Exhibit 4.1
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RIGHTS AGREEMENT
Dated as of February 22, 2001
By and Between
GALILEO INTERNATIONAL, INC.
and
LaSALLE BANK NATIONAL ASSOCIATION,
as Rights Agent
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TABLE OF CONTENTS
Section Page
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1. Certain Definitions.....................................................................................1
2. Appointment of Rights Agent.............................................................................5
3. Issue of Right Certificates.............................................................................5
4. Form of Right Certificates..............................................................................7
5. Countersignature and Registration.......................................................................7
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates............................................................................8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights...........................................8
8. Cancellation and Destruction of Right Certificates.....................................................10
9. Company Covenants Concerning Securities and Rights.....................................................10
10. Record Date............................................................................................11
11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights........................12
12. Certificate of Adjusted Purchase Price or Number of Securities.........................................19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...................................20
14. Fractional Rights and Fractional Securities............................................................22
15. Rights of Action.......................................................................................24
16. Agreement of Rights Holders............................................................................24
17. Right Certificate Holder Not Deemed a Stockholder......................................................25
18. Concerning the Rights Agent............................................................................25
19. Merger or Consolidation or Change of Name of Rights Agent..............................................25
20. Duties of Rights Agent.................................................................................26
21. Change of Rights Agent.................................................................................28
22. Issuance of New Right Certificates.....................................................................28
23. Redemption.............................................................................................29
24. Exchange...............................................................................................30
25. Notice of Certain Events...............................................................................30
26. Notices................................................................................................31
27. Supplements and Amendments.............................................................................32
28. Successors; Certain Covenants..........................................................................32
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Section Page
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29. Benefits of This Agreement.............................................................................33
30. Governing Law..........................................................................................33
31. Severability...........................................................................................33
32. Descriptive Headings, Etc..............................................................................33
33. Determinations and Actions by the Board................................................................33
34. Counterparts...........................................................................................33
Exhibit A......................................................................................................A-1
Exhibit B......................................................................................................B-1
Exhibit C......................................................................................................C-1
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of February 22, 2001 (this
"Agreement"), is made and entered into by and between Galileo International,
Inc., a Delaware corporation (the "Company"), and LaSalle Bank National
Association (the "Rights Agent").
RECITALS
WHEREAS, on February 22, 2001, the Board of the Company authorized and
declared a dividend distribution of one right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding as of the Close of Business
(as hereinafter defined) on March 8, 2001 (the "Record Date"), each Right
initially representing the right to purchase one one-hundredth of a Preferred
Share (as hereinafter defined), on the terms and subject to the conditions
herein set forth, and further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each Common Share
issued or delivered by the Company (whether originally issued or delivered from
the Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date (as hereinafter defined) and the Expiration Date (as
hereinafter defined) or as provided in Section 22.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Acquiring Person" means any Person (other than the Company or any
Related Person) who or which, together with all Affiliates and Associates of
such Person, is the Beneficial Owner of 15% or more of the then-outstanding
Common Shares; provided, however, that a Person will not be deemed to have
become an Acquiring Person solely as a result of a reduction in the number of
Common Shares outstanding unless and until such time as (i) such Person or any
Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of
additional Common Shares, other than as a result of a stock dividend, stock
split or similar transaction effected by the Company in which all holders of
Common Shares are treated equally, or (ii) any other Person who is the
Beneficial Owner of Common Shares thereafter becomes an Affiliate or Associate
of such Person; provided further, however, that any Person (other than the
Company or any Related Person) that, or which, together with all Affiliates and
Associates of such Person, Beneficially Owns 15% or more of the then outstanding
Common Shares as of the date of this Agreement shall not be deemed to have
become an Acquiring Person unless and until such time as such person, together
with all Affiliates and Associates of such Person, shall become the Beneficial
Owner of 20% or more of the then-outstanding Common Shares. Notwithstanding the
foregoing, if the Board of the Company determines in good faith that a Person
who would otherwise be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently and
without any intention of changing or influencing control of the Company, and
such Person divests as promptly as
practicable (as determined by the Board of Directors of the Company) 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 (a), then such Person shall not be deemed to be an "Acquiring Person"
for any purposes of this Agreement.
(b) "Affiliate" and "Associate" will have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement, provided, however,
that a Person will not be deemed to be the Affiliate or Associate of another
Person solely because either or both Persons (i) are or were Directors of the
Company or (ii) are, as of the date of this Agreement, parties to any of the
agreements set forth on Schedule I hereto, each as in effect on the date of this
Agreement, without giving effect to any amendment, modification or supplement to
such agreements that takes effect after the date of this Agreement.
