any Person who, as a result
of a transfer of (or an agreement to transfer) Common Shares by
NWA, Newbridge or any Controlled Affiliate of NWA or Newbridge
(which, if made prior to the Governance Agreement Termination
Time, is made in accordance with the terms of the Governance
Agreement or, if made on or after the Government Agreement
Termination Time, is made in accordance with the terms of the
Supplemental Agreement), becomes the beneficial owner of Common
Shares representing 15% or more of the Voting Power of the Common
Shares of the Company then outstanding; provided that such Person
shall not have acquired Beneficial Ownership of Common Shares in
addition to those acquired from Newbridge or its Controlled
Affiliates other than with the affirmative vote of two-thirds of
the members of the Board of Directors voting on the action (the
"Required Board Vote"), and (x) any Person who, as a result of a
transfer of (or an agreement to transfer) Common Shares by any
member of the B/C/P Group at such time as Newbridge and its
Controlled Affiliates beneficially own Common Shares representing
less than 25% of the Voting Power of the Company, becomes the
beneficial owner of Common Shares representing 15% or more of the
Voting Power of the Company then outstanding; provided that if
Newbridge and its Controlled Affiliates beneficially own Common
Shares representing less than 25% of the Voting Power of the
Company pursuant to a Government Order (as defined in the
Investment Agreement), the Voting Power represented by the Common
Shares transferred by all members of the B/C/P Group in
accordance with clause (x) of the definition of exempt person in
the Rights Agreement shall not exceed the greater of (i) the
Voting Power represented at the time of such transfer of the
Common Shares beneficially owned by the B/C/P Group as of the
date of this Agreement (as adjusted for any dividends,
subdivisions, combinations, recapitalizations or similar
conversions, exchanges or transformations of shares) and (ii) the
Voting Power that Newbridge and its Controlled Affiliates are
permitted to beneficially own under the Government Order (except
that this proviso shall not apply if Newbridge and its Controlled
Affiliates beneficially own Common Shares representing less than
7.5% of the Voting Power of the Company); and provided further
that such Person shall not have acquired Beneficial Ownership of
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Common Shares in addition to those acquired from any member of
the B/C/P Group other than with the Required Board Vote.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates
issued after the Record Date, upon transfer or new issuance of
Common Shares, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares
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 Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on November 20, 2008 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
The Exercise Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares; (ii) upon the grant to holders of the Preferred Shares of
certain rights, options or warrants to subscribe for or purchase
Preferred Shares (or shares having the same rights, powers and
preferences as the Preferred Shares) at a price, or securities
convertible into Preferred Shares (or shares having the same
rights, powers and preferences as the Preferred Shares) with a
conversion price, less than the then current market price of the
Preferred Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends or dividends payable
in Preferred Shares) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of
each Right are also subject to adjustment in the event of a stock
dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, after the date of the Rights
Agreement and prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. The holders of Preferred Shares shall be
entitled to
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receive when, as and if declared by the Board of
Directors out of funds legally available for the purpose, a
quarterly dividend payment in an amount per share, subject to
adjustment, equal to 1000 times the aggregate per share amount of
all cash dividends, and 1000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in Common Shares,
declared on the Common Shares. In the event of liquidation, the
holders of the Preferred Shares will be entitled to receive an
aggregate amount per share, subject to adjustment, equal to 1000
times the aggregate payment made per Common Share. Each Preferred
Share will have 1000 votes, voting together with the Common
Shares. In the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred
Share will be entitled to receive 1000 times the amount received
per Common Share. These rights are protected by customary
antidilution provisions.
From and after the occurrence of an event described in
Section 11(a)(ii) of the Rights Agreement, if Rights are or were
at any time on or after the earlier of (x) the date of such event
and (y) the Distribution Date acquired or beneficially owned by
an Acquiring Person or an Associate or Affiliate (as such terms
are defined in the Rights Agreement) of an Acquiring Person, such
Rights shall become void, and any holder of such Rights shall
thereafter have no right to exercise such Rights.
In the event that any Person becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person and
its Affiliates and Associates (which Rights will thereafter be
void), will thereafter have the right to receive, upon exercise
thereof, that number of Class B Common Shares having a market
value of two times the Exercise Price of the Right. If the
Company does not have sufficient Class B Common Shares to satisfy
such obligation to issue Class B Common Shares, or if the Board
of Directors so elects, the Company shall make adequate provision
to substitute for such Class B Common Shares, upon payment of the
applicable Exercise Price, an amount of cash, a reduction in the
Exercise Price, Preferred Shares or other equity or debt
securities of the Company, or other assets equivalent in value to
the Class B Common Shares issuable upon exercise of a Right;
provided that, if the Company shall not have made adequate
provision to deliver value within 30 days following the date a
person becomes an Acquiring Person, the Company must deliver,
upon exercise of a Right, but without requiring payment of the
Exercise Price then in effect, Class B Common Shares (to the
extent available) and cash equal in value to the difference
between the value of the Class B Common Shares otherwise issuable
upon the exercise of a Right and the Exercise Price then in
effect. The Board of Directors may extend the 30-day period for
up to an additional 60 days to permit the taking of action that
may be necessary to authorize sufficient additional Class B
Common Shares to permit the issuance of Class B Common Shares
upon the exercise in full of the Rights.
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In the event that, at any time after a Person becomes an
Acquiring Person, (i) the Company merges into any other Person,
(ii) any Person merges into the Company and all of the
outstanding Common Shares do not remain outstanding after such
merger, or (iii) the Company sells 50% or more of its
consolidated assets or earning power, proper provision will be
made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current
Exercise Price, in lieu of Preferred Shares for which a Right is
then exercisable, that number of shares of common stock of the
acquiring corporation (including the Company as successor thereto
or as the surviving corporation) which at the time of such
transaction will have a market value of two times the Exercise
Price of the Right.
At any time after any Person becomes an Acquiring Person,
and prior to the acquisition by any person or group of a majority
of the Voting Power, the Board of Directors may exchange the
Rights (other than Rights owned by such Acquiring Person which
have become void), in whole or in part, at an exchange ratio of
one Class B Common Share per Right (subject to adjustment). The
Company may, at its option, substitute Preferred Shares or common
stock equivalents for Class B Common Shares, at the rate of one
one-thousandth of a Preferred Share for each Class B Common Share
(subject to adjustment). No fractional Class B Common Shares will
be issued and in lieu thereof, an adjustment in cash will be made
based on the market price of the Class B Common Shares on the
last trading day prior to the date of exchange.
With certain exceptions, no adjustment in the Exercise
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Exercise Price. No fractional
Preferred Shares will be issued (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share
which may, at the election of the Company, be evidenced by
depositary receipts) upon exercise of the Rights and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise.
At any time prior to any person becoming an Acquiring
Person, the Board of Directors, by the Required Board Vote, may
redeem the Rights in whole, but not in part, at a price of $.001
per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and subject to
such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights (or
upon such later date as the Board of Directors shall specify in
the resolution approving such redemption), the right to exercise
the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors, by the Required Board Vote, without the consent of the
holders of the Rights, except that from and after such time as
any Person becomes an Acquiring Person no such amendment may
adversely
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affect the interests of the holders of the Rights
(other than the Acquiring Person and its Affiliates and
Associates).
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement is available free of charge
to holders of the Rights from the Company after receipt of a
written request therefor. 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 hereby
incorporated herein by reference.
Item 2. Exhibits.
---------
1.1 Rights Agreement, dated as of November 20, 1998,
between Continental Airlines, Inc. and Harris
Trust and Savings Bank, which includes: as Exhibit
A thereto, the Certificate of Designation of
Series A Junior Participating Preferred Stock; as
Exhibit B thereto, the Form of Right Certificate;
as Exhibit C thereto, the Summary of Rights to
Purchase Preferred Shares.
1.2 Certificate of Designation of Series A Junior
Participating Preferred Stock, included as Exhibit
A to Exhibit 1.1.
1.3 Form of Right Certificate, included as Exhibit B
to Exhibit 1.1.
1.4 Summary of Rights to Purchase Preferred Shares,
included as Exhibit C to Exhibit 1.1.
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SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 20, 1998
CONTINENTAL AIRLINES, INC.
By: /s/ Jeffery A. Smisek
---------------------
Name: Jeffery A. Smisek
Title: Executive Vice President,
General Counsel and Secretary
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
1.1 Rights Agreement, dated as of November 20, 1998, between
Continental Airlines, Inc. and Harris Trust and Savings
Bank, which includes: as Exhibit A thereto, the Certificate
of Designation of Series A Junior Participating Preferred
Stock; as Exhibit B thereto, the Form of Right Certificate;
as Exhibit C thereto, the Summary of Rights to Purchase
Preferred Shares.
1.2 Certificate of Designation of Series A Junior Participating
Preferred Stock, included as Exhibit A to Exhibit 1.1.
1.3 Form of Right Certificate, included as Exhibit B to Exhibit
1.1.
1.4 Summary of Rights to Purchase Preferred Shares, included as
Exhibit C to Exhibit 1.1.
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Exhibit 1.1
CONTINENTAL AIRLINES, INC.
And
HARRIS TRUST AND SAVINGS BANK
Rights Agent
RIGHTS AGREEMENT
Dated as of November 20, 1998
RIGHTS AGREEMENT
This Rights Agreement dated as of November 20, 1998,
between Continental Airlines, Inc., a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank (the "Rights
Agent").