(c) A Person will be deemed the "Beneficial Owner" of, and to
"Beneficially Own," any securities:
(i) that such Person, or any of its Affiliates or Associates,
directly or indirectly, beneficially owns (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement); or
(ii) the beneficial ownership of which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, warrants, options or other rights
(in each case, other than upon exercise or exchange of the Rights);
provided, however, that a Person will not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has or shares the right to vote or
dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
(iv) of which any other Person is the Beneficial Owner, if such
Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing)
with such other Person (or any of such other Person's Affiliates or
Associates) with respect to acquiring, holding, voting or disposing of
any securities of the Company; provided, however, that a Person will
not be deemed to be the Beneficial Owner or to Beneficially Own
securities Beneficially Owned by another Person solely because both
Persons are, as of the date of this Agreement, parties to any of the
agreements set forth on Schedule I hereto, each as in effect on the
date of this Agreement, without giving effect to any amendment,
modification or supplement to such agreements that takes effect after
the date of this Agreement;
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provided further, however, that a Person will not be deemed the Beneficial Owner
of, or to Beneficially Own, any security (A) if such Person has the right to
vote such security pursuant to an agreement, arrangement or understanding
(whether or not in writing) which (1) arises solely from a revocable proxy 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 of the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report), or (B) if such beneficial
ownership arises solely as a result of such Person's status as a "clearing
agency," as defined in Section 3(a)(23) of the Exchange Act; provided further,
however, that nothing in this paragraph (c) will cause a Person engaged in
business as an underwriter of securities to be the Beneficial Owner of, or to
Beneficially Own, any securities acquired through such Person's participation in
good faith in an underwriting syndicate until the expiration of 40 calendar days
after the date of such acquisition, or such later date as the Directors of the
Company may determine in any specific case. Notwithstanding anything in this
definition to the contrary, the number of Common Shares outstanding at any
particular time for purposes of determining the particular percentage of
outstanding Common Shares of which any Person is the Beneficial Owner, shall
mean the sum of (1) the number of Common Shares then issued and outstanding,
plus (2) the number of Common Shares not then actually issued and outstanding
that such Person would be deemed to Beneficially Own; but will not include the
number of Common Shares not then actually issued and outstanding that any other
Person would be deemed to Beneficially Own.
(d) "Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the State of New York (or Illinois or such
other state in which the principal office or corporate trust office of the
Rights Agent is located) are authorized or obligated by law or executive order
to close.
(e) "Close of Business" on any given date means 5:00 P.M., New York
City time, on such date; provided, however, that if such date is not a Business
Day it means 5:00 P.M., New York City time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company means the
shares of common stock, par value $.01 per share, of the Company; provided,
however, that, if the Company is the continuing or surviving corporation in a
transaction described in Section 13(a)(ii), "Common Shares" when used with
reference to the Company means shares of the capital stock or units of the
equity interests with the greatest aggregate voting power of the Company.
"Common Shares" when used with reference to any corporation or other legal
entity other than the Company, including an Issuer, means shares of the capital
stock or units of the equity interests with the greatest aggregate voting power
of such corporation or other legal entity.
(g) "Company" means Galileo International, Inc., a Delaware
corporation.
(h) "Distribution Date" means the earlier of: (i) the Close of Business
on the tenth calendar day following the Share Acquisition Date, or (ii) the
Close of Business on the tenth Business Day (or, unless the Distribution Date
shall have previously occurred, such later date as may be specified by the Board
of Directors of the Company) after the commencement of a tender
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or exchange offer by any Person (other than the Company or any Related Person),
if upon the consummation thereof such Person would be an Acquiring Person.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Expiration Date" means the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23, and (iii) the time at which all exercisable Rights are
exchanged as provided in Section 24.
(k) "Final Expiration Date" means the tenth anniversary of the Record
Date.
(l) "Flip-in Event" means an event described in Section 11(a)(ii).
(m) "Flip-over Event" means any event described clauses (i), (ii) or
(ii) of Section 13(a).
(n) "Issuer" has the meaning set forth in Section 13(b).
(o) "Nasdaq" means The National Association of Securities Dealers
Automated Quotation System Stock Market.
(p) "Person" means any individual, firm, corporation, limited liability
company, or other legal entity, and includes any successor (by merger or
otherwise) of such entity.
(q) "Preferred Shares" means shares of Series H Junior Participating
Ordinary Preferred Stock, par value $.01 per share, of the Company having the
rights and preferences set forth in the form of Certificate of Designation of
Series H Junior Participating Ordinary Preferred Stock attached as Exhibit A.
(r) "Purchase Price" means initially $90 per one one-hundredth of a
Preferred Share, subject to adjustment from time to time as provided in this
Agreement.
(s) "Record Date" has the meaning set forth in the Recitals to this
Agreement.
(t) "Redemption Price" means $.01 per Right, subject to adjustment by
resolution of the Board of Directors of the Company to reflect any stock split,
stock dividend or similar transaction occurring after the Record Date.
(u) "Related Person" means (i) any Subsidiary of the Company or (ii)
any employee benefit or stock ownership plan of the Company or of any Subsidiary
of the Company or any entity holding Common Shares for or pursuant to the terms
of any such plan.
(v) "Right" has the meaning set forth in the Recitals to this
Agreement.
(w) "Right Certificates" means certificates evidencing the Rights, in
substantially the form attached as Exhibit B.
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(x) "Rights Agent" means LaSalle Bank National Association, unless and
until a successor Rights Agent has become such pursuant to the terms of this
Agreement, and thereafter, "Rights Agent" means such successor Rights Agent.
(y) "Securities Act" means the Securities Act of 1933, as amended.
(z) "Share Acquisition Date" means the first date of (i) public
announcement by the Company or an Acquiring Person (by press release, filing
made with the Securities and Exchange Commission or otherwise) that an Acquiring
Person has become such or (ii) public disclosure of facts by the Company or the
Acquiring Person indicating that an Acquiring Person has become such.
(aa) "Subsidiary" when used with reference to any Person means any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person; provided, however, that for purposes of Section 13(b),
"Subsidiary" when used with reference to any Person means any corporation or
other legal entity of which at least 20% of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person.
(bb) "Trading Day" means any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Business Day.
(cc) "Triggering Event" means any Flip-in Event or Flip-over Event.
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, will also be, prior to the Distribution Date, the
holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment and hereby
certifies that it complies with the requirements of the New York Stock Exchange
governing transfer agents and registrars. The Company may from time to time act
as Co-Rights Agent or appoint such Co-Rights Agents as it may deem necessary or
desirable. Any actions which may be taken by the Rights Agent pursuant to the
terms of this Agreement may be taken by any such Co-Rights Agent. To the extent
that any Co-Rights Agent takes any action pursuant to this Agreement, such
Co-Rights Agent will be entitled to all of the rights and protections of, and
subject to all of the applicable duties and obligations imposed upon, the Rights
Agent pursuant to the terms of this Agreement.
3. Issue of Right Certificates. (a) Until the Distribution Date, (i)
the Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing Common Shares will also be deemed to be Right Certificates), (ii)
the Rights will be transferable only in connection with the transfer of the
underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued will also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates. On or as
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promptly as practicable after the Record Date, the Company will send by first
class, postage prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company as of such date, a copy of a Summary of Rights to
Purchase Preferred Stock in substantially the form attached as Exhibit C.
(b) Rights will be issued by the Company in respect of all Common
Shares (other than Common Shares issued upon the exercise or exchange of any
Right) issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such Common Shares will have stamped on, impressed on, printed on,
written on, or otherwise affixed to them the following legend or such similar
legend as the Company may deem appropriate and as is 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 or transaction reporting system on
which the Common Shares may from time to time be listed or quoted, or to conform
to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Galileo
International, Inc. and LaSalle Bank National Association, dated as of
February 22, 2001 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of Galileo International, Inc. The
Rights are not exercisable prior to the occurrence of certain events
specified in the Rights Agreement. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire, may be amended, or may be evidenced by separate
certificates and no longer be evidenced by this Certificate. Galileo
International, Inc. will mail to the holder of this Certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor. Under
certain circumstances as set forth in the Rights Agreement, Rights that
are or were beneficially owned by an Acquiring Person or any Affiliate
or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement) may become null and void.
(c) Any Right Certificate issued pursuant to this Section 3 that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any time upon the transfer
of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate and any Right
Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall be subject to and contain the following legend or such similar
legend as the Company may deem appropriate and as is 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:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring
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Person (as such terms are defined in the Rights Agreement). This Right
Certificate and the Rights represented hereby may become null and void
in the circumstances specified in Section 11(a)(ii) or Section 13 of
the Rights Agreement.
(d) As promptly as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send), by
first class, insured, postage prepaid mail, 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
herein. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(e) In the event that the Company purchases or otherwise acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares will be deemed canceled and retired so
that the Company will not be entitled to exercise any Rights associated with the
Common Shares so purchased or acquired.
4. Form of Right Certificates. The Right Certificates (and the form of
election to purchase and the form of assignment to be printed on the reverse
thereof) will be substantially in the form attached as Exhibit B with such
changes and 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 or transaction
reporting system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 22, the Right
Certificates, whenever issued, on their face will entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as are set forth
therein at the Purchase Price set forth therein, but the Purchase Price, the
number and kind of securities issuable upon exercise of each Right and the
number of Rights outstanding will be subject to adjustment as provided herein.
5. Countersignature and Registration. (a) The Right Certificates will
be executed on behalf of the Company by its Chairman of the Board, its President
and Chief Executive Officer, any Executive Vice President, any Senior Vice
President or any Vice President, either manually or by facsimile signature, and
will have affixed thereto the Company's seal or a facsimile thereof which will
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates will be manually
countersigned by the Rights Agent and will not be valid for any purpose unless
so countersigned. In case any officer of the Company who signed any of the Right
Certificates ceases to be such officer of the Company before countersignature by
the Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent, and issued
and delivered by the Company with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right Certificate, is a
proper officer of the Company to sign such
7
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices 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 or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder. Such books
will 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.