The Board of Directors of the Company has authorized
and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Company outstanding at the Close of Business on December 2, 1998
(the "Record Date"), each Right representing the right to
purchase one one-thousandth of a Preferred Share (as hereinafter
defined), or such different amount or kind of securities as is
herein provided upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the
issuance of one Right with respect to each additional Common
Share that shall become outstanding between the Record Date and
the earlier of the Distribution Date, the Redemption Date and the
Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto hereby
agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
shall, after the Announcement Date, become the Beneficial Owner
of Common Shares representing 15% or more of the Voting Power of
the Common Shares of the Company then outstanding.
Notwithstanding the foregoing, no Person shall become an
Acquiring Person (1) if such Person is an Exempt Person (so long
as such Person remains an Exempt Person), (2) as the result of
(A) an acquisition of Common Shares by the Company or (B) the
conversion of Class A Common Shares into Class B Common Shares
which, by reducing the number or Voting Power of shares
outstanding, increases the Voting Power of the shares
beneficially owned by such Person to 15% or more of the Voting
Power; provided, however, that if a Person shall so become the
Beneficial Owner of Common Shares representing 15% or more of the
Voting Power of the Common Shares of the Company then outstanding
by reason of the acquisition of Common Shares by the Company or
the conversion of Class A Common Shares into Class B Common
Shares and shall, after such share purchases by the Company or
such conversion, purchase or otherwise take action to cause it to
become the Beneficial Owner of Common Shares representing an
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additional 1% of the Voting Power of the Common Shares of the
Company then outstanding, then such Person shall be an Acquiring
Person, or (3) if the Board of Directors determines in good faith
that a Person who would otherwise be an Acquiring Person, as
defined pursuant to the foregoing provisions of this paragraph,
has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares so
that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this paragraph,
then such Person shall not be an Acquiring Person for any
purposes of this Agreement.
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule l2b-2 of the General
Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement.
"Air Partners" shall mean Air Partners, L.P., a Texas
limited partnership.
"Announcement Date" shall mean November 20, 1998, the
date on which the declaration of a dividend of one Right for each
Common Share then outstanding was first announced publicly.
A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
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(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage
of time or the satisfaction of one or more conditions) pursuant
to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), written or otherwise, or upon the exercise of
conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be the Beneficial Owner of, or
beneficially own, securities tendered pursuant to a tender or
exchange offer made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange
Act by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; (B) the right to vote pursuant
to any agreement, arrangement or understanding; provided,
however, that a Person shall not be the Beneficial Owner of, or
beneficially own, any security if the
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agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule l3D under the Exchange Act (or
any comparable or successor report); or (C) "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement); 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 (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities), written or
otherwise, for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso to section (B) of the
immediately preceding paragraph (ii)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
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outstanding," when used with reference to a Person's Beneficial
Ownership of securities of the Company, shall mean the number of
such securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder. "Approved Purchase" shall mean a tender offer or
exchange offer made to all holders of Common Shares at or above
the Purchase Price by Air Partners, NWA or Newbridge or any of
its Controlled Affiliates (including, without limitation, Air
Partners and NWA).
"Approved Purchase Procedures" shall mean the
following procedures for establishing the Purchase Price:
(i) the Person proposing to purchase Common
Shares (the "Proposed Purchaser") shall submit a notice to the
Company setting forth the material terms and conditions of a
tender offer or exchange offer by the Proposed Purchaser (or one
of its Controlled Affiliates) pursuant to which it would propose
to acquire some or all of the Common Shares not beneficially
owned by it and its Affiliates (the "Purchase Proposal"). The
Company shall promptly thereafter establish a committee of the
Board of Directors (the "Special Committee") composed of only,
and at least three (3), independent directors, which committee
shall have the authority to consider, review, and negotiate the
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terms of, and to make a recommendation to the full Board of
Directors regarding, the Purchase Proposal, and to retain, at the
Company's expense, counsel, financial advisors and other
advisors, and to take such other actions customarily delegated to
a committee of independent directors in similar circumstances.
The Proposed Purchaser and the Special Committee shall negotiate
in good faith and use their best efforts to agree upon, within
fifteen (15) days after receipt of the Purchase Proposal, a price
for the Common Shares in, and other terms of, a Purchase
Transaction as to which the Special Committee can recommend the
acceptance pursuant to Rule 14e-2(a) of the Exchange Act.
(ii) If the Proposed Purchaser and the Special
Committee are unable to agree upon a price for the Common Shares
as to which the Special Committee can recommend the acceptance
pursuant to Rule 14e-2(a) of the Exchange Act within thirty (30)
days of receipt of the Purchase Proposal, on the thirty-third
(33rd) day after receipt of the Purchase Proposal (the
"Initiation Date"), the Company will designate an investment
banking firm of recognized national standing (the "Company's
Appraiser") and the Proposed Purchaser will designate an
investment banking firm of recognized national standing (the
"Proposed Purchaser's Appraiser"), in each case to determine the
price per share of Common Shares that an unrelated third party
- 7 -
would pay if it were to acquire all outstanding shares of Common
Shares (other than the shares held by the Proposed Purchaser and
its Affiliates) in one or more arm's-length transactions,
assuming that the Common Shares were being sold in a manner
designed to attract all possible participants (such price, the
"Merger Value"). Each of the investment banking firms referred to
herein will be instructed to determine the Merger Value in this
manner.
(iii) Within twenty (20) days after the
Initiation Date, the Company's Appraiser and the Proposed
Purchaser's Appraiser will each determine its initial view as to
the Merger Value and consult with one another with respect
thereto. By the thirtieth (30th) day after the Initiation Date,
the Company's Appraiser and the Proposed Purchaser's Appraiser
will each have determined its final view as to the Merger Value.
At that point, if the Higher Appraised Amount (as defined below)
is not more than 110% of the Lower Appraised Amount (as defined
below), the Merger Value will be the average of those two views.
Otherwise, the Company's Appraiser and the Proposed Purchaser's
Appraiser will agree upon and jointly designate, by the
thirty-fifth (35th) day after the Initiation Date, a third
investment banking firm of recognized national standing (the
"Mutually Designated Appraiser") to determine its view of the
Merger Value. The Mutually Designated Appraiser will not be
permitted
- 8 -
to see or otherwise have access to, or be informed of, the
results of the appraisals of Merger Value by the Company's
Appraiser and the Proposed Purchaser's Appraiser, or any
component of either appraiser's analysis which led to its
conclusions. The Mutually Designated Appraiser will, no later
than the fiftieth (50th) day after the Initiation Date, determine
the Merger Value (the "Mutually Appraised Amount"). The Merger
Value will be (x) the Mutually Appraised Amount, if such amount
falls within the range of values that is between the Lower
Appraised Amount and the Higher Appraised Amount, (y) the Lower
Appraised Amount if such amount is below the Lower Appraised
Amount, and (z) the Higher Appraised Amount if such amount is
above the Higher Appraised Amount.
As used herein, "Lower Appraised Amount" means the
lower of the respective final views of the Company's Appraiser
and the Proposed Purchaser's Appraiser as to the Merger Value and
"Higher Appraised Amount" means the higher of such respective
final views.
The Company and the Proposed Purchaser shall be
responsible for the payment of fees and expenses to the
respective investment banking firms designated by them, and shall
each be responsible for 50% of the fees and expenses payable to
the Mutually Designated Appraiser.
- 9 -
(iv) The Proposed Purchaser shall have one
hundred twenty (120) days after the determination of the Merger
Value as provided in clause (iii) above to purchase Common Shares
at a price equal to or above the Purchase Price and on the other
terms of its Purchase Proposal in a tender offer or exchange
offer made to all holders of Common Shares and the purchase of
Common Shares made within such one hundred twenty (120) day
period and pursuant to such an offer shall be an Approved
Purchase for purposes of this Agreement.
"B/C/P Group" means David Bonderman, James Coulter or
William S. Price, III, or any Person with respect to which one or
more of them (i) directly or indirectly controls at least 50.1%
of the voting power, (ii) directly or indirectly controls at
least 50.1% of the equity, or (iii) directly or indirectly
controls in a manner substantially similar to the control that
the general partner of Air Partners has over Air Partners
pursuant to and as provided in the "Partnership Agreement" (as
defined in the Investment Agreement), which Persons described in
clause (iii) shall include 1998 CAI Partners, L.P., a Texas
limited partnership, under its partnership agreement and
ownership structure in effect on the date hereof.
"Board of Directors" means the board of directors of
the Company.
"Business Day" shall mean any day other than a
Saturday, Sunday, holiday or a day on which banking institutions
in the City
- 10 -
of Houston or the State of Illinois are authorized or obligated
by law or executive order to close.
"Class A Common Shares" shall mean shares of the Class
A Common Stock, par value $.01 per share, of the Company.
"Class B Common Shares" shall mean shares of the Class
B Common Stock, par value $.01 per share, of the Company.
"Class D Common Shares" shall mean shares of the Class
D Common Stock, par value $.01 per share, of the Company.
"Close of Business" on any given date shall mean 5:00
p.m., central time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., central time,
on the next succeeding Business Day.
"Closing" shall mean the closing of the disposition of
the partnership interests of Air Partners and the Common Shares
and other securities of the Company to NWA and Newbridge under
the Investment Agreement.