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Subject to the
provisions of Sections 3(c), 7(d), 11(a), 14 and 24, at any time after the Close
of Business on the Distribution Date and prior to the Expiration Date, any Right
Certificate or Right Certificates representing exercisable Rights 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-hundredths of a Preferred Share (or other securities, as the case may
be) as the Right Certificate or Right Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any such
Right Certificate or Rights Certificates must make such request in a writing
delivered to the Rights Agent and must surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights Agent designated for such purpose. Thereupon or as promptly
as practicable thereafter, subject to the provisions of Sections 7(d) and 14,
the Company will prepare, execute and deliver to the Rights Agent, and the
Rights Agent will countersign and deliver, a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
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 prepare, execute and
deliver a new Right Certificate of like tenor to the Rights Agent and the Rights
Agent will countersign and deliver such new Right Certificate to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a)
The registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date and prior to the Expiration 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 the office or offices of the
Rights
8
Agent designated for such purpose, together with payment in cash, in lawful
money of the United States of America by certified check or bank draft payable
to the order of the Company, equal to the sum of (i) the exercise price for the
total number of securities as to which such surrendered Rights are exercised and
(ii) an amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with the provisions of Section
9(d).
(b) Upon receipt of a Right Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by payment as
described above, the Rights Agent will promptly (i) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the Company hereby
irrevocably authorizes and directs its transfer agent to comply with all such
requests), or, if the Company elects to deposit Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (and the Company
hereby irrevocably authorizes and directs such depositary agent to comply with
all such requests), (ii) after receipt of such certificates (or depositary
receipts, as the case may be), 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, (iii) when appropriate,
requisition from the Company or any transfer agent therefor (or make available,
if the Rights Agent is the transfer agent) certificates representing the number
of equivalent common shares or other equity or debt securities to be issued in
lieu of the issuance of Common Shares in accordance with the provisions of
Section 11(a)(iii), (iv) when appropriate, after receipt of such certificates,
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, (v) when appropriate, requisition from the Company the amount of
cash or other assets to be paid in lieu of the issuance of fractional shares in
accordance with the provisions of Section 14 or in lieu of the issuance of
Common Shares in accordance with the provisions of Section 11(a)(iii), (vi) when
appropriate, after receipt, deliver such cash or other assets to or upon the
order of the registered holder of such Right Certificate, and (vii) when
appropriate, deliver any due xxxx or other instrument provided to the Rights
Agent by the Company for delivery to the registered holder of such Right
Certificate as provided by Section 11(l).
(c) In case the registered holder of any Right Certificate exercises
less than all the Rights evidenced thereby, the Company will prepare, execute
and deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver such new
Right Certificate to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company will be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 or exercise of a Right Certificate as
set forth in this Section 7 unless the registered holder of such Right
Certificate has (i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable, set forth on the
reverse side of the Right
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Certificate surrendered for such transfer, split up, combination, exchange or
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company may reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, will be canceled by it,
and no Right Certificates will be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Right Certificates to the Company, or will, at the written request
of the Company, destroy such canceled Right Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.
9. Company Covenants Concerning Securities and Rights. The Company
covenants and agrees that:
(a) 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, a number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7.
(b) So long as the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of the Rights may be listed on a national securities exchange, or
quoted on Nasdaq, it will endeavor to cause, from and after such time as the
Rights become exercisable, all securities reserved for issuance upon the
exercise of Rights to be listed on such exchange, or quoted on Nasdaq, upon
official notice of issuance upon such exercise.
(c) It will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights, at the time
of delivery of the certificates for such securities, will be (subject to payment
of the Purchase Price) duly authorized, validly issued, fully paid and
nonassessable securities.
(d) It will pay when due and payable any and all U.S. federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates representing
securities issued upon the exercise of Rights; provided, however, that the
Company will not be required to pay any transfer tax or charge 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
representing securities issued upon the exercise of Rights in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates or depositary
receipts representing securities issued upon the exercise of any Rights until
any such tax or
10
charge has been paid (any such tax or charge 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.
(e) It will use its best efforts (i) to file on an appropriate form, as
soon as practicable following the later of the Share Acquisition Date and the
Distribution Date, a registration statement under the Securities Act with
respect to the securities issuable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time after the date set forth in clause (i) of the first sentence of this
Section 9(e), the exercisability of the Rights in order to prepare and file such
registration statement under the Securities Act and to permit it to become
effective. Upon any such suspension, the Company will issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company determines that a registration
statement should be filed under any state securities laws following the date set
forth in clause (i) of this Section 9(e), the Company may temporarily suspend
the exercisability of the Rights in each relevant jurisdiction until such time
as a registration statement has been declared effective and, upon any such
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Rights will not
be exercisable in any jurisdiction if the requisite registration or
qualification in such jurisdiction has not been effected or the exercise of the
Rights is not permitted under applicable law.
(f) Notwithstanding anything in this Agreement to the contrary, after
the later of the Share Acquisition Date and the Distribution Date it will not
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will eliminate or otherwise
diminish the benefits intended to be afforded by the Rights.
(g) In the event that the Company is obligated to issue other
securities of the Company and/or pay cash or other assets pursuant to Section
11, 13, 14 or 24 it will make all arrangements necessary so that such other
securities and/or cash are available for distribution by the Rights Agent, if
and when appropriate.
10. Record Date. Each Person in whose name any certificate representing
Preferred Shares (or Common Shares and/or other securities, as the case may be)
is issued upon the exercise of Rights will for all purposes be deemed to have
become the holder of record of the Preferred Shares (or Common Shares and/or
other securities, as the case may be) represented thereby on, and such
certificate will be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and
11
payment is a date upon which the transfer books of the Company for the Preferred
Shares (or Common Shares and/or other securities, as the case may be) are
closed, such Person will be deemed to have become the record holder of such
securities on, and such certificate will be dated, the next succeeding Business
Day on which the transfer books of the Company for the Preferred Shares (or
Common Shares and/or other securities, as the case may be) are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
will not be entitled to any rights of a holder of any security for which the
Rights are or may become exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions, or to exercise any
preemptive rights, and will not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights. The Purchase Price, the number and kind of securities issuable
upon exercise of 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 that the Company at any time after the Record Date
(A) declares a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivides the outstanding Preferred Shares, (C) combines
the outstanding Preferred Shares into a smaller number of Preferred
Shares, or (D) issues 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 Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification and/or the
number and/or kind of shares of capital stock issuable on such date
upon exercise of a Right, will be proportionately adjusted so that the
holder of any Right exercised after such time is entitled to receive
upon payment of the Purchase Price then in effect the aggregate number
and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Shares were open, the
holder of such Right would have owned upon such exercise (and, in the
case of a reclassification, would have retained after giving effect to
such reclassification) and would have 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 issuable upon exercise of one Right. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) or Section 13, the adjustment provided
for in this Section 11(a)(i) will be in addition to, and will be made
prior to, any adjustment required pursuant to Section 11(a)(ii) or
Section 13.
(ii) Subject to the provisions of Section 24, if any Person becomes
an Acquiring Person, then, from and after the latest of the
Distribution Date, the Share Acquisition Date and the date of the
occurrence of such Flip-in Event, each holder of a Right, except as
provided below, shall thereafter have the right to receive, upon
exercise thereof in accordance with the terms of this Agreement at an
exercise price per Right equal to the product of the then-current
Purchase Price multiplied by the number of one
12
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of such Flip-in Event
(or, if any other Flip-in Event shall have previously occurred, the
product of the then-current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the first occurrence of a
Flip-in Event), in lieu of Preferred Shares, such number of Common
Shares as equals the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to
the date of the occurrence of such Flip-in Event (or, if any other
Flip-in Event shall have previously occurred, multiplying the
then-current Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to
the date of the first occurrence of a Flip-in Event), and dividing that
product by (y) 50% of the current per share market price of the Common
Shares (determined pursuant to Section 11(d)) on the date of the
occurrence of such Flip-in Event. Notwithstanding anything in this
Agreement to the contrary, from and after the first occurrence of a
Flip-in Event, any Rights that are Beneficially Owned by (A) any
Acquiring Person (or any Affiliate or Associate of any Acquiring
Person), (B) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the occurrence
of a Flip-in Event, or (C) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or
concurrently with the occurrence of a Flip-in Event pursuant to either
(1) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (2) a
transfer which the Directors of the Company have determined is part of
a plan, arrangement or understanding which has the purpose or effect of
avoiding the provisions of this Section 11(a)(ii), and subsequent
transferees of any of such Persons, will be void without any further
action and any holder of such Rights will thereafter have no rights
whatsoever with respect to such Rights under any provision of this
Agreement. The Company will use all reasonable efforts to ensure that
the provisions of this Section 11(a)(ii) are complied with, but will
have no liability to any holder of Right Certificates or any other
Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder. Upon the occurrence of a Flip-in Event, no Right
Certificate that represents Rights that are or have become void
pursuant to the provisions of this Section 11(a)(ii) will thereafter be
issued pursuant to Section 3 or Section 6, and any Right Certificate
delivered to the Rights Agent that represents Rights that are or have
become void pursuant to the provisions of this Section 11(a)(ii) will
be canceled. Upon the occurrence of a Flip-over Event, any Rights that
shall not have been previously exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only pursuant to Section 13
and not pursuant to this Section 11(a)(ii).