"Common Shares" when used with reference to the
Company shall mean the Class A Common Shares, Class B Common
Shares and Class D Common Shares. "Common Shares" when used with
reference to any Person other than the Company (or, in the event
of a transaction referred to in Section 13 hereof, if the Company
is the surviving corporation or the successor when thereafter
used
- 11 -
with reference to the Company) shall mean the capital stock (or
equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such
first-mentioned Person.
"common stock equivalents" shall have the meaning set
forth in Section 11(a)(iii)(B)(3) hereof.
"Controlled Affiliate" shall mean, with respect to any
Person, one or more of such Person's Affiliates that is directly
or indirectly controlled by such Person and, with respect to NWA
or Newbridge, shall include Air Partners after the Closing.
"Current Value" shall have the meaning set forth in
Section 11(a)(iii)(A)(1) hereof.
"Distribution Date" shall have the meaning set forth
in Section 3(a) hereof.
"equivalent preferred shares" shall have the meaning
set forth in Section 11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
- 12 -
"Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company or any Subsidiary of the Company, (iv) any entity holding
Common Shares for or pursuant to the terms of any such employee
benefit plan, (v) Air Partners and its Controlled Affiliates so
long as (A) the general partner of Air Partners is either
Newbridge or a Controlled Affiliate of Newbridge (including,
without limitation, NWA) or a Person who is an Exempt Person
under clause (ix) below and (B) a majority of the limited
partnership interests of Air Partners are beneficially owned by
NWA or a Controlled Affiliate of Newbridge (including, without
limitation, NWA) or any Person who is an Exempt Person under
clause (ix) below and (C) (1) until the Governance Agreement
Termination Time, Air Partners does not acquire Beneficial
Ownership of Common Shares other than as permitted by and in
compliance with the terms of the Governance Agreement or, (2) at
or after the Governance Agreement Termination Time while any
provision of the Supplemental Agreement remains in effect, Air
Partners does not acquire any Common Shares other than in a
transaction that is either (a) an Approved Purchase, (b)
otherwise approved by a majority of the "Independent Directors"
(as defined in the Governance Agreement or the Supplemental
Agreement as the case may be) or (c) a transaction that, if the
Governance Agreement had been in effect, NWA or Newbridge would
- 13 -
have been permitted to take under Section 1.01(a) thereof, (vi)
NWA, Newbridge and any Controlled Affiliate of NWA or Newbridge
(A) prior to the Governance Agreement Termination Time, so long
as they do not take any action prohibited by the Governance
Agreement, and (B) at or after the Governance Agreement
Termination Time, so long as they do not take any action
prohibited by the Supplemental Agreement; provided, however, that
in the case of either (A) or (B) in this clause (vi), no action
taken by NWA, Newbridge or any Controlled Affiliate of either of
them shall be a violation of this clause (vi) until the Company
shall have delivered to Newbridge notice of the violation and, if
such violation is capable of being remedied, the Company's
proposed remedy, in which case no violation shall have occurred
for purposes of this clause (vi) unless the violation shall not
have been remedied within 30 days following the Company's
delivery to Newbridge of such notice, delivered in accordance
with the Governance Agreement or the Supplemental Agreement (as
the case may be), (vii) NWA, Newbridge and any Controlled
Affiliate of NWA or Newbridge after the Governance Agreement
Termination Time and while any provision of the Supplemental
Agreement remains in effect so long as none of them acquires any
Common Shares other than in a transaction that either (A) is an
Approved Purchase, (B) is otherwise approved by a majority of the
"Independent Directors" (as defined in the
- 14 -
Governance Agreement or the Supplemental Agreement as the case
may be), (C) results in the percentage of Fully Diluted Voting
Power of the Common Shares beneficially owned by NWA, Newbridge
and their Controlled Affiliates not exceeding the highest
percentage of Fully Diluted Voting Power of the Common Shares
previously beneficially owned by them, including as "beneficially
owned" for purposes of such calculation any Common Shares with
respect to which NWA, Newbridge or their Controlled Affiliates
have been granted a proxy pursuant to the Investment Agreement,
or (D) a transaction that, if the Governance Agreement had been
in effect, NWA or Newbridge would have been permitted to take
under Section 1.01(a) thereof, (viii) the B/C/P Group, (ix) any
Person who, as a result of a transfer of (or an agreement to
transfer) Common Shares by NWA, Newbridge or any Controlled
Affiliate of NWA or Newbridge (which, if made prior to the
Governance Agreement Termination Time, is made in accordance with
the terms of the Governance Agreement or, if made on or after the
Government Agreement Termination Time, is made in accordance with
the terms of the Supplemental Agreement), becomes the beneficial
owner of Common Shares representing 15% or more of the Voting
Power of the Common Shares of the Company then outstanding;
provided that such Person shall not have acquired Beneficial
Ownership of Common Shares in addition to those acquired from
Newbridge or its
- 15 -
Controlled Affiliates other than with the Required Board Vote,
and (x) any Person who, as a result of a transfer of (or an
agreement to transfer) Common Shares by any member of the B/C/P
Group at such time as Newbridge and its Controlled Affiliates
beneficially own Common Shares representing less than 25% of the
Voting Power of the Company, becomes the beneficial owner of
Common Shares representing 15% or more of the Voting Power of the
Company then outstanding; provided that if Newbridge and its
Controlled Affiliates beneficially own Common Shares representing
less than 25% of the Voting Power of the Company pursuant to a
Government Order (as defined in the Investment Agreement), the
Voting Power represented by the Common Shares transferred by all
members of the B/C/P Group in accordance with this clause (x)
shall not exceed the greater of (i) the Voting Power represented
at the time of such transfer of the Common Shares beneficially
owned by the B/C/P Group as of the date of this Agreement (as
adjusted for any dividends, subdivisions, combinations,
recapitalizations or similar conversions, exchanges or
tranformations of shares) and (ii) the Voting Power that
Newbridge and its Controlled Affiliates are permitted to
beneficially own under the Government Order (except that this
proviso shall not apply if Newbridge and its Controlled
Affiliates beneficially own Common Shares representing less than
7.5% of the Voting Power of the Company); and provided further
that such Person shall not have acquired Beneficial Ownership of
Common Shares in addition to those acquired from any member of
the B/C/P Group other than with the Required Board Vote.
"Exercise Price" shall have the meaning set forth in
Section 7(b).
"Final Expiration Date" shall mean November 20, 2008.
"Fully Diluted Voting Power" of any Person shall be
calculated by dividing (i) the sum of (A) ten times the aggregate
number of shares of Class A Common Shares beneficially owned by
such Person (assuming exercise of all outstanding securities held
by such Person that are convertible into or exercisable or
exchangeable for shares of Class A Common Shares) and (B) the
number of shares of Class B Common Shares beneficially owned by
such Person (assuming exercise of all outstanding securities held
by such Person that are convertible into or exercisable or
exchangeable for shares of Class B Common Shares) by (ii) the sum
of (A) ten times the aggregate number of outstanding shares of
Class A Common Shares (assuming the exercise of all outstanding
securities convertible
- 16 -
into or exercisable or exchangeable for shares of Class A Common
Shares) and (B) the aggregate number of outstanding shares of
Class B Common Shares (assuming the exercise of all outstanding
securities convertible into or exercisable or exchangeable for
shares of Class B Common Shares).
"Governance Agreement" shall mean the Governance
Agreement dated as of January 25, 1998 by and between the
Company, NWA and Newbridge, as amended by the First Amendment to
the Governance Agreement dated as of March 2, 1998, the Second
Amendment to the Governance Agreement dated as of November 20,
1998, and as it may be further amended from time to time after
the date hereof in accordance with its terms.
"Governance Agreement Termination Time" shall mean the
time of termination of the Governance Agreement.
"Investment Agreement" shall mean the Investment
Agreement dated as of January 25, 1998 among NWA, Newbridge, Air
Partners, the partners of Air Partners signatory thereto,
Bonderman Family Limited Partnership, 1992 Air, Inc. and Air
- 17 -
Saipan, Inc. as amended by Amendment No. 1 dated February 27,
1998 and Amendment No. 2 dated as of the date hereof.
"Newbridge" shall mean Newbridge Parent Corporation, a
Delaware corporation (whose name is expected to be changed after
the Closing to Northwest Airlines Corporation).
"NWA" shall mean Northwest Airlines Corporation, a
Delaware corporation (whose name is expected to be changed after
the Closing to Northwest Airlines Holdings Corporation).
"Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability partnership,
business trust, limited liability company, unincorporated
association or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Preferred Shares" shall mean the shares of Series A
Junior Participating Preferred Stock, par value $.01 per share,
of the Company.
"Purchase Price" shall mean a price for each Common
Share in an Approved Purchase as established by the Approved
Purchase Procedures.
- 18 -
"Redemption Date" shall mean the date on which the
Rights are redeemed as provided in Section 23 hereof.
"Redemption Price" shall mean $.001 per Right,
appropriately adjusted to reflect any stock split, stock
dividend, or similar transaction occurring after the date hereof.
"Required Board Vote" shall mean approval of an action
by the Board of Directors by the affirmative vote of two-thirds
of the members of the Board of Directors voting on the action.
"Right Certificate" shall mean a certificate
evidencing a Right in substantially the form of Exhibit B hereto.
"Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii) hereof.
"Section 13 Trigger Date" shall have the meaning set
forth in Section 13 hereof.
"Shares Acquisition Date" shall mean the earlier of
the date of (i) the public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such or (ii)
the public disclosure of facts by the Company or an Acquiring
Person indicating that an Acquiring Person has become such.
"Spread" shall have the meaning set forth in Section
11(a)(iii)(A) hereof.
"Subsidiary" of any Person shall mean any Person of
which a majority of the voting power of the voting equity
- 19 -
securities or equity interest is owned, directly or indirectly,
by such Person.
"Substitution Period" shall have the meaning set forth
in Section 11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights
to Purchase Preferred Shares in substantially the form of Exhibit
C hereto.
"Supplemental Agreement" shall mean the Supplemental
Agreement dated as of November 20, 1998 by and between the
Company, NWA and Newbridge.
"Voting Power" shall mean the total number of votes
entitled to be cast generally by the holders of the Common Shares
of the Company then outstanding, voting together as a single
class.
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 (who, in accordance with Section 3
hereof, shall, prior to the Distribution Date, also be the
holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such
co-Rights Agents, as it may deem necessary or desirable.
- 20 -
Section 3. Issue of Right Certificates.
(a) Until the Close of Business on the earlier of (i)
the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day (or such later date as may be determined by action
of the Board of Directors 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 acting in compliance
with the Governance Agreement, if applicable) of, or of the first
public announcement of the intention of any Person (other than
any of the Persons referred to in the preceding parenthetical) to
commence (unless such Person publicly announces within five (5)
Business Days that it no longer intends to commence), a tender or
exchange offer the consummation of which could result in any
Person becoming an Acquiring Person (such earlier date being
herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be
deemed to be Right Certificates other than for purposes of this
Section 3 and any provision of this Agreement referring to the
issuance or distribution of Right Certificates) and not by
separate Right
- 21 -
Certificates, and (y) the Rights (and the right to receive Right
Certificates) will be transferable only in connection with the
transfer of Common Shares. 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 at the
expense of the Company) by first-class, insured, postage-prepaid
mail (or such other method of delivery selected by the Company),
to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate
evidencing one Right for each Common Share so held (subject to
adjustment as provided in this Agreement). As of the Close of
Business on the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of the Summary of Rights
by first-class, postage-prepaid mail (or such other method of
delivery selected by the Company), to each record holder of
Common Shares as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Company.
The Rights Agent will mail to any holder of the Right
Certificates a copy of this Agreement without charge to the
holder but at the
- 22 -
expense of the Company after receipt of a written request
therefor. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in
the names of the holders thereof. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date),
the surrender for transfer of any certificate for Common Shares
outstanding on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares
evidenced thereby.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise
affixed to them substantially the following legend:
This certificate also evidences and entitles
the holder hereof to certain rights (the
"Rights") as set forth in the Rights
Agreement between Continental Airlines, Inc.
and Harris Trust and Savings Bank, dated as
of November 20, 1998 as it may from time to
time be amended or supplemented pursuant to
its terms (the "Rights Agreement"), the
terms
- 23 -
of which are hereby incorporated herein by
reference. A copy of the Rights Agreement is
on file at the principal executive offices
of Continental Airlines, Inc. Under certain
circumstances set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. Harris Trust
and Savings Bank will mail to the holder of
this certificate a copy of the Rights
Agreement without charge after receipt of a
written request therefor. Under certain
circumstances, rights beneficially owned by
any Person who becomes an Acquiring Person
(as defined in the Rights Agreement) and
certain other Persons shall become null and
void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares
shall be canceled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares
that are no longer outstanding.
- 24 -
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be substantially the same as Exhibit B hereto and may have
such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform
to usage. Subject to the other provisions of this Agreement, the
Right Certificates shall entitle the holders thereof to purchase
such number of one one-thousandths of a Preferred Share as shall
be set forth therein at the Exercise Price, but the number of one
one-thousandths of a Preferred Share and the Exercise Price shall
be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature; shall have affixed thereto
- 25 -
the Company's seal or a facsimile thereof; and shall be attested
by the Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Agent shall
countersign the Right Certificates, either manually or by
facsimile signature, and the Right Certificate shall not be valid
for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates may nonetheless be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of
the Company to sign such Right Certificate, although at the date
of the execution of this Rights Agreement any such person was not
such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office, books for
registration of the transfer of the Right Certificates issued
- 26 -
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 14
hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the earliest of the
Redemption Date, the Close of Business on the Final Expiration
Date, or the time at which the Rights are exchanged as provided
in Section 24 hereof, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have
become void pursuant to Section 11(a)(ii) hereof) may be
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-thousandths of a
Preferred Share as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request
in
- 27 -
writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights
Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall 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
for any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange
of Right Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security
- 28 -
reasonably satisfactory to them, and, at the Company's or the
Rights Agent's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder 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 registered holder of any Right
Certificate (other than a holder whose Rights have become void
pursuant to Section 11(a)(ii) hereof) may exercise the Rights
evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at its principal office, together
with payment of the Exercise Price for each one one-thousandth of
a Preferred Share as to which the Rights are exercised, prior to
the earliest of (i) the Close of Business on the Final Expiration
Date, (ii) the time at which the right to exercise the Rights
- 29 -
terminates pursuant to Section 23 hereof, or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(b) The purchase price for each one
one-thousandth of a Preferred Share to be purchased upon the
exercise of a Right shall initially be Two Hundred Dollars ($200)
(the "Exercise Price"), shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof, and shall be
payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to
purchase and certificate duly executed, accompanied by payment of
the Exercise Price for the number of one one-thousandths of a
Preferred Share to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof by
certified check, cashier's check or money order payable to the
order of the Company, the Rights Agent shall thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of one one-thousandths of a
Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or
- 30 -
(B) requisition from any depositary agent for the Preferred
Shares depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional Preferred Shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates
or 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 (iv) when appropriate, after receipt, deliver the cash
described in clause (iii) above to or upon the order of the
registered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing the unexercised
Rights shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.
- 31 -
(e) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate following the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Company
- 32 -
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled
Right Certificates, and in such case shall deliver a certificate
of destruction thereof to the Company.
Section 9. Status and Availability of Preferred
Shares.
(a) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all
Preferred Shares delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Shares
(subject to payment of the Exercise Price), be duly and validly
authorized and issued and fully paid and non-assessable shares.
(b) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any
Preferred Shares 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 Right
Certificates to a person other than, or the issuance or delivery
of certificates or depositary receipts for the Preferred Shares
in a name other than
- 33 -
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise; or to issue or to
deliver any certificates or depositary receipts for Preferred
Shares upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender); or until it has been
established to the Company's reasonable satisfaction that no such
tax is due.
(c) The Company covenants and agrees that it will
cause to be reserved and kept available, out of its authorized
and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights in
accordance with Section 7 hereof.
Section 10. Preferred Shares Record Date. Each person
in whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes have become the
holder of record of the Preferred Shares represented thereby on,
and such certificate shall be dated, the date upon which the
Right Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable transfer taxes)
was made. Prior to the exercise of the Rights
- 34 -
evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which
the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Exercise Price, Number of
Shares or Number of Rights. The Exercise Price, the number of
Preferred Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend on
the Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of
the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Exercise Price in effect at
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the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such
date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date, he
would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.
(ii) Subject to the following paragraph of
this subparagraph (ii) and to Section 24 of this Agreement, in
the event any Person shall become an Acquiring Person, each
holder of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Exercise
Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of such
number of Preferred Shares for which a Right is then exercisable,
such
- 36 -
number of Class B Common Shares as shall equal the result
obtained by (x) multiplying the then current Exercise Price by
the number of one one-thousandths of a Preferred Share for which
a Right was or would have been exercisable (if the Rights had
been exercisable) as of immediately prior to such Person becoming
an Acquiring Person and dividing that product by (y) 50% of the
then current per share market price of the Class B Common Shares
(determined pursuant to Section 11(d) hereof) on the date such
Person became an Acquiring Person. In the event that any Person
shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action that would
eliminate or diminish the benefits intended to be afforded by the
Rights.
From and after the occurrence of such an event, any
Rights that are or were acquired or beneficially owned by such
Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) on or after the earlier of (x) the date of such event and
(y) the Distribution Date, shall be void and any holder of such
Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Right Certificate shall
be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be
- 37 -
void pursuant to the preceding sentence or any Associate,
Affiliate or transferee thereof; no Right Certificate shall be
issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence 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
preceding sentence or any Associate or Affiliate thereof shall be
canceled.