(iii) Upon the occurrence of a Flip-in Event, if the number of
Common Shares that are authorized and not outstanding or subscribed
for, or reserved or otherwise committed for issuance for purposes other
than issuance upon exercise of the Rights, are not sufficient to permit
the holder of each Right to purchase the number of Common Shares to
which such holder would be entitled upon the exercise in full of the
Rights in accordance with Section 11(a)(ii), or should the Board of
Directors so elect, the Company
13
shall: (A) determine the excess of (1) the value of the Common Shares
issuable upon the exercise of a Right (calculated as provided in
Section 11(d)(i)) pursuant to Section 11(a)(ii) (the "Exercise Value")
over (2) the Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for such
Common Shares, upon payment of the Purchase Price, any one or more of
the following having an aggregate value determined by the Board of
Directors to be equal to the Exercise Value: (1) cash, (2) a reduction
in the Purchase Price, (3) Common Shares or other equity securities of
the Company (including, without limitation, shares, or units of shares,
of preferred stock which the Board of Directors of the Company has
determined to have the same value as the Common Shares (such shares of
preferred stock, "equivalent common shares")), (4) debt securities of
the Company, or (5) other assets; provided, however, that if the
Company shall not have made adequate provision to -------- -------
deliver value pursuant to clause (B) above within 30 days following the
latest of the Distribution Date, the Share Acquisition Date and the
first occurrence of a Flip-in Event, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares (to the
extent available) and then, if necessary, cash, which shares and cash
have an aggregate value equal to the Spread. If the Board of Directors
of the Company shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance
upon exercise in full of the Rights, the 30-day period set forth above
may be extended to the extent necessary, but not more than 90 days
after the latest of the Distribution Date, the Share Acquisition Date,
and the first occurrence of a Flip-in Event, in order that the Company
may seek stockholder approval for the authorization of such additional
Common 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
11(a)(ii), 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 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. To the extent
that any legal or contractual restrictions prevent the Company from
paying the full amount of cash payable in accordance with the foregoing
sentence, the Company will pay to holders of the Rights as to which
such payments are being made all amounts which are not then restricted
on a pro rata basis and will continue to make payments on a pro rata
basis as promptly as funds become available until the full amount due
to each such Rights holder has been paid. The Board of Directors may,
but shall not be required to, establish procedures to allocate the
right to receive Common Shares, equivalent common shares, other equity
or debt securities of the Company, cash or other assets upon exercise
of the Rights among holders of the Rights (other than those Rights that
have become void).
14
(b) In the event that the Company fixes 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 securities having equivalent
rights, privileges and preferences as the Preferred Shares (for purposes of this
Section 11(b), "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 current per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price and the denominator of which is 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 issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which is in a form other
than cash, the value of such consideration will be as determined in good faith
by the Board of Directors of the Company, whose determination will be described
in a statement filed with the Rights Agent. Preferred Shares owned by or held
for the account of the Company will not be deemed outstanding for the purpose of
any such computation. Such adjustment will 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 Purchase Price will be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In the event that the Company fixes a record date for the making of
a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Preferred Shares) or subscription rights,
options or warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date will be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which is the current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d)) on such record date
or, if earlier, the date on which Preferred Shares begin to trade on an
ex-dividend or when issued basis for such distribution, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination will be described in a statement filed with the Rights
Agent) of the portion of the evidences of indebtedness, cash, assets or stock so
to be distributed or of such subscription rights, options or warrants applicable
to one Preferred Share, and the denominator of which is 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 issuable upon exercise of one
15
Right. Such adjustments will be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price will again be adjusted to be the Purchase 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 Common Shares on any date will be deemed to be
the average of the daily closing prices per share of such Common Shares
for the 30 consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the current per share market
price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares (other than the Rights)
or (B) any subdivision, combination or reclassification of such Common
Shares, 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 will be
appropriately adjusted to take into account ex-dividend trading or to
reflect the current per share market price per Common Share equivalent.
The closing price for each day will be the last sale price, regular
way, reported at or prior to 4:00 p.m. New York City time, or, in case
no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, reported as of 4:00 p.m. New York City
time, 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 Common
Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported as of 4:00 p.m. New York City time in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Common Shares are listed or admitted to trading or, if the
Common Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price reported at or prior to 4:00
p.m. New York City time or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported at
or prior to 4:00 p.m. New York City time, by Nasdaq or such other
system then in use, or, if on any such date the Common Shares 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 Common Shares selected by the Board of Directors of the
Company. If the Common Shares are not publicly held or not so listed or
traded, or are not the subject of available bid and asked quotes,
"current per share market price" will mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination will be described in a statement filed with the
Rights Agent.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares will be determined in the
same manner as set forth above for Common Shares in Section 11(d)(i),
other than the last sentence thereof. If the current per share market
price of the Preferred Shares cannot be determined in the manner
provided above, the "current per share market price" of the Preferred
Shares will be conclusively deemed to be an amount equal to the current
per share market price of the Common Shares multiplied by one hundred
(as such number may be appropriately
16
adjusted to reflect events such as stock splits, stock dividends,
recapitalizations or similar transactions relating to the Common Shares
occurring after the date of this Agreement). If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or
traded, or the subject of available bid and asked quotes, "current per
share market price" of the Preferred Shares will mean the fair value
per share as determined in good faith by the Board of Directors of the
Company, whose determination will be described in a statement filed
with the Rights Agent. For all purposes of this Agreement, the current
per share market price of one one-hundredth of a Preferred Share will
be equal to the current per share market price of one Preferred Share
divided by one hundred.
(iii) For the purpose of any computation hereunder, the value of
any securities or assets other than Common Shares or Preferred Shares
shall be the fair value as determined in good faith by the Board of
Directors of the Company, which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Except as set forth below, no adjustment in the Purchase Price will
be required unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made will be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 will be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of a Common Share or other security,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 will be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the number
and/or kind of such other securities so receivable upon exercise of any Right
(and/or the Purchase Price in respect thereof) will be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares (and the Purchase Price
in respect thereof) contained in this Section 11, and the provisions of Sections
7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the Purchase Price
in respect thereof) will apply on like terms to any such other securities (and
the Purchase Price in respect thereof).