(iii) In the event that the number of Class B
Common Shares which are authorized by the Company's amended and
restated certificate of incorporation and not outstanding or
subscribed for, or reserved or otherwise committed for issuance
for purposes other than upon exercise of the Rights, are not
sufficient to permit the holder of each Right to purchase the
number of Class B Common Shares to which he would be entitled
upon the exercise in full of the Rights in accordance with
subparagraph (ii) of paragraph (a) of this Section 11, or should
the Board of Directors so elect, the Company shall: (A) determine
the excess of (1) the value of the Class B Common Shares issuable
upon the exercise of a Right (calculated as provided in the last
sentence
- 38 -
of this subparagraph (iii)) pursuant to Section 11(a)(ii) hereof
(the "Current Value") over (2) the Exercise Price (such excess,
the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for such Class B Common Shares, upon
payment of the applicable Exercise Price, any one or more of the
following having an aggregate value determined by the Board of
Directors to be equal to the Current Value: (1) cash; (2) a
reduction in the Exercise Price; (3) Preferred Shares or other
equity securities of the Company (including, without limitation,
shares, or units or fractions of shares, of preferred stock which
the Board of Directors has determined to have the same value as
the Class B Common Shares (such shares of preferred stock,
"common stock equivalents")); (4) debt securities of the Company;
or (5) other assets; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause
(B) above within thirty (30) days following the first occurrence
of an event triggering the rights to purchase Class B Common
Shares described in Section 11(a)(ii) (the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring
payment of the Exercise Price, shares of Class B Common Shares
(to the extent available) and then, if necessary, cash, which
shares and cash
- 39 -
have an aggregate value equal to the
Spread. If the Board of Directors shall determine in good faith
that it is likely that sufficient additional shares of Class B
Common Shares could be authorized for issuance upon exercise in
full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization
of such additional shares (such period, as it may be extended,
the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof and the last
paragraph of Section 11(a)(ii) hereof, that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension,
the Company shall make a public announcement, and shall deliver
to the Rights Agent a statement, stating that the exercisability
of the Rights has been temporarily suspended. At
- 40 -
such time as the suspension is no longer in effect, the Company
shall make another public announcement, and deliver to the Rights
Agent a statement, so stating. For purposes of this Section
11(a)(iii), the value of the Class B Common Shares shall be the
current per share market price (as determined pursuant to Section
11(d)(i) hereof) of the Class B Common Shares on the Section
11(a)(ii) Trigger Date and the value of any common stock
equivalent shall be deemed to have the same value as the Class B
Common Shares on such date.
(b) In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights,
powers and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred
Shares or equivalent preferred shares at a price per Preferred
Share or equivalent preferred share (or having a conversion price
per share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the then current per share
market price of the Preferred Shares (as defined in Section
11(d)) on such record date, the Exercise Price to be in effect
after such
- 41 -
record date shall be adjusted 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
Preferred Shares outstanding on such record date plus the number
of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred
shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.
In case such subscription price may be paid in 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, whose determination shall be described
in a statement filed with the Rights Agent. Preferred Shares
owned by or held
- 42 -
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 Preferred
Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) 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 Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or
evidences of
- 43 -
indebtedness so to be distributed or of such subscription rights
or warrants applicable to one Preferred Share and the denominator
of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Exercise Price shall again be adjusted to be the
Exercise Price which would then be in effect if such record date
had not been fixed.
(d) (i) For the purpose of any computation
hereunder, the "current per share market price" of any security
(a "Security" for the purpose of this Section 11(d)(i)) on any
date shall be the average of the daily closing prices per share
of such Security for the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share
market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of
such Security
- 44 -
or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and
prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-
the-counter market, as reported by the National Association of
- 45 -
Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the
Board of Directors. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation
hereunder, the "current per share market price" of the Preferred
Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Shares are not
publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current
per share market price of the Class B Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by 1000. If neither the Class
B Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the
fair value
- 46 -
per share as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with
the Rights Agent.
(e) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Exercise Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest
one ten-millionth of a Preferred Share or one ten-thousandth of
any other share or security as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than three years from
the date of the transaction that requires such adjustment.
(f) If as a result of an adjustment made pursuant
to Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital
stock of the Company other than Preferred Shares, the number of
such other shares so receivable upon exercise of any Right shall
thereafter be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions
- 47 -
with respect to the Preferred Shares contained in Section 11(a)
through (c), inclusive, and the provisions of Sections 7, 9, 10
and 13 with respect to the Preferred Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Exercise Price hereunder
shall evidence the right to purchase, at the adjusted Exercise
Price, the number of one one-thousandths of a Preferred Share
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Exercise Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of
one one-thousandths of a Preferred Share (calculated to the
nearest one ten-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-thousandths of a share
covered by a Right immediately prior to this adjustment 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
- 48 -
Exercise Price in effect immediately after such adjustment of the
Exercise Price.
(i) The Company may elect on or after the date of
any adjustment of the Exercise Price to adjust the number of
Rights in substitution for any adjustment in the number of one
one-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a Preferred Share for which a
Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the
nearest one millionth) obtained by dividing the Exercise Price in
effect immediately prior to adjustment of the Exercise Price by
the Exercise Price in effect immediately after adjustment of the
Exercise Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Exercise Price is adjusted or any day
thereafter, but, if the Right Certificates have been distributed,
shall be at least 10 days later than the date of the public
announcement. If Right
- 49 -
Certificates have been distributed, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the 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 to be so 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.
(j) Irrespective of any adjustment or change in
the Exercise Price or the number of one one-thousandths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price and the number of one one-
- 50 -
thousandths of a Preferred Share, which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Exercise Price below one one-thousandth
of the then par value of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and non-assessable Preferred Shares at such adjusted Exercise
Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the issuing
to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to
- 51 -
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of any
Preferred Shares at less than the current market price, (iii)
issuance wholly for cash of Preferred Shares or securities which
by their terms are convertible into or exchangeable for Preferred
Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares or (v) issuance of any rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Shares shall not be taxable
to such stockholders.
(n) In the event that at any time after the date
of this Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Shares
payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or
- 52 -
otherwise other than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any
such case (i) the number of one one-thousandths of a Preferred
Share purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one
one-thousandths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the
Voting Power of the number of Common Shares outstanding
immediately before such event and the denominator of which is the
Voting Power of the number of Common Shares outstanding
immediately after such event, and (ii) each Common Share
outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared
or paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certificate of Adjustment. Whenever an
adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting
for such adjustment, (b) file with the Rights Agent and with each
- 53 -
transfer agent for the Preferred Shares or the Common Shares a
copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained, and
shall not be obligated or responsible for calculating any
adjustment, nor shall it be deemed to have knowledge of such an
adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. In the event that, at any time after
a Person becomes an Acquiring Person, directly or indirectly, (a)
the Company shall consolidate with, or merge with and into, any
other Person, (b) any Person shall consolidate with the Company,
or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities
of any other Person (or the Company) or cash or any other
property, or (c) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or
- 54 -
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person other than the Company or one or more of its
wholly-owned Subsidiaries (the date of any such event, a "Section
13 Trigger Date"), then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then
current Exercise Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and
in lieu of Preferred Shares for which a Right is then
exercisable, such number of Common Shares of such other Person
(including the Company as successor thereto or as the surviving
corporation) as shall equal the result obtained by (A)
multiplying the then current Exercise Price by the number of one
one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date
of consummation of such consolidation, merger, sale or transfer;
(ii) the issuer of such Common Shares shall thereafter be liable
for, and shall assume, by
- 55 -
virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
such issuer; and (iv) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof)
in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights. The
Company covenants and agrees that it shall not consummate any
such consolidation, merger, sale or transfer unless prior thereto
the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there
are any rights, warrants, instruments or securities outstanding
or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by
the Rights. The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other
transfers. For purposes hereof,
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the "earning power" of the Company and its Subsidiaries shall be
determined in good faith by the Company's Board of Directors on
the basis of the operating earnings of each business operated by
the Company and its Subsidiaries during the three fiscal years
preceding the date of such determination (or, in the case of any
business not operated by the Company or any Subsidiary during
three full fiscal years preceding such date, during the period
such business was operated by the Company or any Subsidiary).
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. In lieu of such fractional Rights,
there shall be paid to the registered holders 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 current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing
price 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
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and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the
Rights are 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 on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors.
If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions that are
integral multiples of one one-thousandth of a Preferred Share)
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upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares. Fractions of Preferred
Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such
agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of
one one-thousandth of a Preferred Share, the Company shall pay to
each registered holder of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one Preferred
Share as the fraction of one Preferred Share that such holder
would otherwise receive upon the exercise of the aggregate number
of Rights exercised by such holder. For the purposes of this
Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Class B Common Share (as
determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading
- 59 -
Day immediately prior to the date of such exercise multiplied by
1000.
(c) The holder of a Right by the acceptance of
the Right expressly waives any right to receive fractional Rights
or fractional shares upon exercise of a Right except as provided
above.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares) may, without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), on his own behalf and
for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights,
it is specifically
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acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder
of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books
maintained by the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer with a completed form of
certification; and
(c) the Company and the Rights Agent may treat
the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights
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evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent 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 the Preferred Shares or any other
securities of the Company 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, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with
the provisions hereof.
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Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses, legal fees
and disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent,
and its officers, agents and directors for, and to hold each of
them harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part
of the Rights Agent, for anything done or omitted by the Rights
Agent or such indemnified party in connection with the acceptance
or administration of this Agreement or the exercise or
performance of its duties hereunder, including the costs and
expenses of defending against any claim of liability in the
premises. The indemnity provided for herein shall survive the
expiration of the Rights, the termination of this Agreement, and
the resignation or removal of the Rights Agent. The costs and
expenses of successfully enforcing this right of indemnification
shall also be paid by the Company.
The Rights Agent may conclusively rely upon and shall
be protected by the Company and shall incur no liability for, or
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in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement or the
exercise or performance of its duties hereunder in reliance upon
any Right Certificate or certificate for the Preferred Shares or
Common Shares or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper person or persons, or otherwise
upon the advice of counsel as set forth in Section 20 hereof.
Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if
the Rights Agent has been advised of the likelihood of such loss
or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
- 64 -
Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, 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 Agreement any
of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
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
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adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, and no implied duties or
obligations shall be read into this Agreement against the Rights
Agent, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from
acting, the Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
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Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the General Counsel, the Treasurer
or the Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder
only for its own negligence, 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 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
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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 Sections 11 or 13 hereof or responsible
for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of 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 Preferred Shares to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any
Preferred Shares will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
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directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, the Chief
Operating Officer, any Executive Vice President, the General
Counsel, the Managing Attorney - Corporate and the Secretary 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. Any
application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on or after which
such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified
in such application (which date shall not be less than five
Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking
any such action (or the effective date in the case of an
omission), the
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Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform 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.
(j) Except as otherwise provided herein, the
Rights Agent shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of
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its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) The Rights Agent shall not be required to
take notice or be deemed to have notice of any fact, event or
determination (including, without limitation, any dates or events
defined in this Agreement or the designation of any Person as an
Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified
in writing by the Company of such fact, event or determination.
(l) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has not been completed,
the Rights Agent shall not take any further action with respect
to such requested exercise or transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Shares and the Preferred Shares by registered or certified
- 71 -
mail and, at the expense of the Company, to the holders of the Right
Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common
Shares and the Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder 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 (i)
a corporation organized and doing business under the laws of the
United States, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is
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subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50 million
dollars or (ii) a subsidiary of a corporation described in clause
(i) 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 Shares and the Preferred Shares, 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.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
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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 and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption.
(a) At any time prior to the time any Person becomes
an Acquiring Person, the Board of Directors may, by the Required
Board Vote, redeem all but not less than all of the then
outstanding Rights at the Redemption Price. The redemption of the
Rights by the Board of Directors may be made effective at such
time, on such basis and subject to such conditions as the Board
of Directors in its sole discretion may establish. The Company
may, at its option, pay the Redemption Price in cash, Class B
Common Stock (based on the market price thereof, as determined by
the Board of Directors) or other form of consideration deemed
appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of
Directors ordering the redemption of the Rights pursuant to
paragraph (a) of this Section 23 (or on such other later date, or
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upon satisfaction of such conditions, as shall be specified in
the resolution of the Board of Directors approving such
redemption), and without any further action and without any
notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such
action of the Board of Directors ordering the redemption of the
Rights pursuant to paragraph (a), the Company shall mail a notice
of redemption to all the holders of the then outstanding Rights
at their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. If
the payment of the Redemption Price is not included with such
notice, each such notice shall state the method by which the
payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other
than that
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specifically set forth in this Section 23 or in Section 24
hereof, other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors may, at its option, at
any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Class B Common Shares
at an exchange ratio of one Class B Common Share per Right
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such
Subsidiary, any entity holding Common Shares for or pursuant to
the terms of any such plan or any Exempt Person), together with
all Affiliates and Associates of such Person, becomes the
Beneficial Owner of Common Shares representing a majority of the
Voting Power then outstanding.
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(b) Immediately upon the action of the Board of
Directors ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Class B Common Shares
equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the
validity of the exchange. The Company promptly shall mail a
notice of the exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of
the Rights Agent. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the Class B Common Shares for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii) hereof) held by each holder
of Rights.
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(c) In any exchange pursuant to this Section 24,
the Company, at its option, may substitute Preferred Shares or
common stock equivalents for Class B Common Shares exchangeable
for Rights, at the initial rate of one one-thousandth of a
Preferred Share (or an appropriate number of common stock
equivalents) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares
pursuant to the terms thereof, so that the fraction of a
Preferred Share delivered in lieu of each Common Share shall have
the same voting rights as one Class B Common Share.
(d) In the event that there shall not be
sufficient Class B Common Shares, Preferred Shares or common
stock equivalents authorized by the Company's amended and
restated certificate of incorporation and not outstanding or
subscribed for, or reserved or otherwise committed for issuance
for purposes other than upon exercise of Rights, to permit any
exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be
necessary to authorize additional Class B Common Shares,
Preferred Shares or common stock equivalents for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue
fractions of Class B Common Shares or to distribute certificates
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which evidence fractional Class B Common Shares. In lieu of such
fractional Class B Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which
such fractional Class B Common Shares would otherwise be issuable
an amount in cash equal to the same fraction of the current per
share market value of a whole Class B Common Share. For the
purposes of this paragraph (e), the current per share market
value of a whole Class B Common Share shall be the closing price
of a Class B Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall, after the
Distribution Date, propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to
make any other distribution to the holders of its Preferred
Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants
to subscribe for or to purchase any additional Preferred Shares
or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred
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Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company,
or (vi) to declare or pay any dividend on the Common Shares
payable in Common Shares or to effect a subdivision, combination
or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then,
in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice
of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
- 80 -
above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to
the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case any event set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon as
practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
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Continental Airlines, Inc.
Dept. HQS-EO
Continental Tower
1600 Smith Street
Houston, Texas 77002
Attention: Secretary and General Counsel
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sent by registered or certified mail and
shall be deemed given upon receipt and addressed (until another
address is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
1601 Elm Street, Suite 2320
Dallas, TX 75201
Attention: Jill Wessell, Vice President
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. By the
Required Board Vote, the Company may from time to time, and the
Rights Agent shall, if the Company directs, supplement or amend
- 82 -
this Agreement without the approval of any holders of Right
Certificates to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any change to or
delete any provision hereof or to adopt any other provisions with
respect to the Rights which the Company may deem necessary or
desirable; provided, however, that from and after such time as
any Person becomes an Acquiring Person, this Agreement shall not
be amended or supplemented in any manner which would adversely
affect the interests of the holders of Rights (other than an
Acquiring Person and its Affiliates and Associates).
Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment to this Rights Agreement
shall be made which reduces the Redemption Price, provides for an
earlier Final Expiration Date, alters the provisions of Section
23(a) relating to the redemption of the Rights, or extends the
time during which the Rights may be redeemed if, in any such
case, at the time of such supplement or amendment the Rights are
not redeemable.
Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment that changes the rights and
duties of the Rights Agent under this Agreement will be effective
- 83 -
against the Rights Agent without the execution of such supplement
or amendment by the Rights Agent.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
- 84 -
Section 31. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State, except the rights and
obligations of the Rights Agent, which shall be governed by and
construed in accordance with the laws of the State of Illinois.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 33. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 34. Administration. The Board of Directors
shall have the exclusive power and authority to administer and
interpret the provisions of this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors
or the Company or as may be necessary or advisable in the
- 85 -
administration of this Agreement. All such actions, calculations,
determinations and interpretations which are done or made by the
Board of Directors in good faith shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the
Rights and all other parties and shall not subject the Board of
Directors to any liability to the holders of the Rights.
[The remainder of this page is intentionally being left blank.]
- 86 -
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested, all as of the
day and year first above written.
CONTINENTAL AIRLINES, INC.
Attest:
By:/s/ Scott R. Peterson By:/s/ Jeffery A. Smisek
--------------------- -------------------------------
Scott R. Peterson Jeffery A. Smisek
Assistant Secretary Executive Vice President
General Counsel and Secretary
HARRIS TRUST AND SAVINGS BANK, as
rights agent
Attest:
By:/s/ Joseph McFadden By:/s/ Jill Wessell
-------------------------- ------------------------------
Name: Joseph McFadden Name: Jill Wessell
Title: Vice President Title: Vice President
[Signature Page to Rights Agreement]
A-2
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CONTINENTAL AIRLINES, INC.
-----------------------------------------------
(Pursuant to Section 151 of the
Delaware General Corporation Law)
------------------------------------------------
Continental Airlines, Inc., a Delaware corporation
(the "Corporation"), hereby certifies that the following
resolution was adopted by the Board of Directors of the
Corporation as required by Section 151 of the Delaware General
Corporation Law at a meeting duly called and held on November 16,
1998:
RESOLVED, that pursuant to the authority granted to
and vested in the Board of Directors of this Corporation
(hereinafter called the "Board of Directors" or the "Board") in
accordance with the provisions of the Amended and Restated
Certificate of Incorporation of the Corporation (the "Restated
Certificate of Incorporation"), the Board of Directors hereby
creates a series of Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
A-3
Section 1. Designation and Amount. The shares of this
series shall be designated as "Series A Junior Participating
Preferred Stock" (the "Series A Preferred Stock") and the number
of shares constituting the Series A Preferred Stock shall be
100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to
a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible
into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any other stock)
ranking prior and superior to the Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of
March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount (if any) per share (rounded to the
nearest cent), subject to the provision for adjustment
hereinafter set forth, equal to 1000 times the aggregate per
share amount of all cash dividends, and 1000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of
Class A Common Stock, par value $.01 per share (the "Class A
Common Stock"), Class B Common Stock, par value $.01 per share
(the "Class B Common Stock") or Class D Common Stock, par value
$.01 per share (the "Class D Common Stock" and, together with the
Class A Common Stock and the Class B Common Stock, the "Common
Stock"), of the Corporation or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time declare or pay any
A-4
dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such
event under the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(C) Dividends due pursuant to paragraph (A) of
this Section shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for the
payment thereof.