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder will evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price pursuant to Section
11(b) or Section 11(c), each Right outstanding immediately prior to the making
of such adjustment will thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share) obtained by
(i)
17
multiplying (x) the number of one one-hundredths of a Preferred Share issuable
upon exercise of a Right immediately prior to such adjustment of the Purchase
Price by (y) the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share issuable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-hundredths 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 will become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
will 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. Such record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, will be at least 10 calendar days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company will, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional Rights to which such
holders are entitled as a result of such adjustment, or, at the option of the
Company, will 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 are entitled
after such adjustment. Right Certificates so to be distributed will be issued,
executed, and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and will be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Without respect to any adjustment or change in the Purchase Price
and/or the number and/or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares or below the then par value, if any, of any other securities of
the Company issuable upon exercise of the Rights, the Company will 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 nonassessable
Preferred Shares or such other securities, as the case may be, at such adjusted
Purchase Price.
(l) In any case in which this Section 11 otherwise requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised
18
after such record date the number of Preferred Shares or other securities of the
Company, if any, issuable upon such exercise over and above the number of
Preferred Shares or other securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company delivers to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
Preferred Shares or other securities upon the occurrence of the event requiring
such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the
Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its sole discretion the Board of Directors of the Company
determines to be advisable in order that any (i) consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less
than the current per share market price therefor, (iii) issuance wholly for cash
of Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares is not taxable to such
stockholders.
(n) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company at any time after the Record Date prior to the
Distribution Date (i) pays a dividend on the outstanding Common Shares payable
in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines
the outstanding Common Shares into a smaller number of shares, or (iv) issues
any shares of its capital stock in a reclassification of the outstanding Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event equals the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which is the total number of
Common Shares outstanding immediately prior to the occurrence of the event and
the denominator of which is the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(n) will be made successively whenever such a dividend is paid
or such a subdivision, combination or reclassification is effected.
12. Certificate of Adjusted Purchase Price or Number of Securities.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company will promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares and the
Common Shares a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary of such adjustment to each
holder of a Right Certificate in accordance with Section 26.
19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) In the event that:
(i) at any time after a Person has become an Acquiring Person, the
Company consolidates with, or merges with or into, any other Person and the
Company is not the continuing or surviving corporation of such
consolidation or merger; or
(ii) at any time after a Person has become an Acquiring Person, any
Person consolidates with the Company, or merges with or into the Company,
and the Company is the continuing or surviving corporation of such merger
or consolidation and, in connection with such merger or consolidation, all
or part of the Common Shares is changed into or exchanged for stock or
other securities of any other Person or cash or any other property; or
(iii) at any time after a Person has become an Acquiring Person, the
Company, directly or indirectly, sells or otherwise transfers (or one or
more of its Subsidiaries sells or otherwise transfers), in one or more
transactions, assets or earning power (including without limitation
securities creating any obligation on the part of the Company and/or any of
its Subsidiaries) representing in the aggregate more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons other than the Company or one or more of its wholly
owned Subsidiaries;
then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the Share Acquisition Date, such number of duly authorized,
validly issued, fully paid, nonassessable and freely tradeable Common Shares of
the Issuer, free and clear of any liens, encumbrances and other adverse claims
and not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is exercisable immediately
prior to the Share Acquisition Date and dividing that product by (y) 50% of the
current per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11(d)), on the date of the occurrence of such Flip-over
Event; (B) the Issuer will thereafter be liable for, and will assume, by virtue
of the occurrence of such Flip-over Event, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" will thereafter be
deemed to refer to the Issuer; and (D) the Issuer will take such steps
(including without limitation the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Rights) in connection
with such consummation as may be necessary to assure that the provisions hereof
are thereafter applicable, as nearly as reasonably may be possible, in relation
to its Common Shares thereafter deliverable upon the exercise of the Rights.
(b) For purposes of this Section 13, "Issuer" means (i) in the case of any
Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person that is
the continuing, surviving,
20
resulting or acquiring Person (including the Company as the continuing or
surviving corporation of a transaction described in Section 13(a)(ii) above),
and (ii) in the case of any Flip-over Event described in Section 13(a)(iii)
above, the Person that is the party receiving the greatest portion of the assets
or earning power (including without limitation securities creating any
obligation on the part of the Company and/or any of its Subsidiaries)
transferred pursuant to such transaction or transactions; provided, however,
that, in any such case, (A) if (1) no class of equity security of such Person
is, at the time of such merger, consolidation or transaction and has been
continuously over the preceding 12-month period, registered pursuant to Section
12 of the Exchange Act, and (2) such Person is a Subsidiary, directly or
indirectly, of another Person, a class of equity security of which is and has
been so registered, the term "Issuer" means such other Person; and (B) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person, a
class of equity security of two or more of which are and have been so
registered, the term "Issuer" means whichever of such Persons is the issuer of
the equity security having the greatest aggregate market value. Notwithstanding
the foregoing, if the Issuer in any of the Flip-over Events listed above is not
a corporation or other legal entity having outstanding equity securities, then,
and in each such case, (x) if the Issuer is directly or indirectly wholly owned
by a corporation or other legal entity having outstanding equity securities,
then all references to Common Shares of the Issuer will be deemed to be
references to the Common Shares of the corporation or other legal entity having
outstanding equity securities which ultimately controls the Issuer, and (y) if
there is no such corporation or other legal entity having outstanding equity
securities, (I) proper provision will be made so that the Issuer creates or
otherwise makes available for purposes of the exercise of the Rights in
accordance with the terms of this Agreement, a kind or kinds of security or
securities having a fair market value at least equal to the economic value of
the Common Shares which each holder of a Right would have been entitled to
receive if the Issuer had been a corporation or other legal entity having
outstanding equity securities; and (II) all other provisions of this Agreement
will apply to the issuer of such securities as if such securities were Common
Shares.