A-5
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock
shall entitle the holder thereof to 1000 votes on all matters
submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number
of votes entitled to be cast by the holders of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of votes entitled to be cast
by the holders of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided in the Amended
and Restated Certificate of Incorporation, including any other
Certificate of Designation creating a series of Preferred Stock
or any similar stock, or by law, the holders of shares of Series
A Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise
required by law, holders of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred
Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether
or not
A-6
declared, on shares of Series A Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are
then entitled; or
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock; provided that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any
stock of the Corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise acquire
for consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. The Corporation
shall take all such actions as are necessary to cause all such
shares to become authorized but unissued shares of Preferred
Stock that may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance set
forth herein or in the Restated Certificate of Incorporation,
including any Certificate of Designation creating a series of
Preferred Stock or any similar stock, or as otherwise required by
law.
A-7
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 1000 times the aggregate amount to be distributed per
share to holders of shares of Common Stock plus an amount equal
to any accrued and unpaid dividends. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth, equal to
1000 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into
which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of
A-8
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. Amendment. The Restated Certificate of
Incorporation shall not be amended in any manner, including in a
merger or consolidation, which would alter, change, or repeal the
powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote
of the holders of at least two-thirds of the outstanding shares
of Series A Preferred Stock, voting together as a single class.
Section 9. Rank. The Series A Preferred Stock shall
rank, with respect to the payment of dividends and upon
liquidation, dissolution and winding up, junior to all series of
Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation by its duly authorized
officer this ______ day of November, 1998.
CONTINENTAL AIRLINES, INC.
By: _____________________________
Name:
Title:
Exhibit B
Form of Right Certificate
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER NOVEMBER 20, 2008 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.001
A-9
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT (AS DEFINED HEREIN).
UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR
WERE ACQUIRED OR BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
CONTINENTAL AIRLINES, INC.
This certifies that _______________________ , or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights
Agreement, dated as of November 20, 1998 (the "Rights
Agreement"), between Continental Airlines, Inc., a Delaware
corporation (the "Company"), and Harris Trust and Savings Bank
(the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to the earliest of (i) 5:00 P.M.,
central time, on November 20, 2008, (ii) the Redemption Date (as
such term is defined in the Rights Agreement), or (iii) the time
at which such Rights are exchanged pursuant to Section 24 of the
Rights Agreement, at the principal office of the Rights Agent, or
at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, par value $.01 per share
("Preferred Shares"), of the Company, at a purchase price of $200
per one one-thousandth of a Preferred Share (the "Exercise
Price"), upon presentation and surrender of this Right
Certificate with the certification and the Form of Election to
Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Exercise Price set forth above, are the
number and Exercise Price as of November 20, 1998, based on the
Preferred Shares as constituted at such date. As provided in the
Rights Agreement, the Exercise Price and the number of one
one-thousandths of a Preferred Share
B-2
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.
From and after the occurrence of an event described in
Section 11(a)(ii) of the Rights Agreement, if the Rights are or
were at any time on or after the earlier of (x) the date of such
event and (y) the Distribution Date (as such term is defined in
the Rights Agreement) acquired or beneficially owned by an
Acquiring Person or an Associate or Affiliate of an Acquiring
Person (as such terms are defined in the Rights Agreement), such
Rights shall become void, and any holder of such Rights shall
thereafter have no right to exercise such Rights.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the offices of
the Rights Agent and will be mailed to the holder of the Right
Certificates, without charge, after receipt of a written request
therefor.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at
the Company's option, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at a redemption price of $.001
per Right or (ii) may be exchanged in whole or
B-3
in part for shares of the Company's Class B Common stock, par
value $.01 per share, or Preferred Shares.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractions that are integral multiples of one one-thousandth of a
Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
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.
B-4
WITNESS the facsimile signature of the proper officers
of the Company. Dated as of December _____, 1998.
CONTINENTAL AIRLINES, INC.
Attest:
_____________________________ By:__________________________
Name: Name:
Title: Title:
Countersigned:
HARRIS TRUST AND SAVINGS BANK
Rights Agent
By: _________________________
Authorized Signature
B-5
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________________
hereby sells, assigns and transfers unto
_______________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint __________________________________ Attorney, to transfer
the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ____________, ____
_____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- ---------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
______________________________
B-6
Signature
- ---------------------------------------------------------------
B-7
Form of Reverse Side of Right Certificate--continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: CONTINENTAL AIRLINES, INC.:
The undersigned hereby irrevocably elects to exercise
______________________________ Rights represented by this Right
Certificate to purchase the Preferred Shares issuable upon the
exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
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: ________________, _____
B-8
______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- ---------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
________________________________
Signature
- ---------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Company and the Rights Agent
will deem the beneficial owner of the Rights evidenced by this
Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-9
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
Effective November 20, 1998, the Board of Directors of
Continental Airlines, Inc. (the "Company") declared a dividend of
one preferred share purchase right (a "Right") for each
outstanding share of Class A Common Stock, par value $.01 per
share (the "Class A Common Shares"), Class B Common Stock, par
value $.01 per share (the "Class B Common Shares"), and Class D
Common Stock, par value $.01 per share (the "Class D Common
Shares" and together with the Class A Common Shares and the Class
B Common Shares, the "Common Shares"), of the Company. The
dividend is payable on December 2, 1998 (the "Record Date") to
the stockholders of record on that date. Each Right entitles the
registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company, at
a price of $200 per one one-thousandth of a Preferred Share (the
"Exercise Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Harris Trust and
C-1
Savings Bank, as Rights Agent (the "Rights Agent").
Until the earlier of (i) the tenth day following a
public announcement or public disclosure of facts indicating that
a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or
more of the total number of votes entitled to be cast generally
by the holders of the Common Shares of the Company then
outstanding, voting together as a single class (the "Voting
Power"), or (ii) the tenth business day (or such later date as
may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would
result in any Person becoming an Acquiring Person (the earlier of
such dates being called the "Distribution Date"), the Rights will
be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common
Share certificates with a copy of this Summary of Rights attached
thereto.
Certain "exempt persons" are excluded from the
definition of Acquiring Person including: (i) the Company, (ii)
any Subsidiary of the Company, (iii) any employee benefit plan of
the Company or any Subsidiary of the Company, (iv) any entity
holding Common Shares for or pursuant to the terms of any such
employee benefit plan, (v) Air Partners, L.P., a Texas limited
C-2
partnership ("Air Partners"), and its Controlled Affiliates so
long as (A) the general partner of Air Partners is either
Newbridge Parent Corporation, a Delaware corporation
("Newbridge"), or a Controlled Affiliate of Newbridge (including,
without limitation, Northwest Airlines Corporation, a Delaware
corporation ("NWA")) or a Person who is an Exempt Person under
clause (ix) below and (B) a majority of the limited partnership
interests of Air Partners are beneficially owned by NWA or a
Controlled Affiliate of Newbridge (including, without limitation,
NWA) or any Person who is an Exempt Person under clause (ix)
below and (C) (1) until the earlier of the sixth anniversary of
the closing of the transactions contemplated by the Investment
Agreement, dated as of January 25, 1998, as amended, among NWA,
Newbridge, Air Partners, the partners of Air Partners and certain
of its affiliates (the "Investment Agreement") and the Purchase
Agreement dated as of March 2, 1998 among NWA, Newbridge, Barlow
Investors III, LLC and the Guarantors that are signatory thereto,
and such time as NWA and its affiliates cease to beneficially own
voting securities representing at least 10% of the Fully Diluted
Voting Power (as defined in the Rights Agreement) (the
"Governance Agreement Termination Time"), Air Partners does not
acquire Beneficial Ownership of Common Shares other than as
permitted by and in compliance with the terms of the Governance
Agreement, dated as
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of January 25, 1998, as amended, among the Company, NWA and
Newbridge, (the "Governance Agreement") or, (2) at or after the
Governance Agreement Termination Time while any provision of the
Supplemental Agreement, dated as of November 20, 1998, by and
among the Company, NWA and Newbridge (the "Supplemental
Agreement"), remains in effect, Air Partners does not acquire any
Common Shares other than in a transaction that is either (a) an
Approved Purchase (as defined in the Rights Agreement), (b)
otherwise approved by a majority of the "Independent Directors"
(as defined in the Governance Agreement or the Supplemental
Agreement as the case may be) or (c) a transaction that, if the
Governance Agreement had been in effect, NWA or Newbridge would
have been permitted to take under Section 1.01(a) thereof, (vi)
NWA, Newbridge and any Controlled Affiliate of NWA or Newbridge
(A) prior to the Governance Agreement Termination Time, so long
as they do not take any action prohibited by the Governance
Agreement, and (B) at or after the Governance Agreement
Termination Time, so long as they do not take any action
prohibited by the Supplemental Agreement; provided, however, that
in the case of either (A) or (B) in this clause (vi), no action
taken by NWA, Newbridge or any Controlled Affiliate of either of
them shall be a violation of clause (vi) of the definition of
exempt person in the Rights Agreement until the Company shall
have delivered to Newbridge notice of the
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violation and, if such violation is capable of being remedied,
the Company's proposed remedy, in which case no violation shall
have occurred for purposes of such clause (vi) unless the
violation shall not have been remedied within 30 days following
the Company's delivery to Newbridge of such notice, delivered in
accordance with the Governance Agreement or the Supplemental
Agreement (as the case may be), (vii) NWA, Newbridge and any
Controlled Affiliate of NWA or Newbridge after the Governance
Agreement Termination Time and while any provision of the
Supplemental Agreement remains in effect so long as none of them
acquires any Common Shares other than in a transaction that
either (A) is an Approved Purchase, (B) is otherwise approved by
a majority of the "Independent Directors" (as defined in the
Governance Agreement or the Supplemental Agreement as the case
may be), (C) results in the percentage of Fully Diluted Voting
Power of the Common Shares beneficially owned by NWA, Newbridge
and their Controlled Affiliates not exceeding the highest
percentage of Fully Diluted Voting Power of the Common Shares
previously beneficially owned by them, including as "beneficially
owned" for purposes of such calculation any Common Shares with
respect to which NWA, Newbridge or their Controlled Affiliates
have been granted a proxy pursuant to the Investment Agreement,
or (D) a transaction that, if the Governance Agreement had been
in effect, NWA or Newbridge would have been
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permitted to take under Section 1.01(a) thereof, (viii) David
Bonderman, James Coulter or William S. Price, III, or any Person
with respect to which one or more of them (A) directly or
indirectly controls at least 50.1% of the voting power, (B)
directly or indirectly controls at least 50.1% of the equity, or
(C) directly or indirectly controls in a manner substantially
similar to the control that the general partner of Air Partners
has over Air Partners pursuant to and as provided in the
"Partnership Agreement" (as defined in the Investment Agreement),
which Persons described in clause (C) shall include 1998 CAI
Partners, L.P., a Texas limited partnership, under its
partnership agreement and ownership structure in effect on the
date hereof (the "B/C/P Group"), (ix) any Person who, as a result
of a transfer of (or an agreement to transfer) Common Shares by
NWA, Newbridge or any Controlled Affiliate of NWA or Newbridge
(which, if made prior to the Governance Agreement Termination
Time, is made in accordance with the terms of the Governance
Agreement or, if made on or after the Government Agreement
Termination Time, is made in accordance with the terms of the
Supplemental Agreement), becomes the beneficial owner of Common
Shares representing 15% or more of the Voting Power of the Common
Shares of the Company then outstanding; provided that such Person
shall not have acquired Beneficial Ownership of Common Shares in
addition to those acquired from Newbridge or its Controlled
Affiliates other than with the affirmative vote of two-thirds of
the members of the Board of Directors voting on the action (the
"Required Board Vote"), and (x) any Person who,
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as a result of a transfer of (or an agreement to transfer) Common
Shares by any member of the B/C/P Group at such time as Newbridge
and its Controlled Affiliates beneficially own Common Shares
representing less than 25% of the Voting Power of the Company,
becomes the beneficial owner of Common Shares representing 15% or
more of the Voting Power of the Company then outstanding;
provided that if Newbridge and its Controlled Affiliates
beneficially own common shares representing less than 25% of the
Voting Power of the Company pursuant to a Government Order (as
defined in the Investment Agreement), the Voting Power
represented by the Common Shares transferred by all members of
the B/C/P Group in accordance with clause (x) of the definition
of exempt person in the Rights Agreement shall not exceed the
greater of (i) the Voting Power represented at the time of such
transfer of the Common Shares beneficially owned by the B/C/P
Group as of the date of this Agreement (as adjusted for any
dividends, subdivisions, combinations, recapitalizations or
similar conversions, exchanges or transformations of shares) and
(ii) the Voting Power that Newbridge and its Controlled
Affiliates are permitted to beneficially own under the Government
Order (except that this proviso shall not apply if Newbridge and
its Controlled Affiliates beneficially own Common Shares
representing less than 7.5% of the Voting Power of the Company);
provided that such Person shall not have acquired Beneficial
Ownership of Common Shares in addition to those acquired from any
member of the B/C/P Group other than with the Required Board
Vote.
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate
certificates evidencing the Rights
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("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on November 20, 2008 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
The Exercise Price payable, and the number of
Preferred Shares or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the
Preferred Shares; (ii) upon the grant to holders of the Preferred
Shares of certain rights, options or warrants to subscribe for or
purchase Preferred Shares (or shares having the same rights,
powers and preferences as the Preferred Shares) at a price, or
securities convertible into Preferred Shares (or shares having
the same rights, powers and preferences as the Preferred Shares)
with a conversion price, less than the then current market price
of the Preferred Shares or (iii) upon the distribution to holders
of the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends or dividends payable
in Preferred
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Shares) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of
each Right are also subject to adjustment in the event of a stock
dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, after the date of the Rights
Agreement and prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. The holders of Preferred Shares
shall be entitled to receive when, as and if declared by the
Board of Directors out of funds legally available for the
purpose, a quarterly dividend payment in an amount per share,
subject to adjustment, equal to 1000 times the aggregate per
share amount of all cash dividends, and 1000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in Common
Shares, declared on the Common Shares. In the event of
liquidation, the holders of the Preferred Shares will be entitled
to receive an aggregate amount per share, subject to adjustment,
equal to 1000 times the aggregate payment made per Common Share.
Each Preferred Share will have 1000 votes, voting together with
the Common Shares. In the event of any merger, consolidation or
other
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transaction in which Common Shares are exchanged, each Preferred
Share will be entitled to receive 1000 times the amount received
per Common Share. These rights are protected by customary
antidilution provisions.
From and after the occurrence of an event described in
Section 11(a)(ii) of the Rights Agreement, if Rights are or were
at any time on or after the earlier of (x) the date of such event
and (y) the Distribution Date acquired or beneficially owned by
an Acquiring Person or an Associate or Affiliate (as such terms
are defined in the Rights Agreement) of an Acquiring Person, such
Rights shall become void, and any holder of such Rights shall
thereafter have no right to exercise such Rights.
In the event that any Person becomes an Acquiring
Person, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring
Person and its Affiliates and Associates (which Rights will
thereafter be void), will thereafter have the right to receive,
upon exercise thereof, that number of Class B Common Shares
having a market value of two times the Exercise Price of the
Right. If the Company does not have sufficient Class B Common
Shares to satisfy such obligation to issue Class B Common Shares,
or if the Board of Directors so elects, the Company shall make
adequate provision to substitute for such Class B Common Shares,
upon payment of the applicable Exercise Price, an amount of cash,
a
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reduction in the Exercise Price, Preferred Shares or other equity
or debt securities of the Company, or other assets equivalent in
value to the Class B Common Shares issuable upon exercise of a
Right; provided that, if the Company shall not have made adequate
provision to deliver value within 30 days following the date a
person becomes an Acquiring Person, the Company must deliver,
upon exercise of a Right, but without requiring payment of the
Exercise Price then in effect, Class B Common Shares (to the
extent available) and cash equal in value to the difference
between the value of the Class B Common Shares otherwise issuable
upon the exercise of a Right and the Exercise Price then in
effect. The Board of Directors may extend the 30-day period for
up to an additional 60 days to permit the taking of action that
may be necessary to authorize sufficient additional Class B
Common Shares to permit the issuance of Class B Common Shares
upon the exercise in full of the Rights.
In the event that, at any time after a Person becomes
an Acquiring Person, (i) the Company merges into any other
Person, (ii) any Person merges into the Company and all of the
outstanding Common Shares do not remain outstanding after such
merger, or (iii) the Company sells 50% or more of its
consolidated assets or earning power, proper provision will be
made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current
Exercise Price, in lieu of
C-11
Preferred Shares for which a Right is then exercisable, that
number of shares of common stock of the acquiring corporation
(including the Company as successor thereto or as the surviving
corporation) which at the time of such transaction will have a
market value of two times the Exercise Price of the Right.
At any time after any Person becomes an Acquiring
Person, and prior to the acquisition by any person or group of a
majority of the Voting Power, the Board of Directors may exchange
the Rights (other than Rights owned by such Acquiring Person
which have become void), in whole or in part, at an exchange
ratio of one Class B Common Share per Right (subject to
adjustment). The Company may, at its option, substitute Preferred
Shares or common stock equivalents for Class B Common Shares, at
the rate of one one-thousandth of a Preferred Share for each
Class B Common Share (subject to adjustment). No fractional Class
B Common Shares will be issued and in lieu thereof, an adjustment
in cash will be made based on the market price of the Class B
Common Shares on the last trading day prior to the date of
exchange.
With certain exceptions, no adjustment in the Exercise
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Exercise Price. No fractional
Preferred Shares will be issued (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share
which may, at the election of the Company, be evidenced by
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depositary receipts) upon exercise of the Rights and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise.
At any time prior to any person becoming an Acquiring
Person, the Board of Directors, by the Required Board Vote, may
redeem the Rights in whole, but not in part, at a price of $.001
per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and subject to
such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights (or
upon such later date as the Board of Directors shall specify in
the resolution approving such redemption), the right to exercise
the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors, by the Required Board Vote, without the consent of the
holders of the Rights, except that from and after such time as
any Person becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights
(other than the Acquiring Person and its Affiliates and
Associates).
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
C-13
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated November 20, 1998. A
copy of the Rights Agreement is available free of charge to
holders of the Rights from the Company after receipt of a written
request therefor. 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 hereby incorporated
herein by reference.
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