(c) The Company will not consummate any Flip-over Event if, (i) at the time
of or immediately after such Flip-over Event, there are or would be any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the stockholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights. In addition, the Company will not consummate any Flip-over Event unless
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such consummation the Company and the
Issuer have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in subsections (a) and (b) of this Section 13
and further providing that as promptly as practicable after the consummation of
any Flip-over Event, the Issuer will:
21
(A) prepare and file a registration statement under the Securities Act
with respect to the Rights and the securities issuable upon exercise of the
Rights on an appropriate form, and use its best efforts to cause such
registration statement to (1) become effective as soon as practicable after
such filing and (2) remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date;
(B) take all such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; and
(C) deliver to holders of the Rights historical financial statements
for the Issuer and each of its Affiliates which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under
the Exchange Act.
(d) The provisions of this Section 13 will similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Flip-over Event occurs at any time after the occurrence of a Flip-in Event,
except for Rights that have become void pursuant to Section 11(a)(ii), Rights
that shall not have been previously exercised will cease to be exercisable in
the manner provided in Section 11(a)(ii) and will thereafter be exercisable in
the manner provided in Section 13(a).
14. Fractional Rights and Fractional Securities. (a) The Company will not
be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, the Company
will pay as promptly as practicable to the registered holders of the Right
Certificates with regard to which such fractional Rights otherwise would be
issuable, an amount in cash equal to the same fraction of the current market
value of one Right. For the purposes of this Section 14(a), the current market
value of one Right is the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights otherwise would
have been issuable. The closing price for any day is the last sale price,
regular way, reported at or prior to 4:00 p.m. New York City time, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, reported as of 4:00 p.m. New York City time, 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 reported at or prior to 4:00 p.m. New York City time or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported at or prior to 4:00 p.m. New York City time
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 of the Company. If the Rights are not
publicly held or are not so listed or traded, or are not the subject of
available bid and asked quotes, the current market value of one Right will mean
the fair value thereof as
22
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
(b) The Company will not be required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share) upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-hundredth 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 provides that the holders of such depositary
receipts 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-hundredth of a Preferred Share, the Company may
pay to any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section 14(b),
the current market value of one Preferred Share is the closing price of the
Preferred Shares (as determined in the same manner as set forth for Common
Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise; provided, however, that if the
closing price of the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day will be conclusively deemed to be
an amount equal to the closing price of the Common Shares (determined pursuant
to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by
one hundred (as such number may be appropriately adjusted to reflect events such
as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement);
provided further, however, that if neither the Common Shares nor the Preferred
Shares are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Preferred Share will mean the fair value thereof as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
(c) Following the occurrence of a Triggering Event, the Company will not be
required to issue fractions of Common Shares or other securities issuable upon
exercise or exchange of the Rights or to distribute certificates which evidence
any such fractional securities. In lieu of issuing any such fractional
securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of one such security. For purposes of this
Section 14(c), the current market value of one Common Share or other security
issuable upon the exercise or exchange of Rights is the closing price thereof
(as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise or exchange; provided, however, that if neither the Common
Shares nor any such other securities are publicly held or listed or admitted to
trading on any national securities exchange, or the subject of available bid and
asked quotes, the current market value of one Common Share or such other
security will mean the fair value thereof as determined in good faith by the
Board of Directors of the Company, whose determination will mean the fair value
thereof as will be described in a statement filed with the Rights Agent.
23
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, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the holder of any Common Shares), may in his own behalf
and for his own benefit enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to this Agreement.
16. Agreement of Rights 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 are transferable only in
connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the associated
Common Share certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificate or the associated Common Share certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent will be affected by any notice to
the contrary;
(d) Such holder expressly waives any right to receive any fractional Rights
and any fractional securities upon exercise or exchange of a Right, except as
otherwise provided in Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent will have any liability to any holder of a Right or
other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided,
24
however, that the Company will use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Right Certificate will be entitled to vote, receive dividends, or be
deemed for any purpose the holder of Preferred Shares or any other securities of
the Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor will 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), 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 of this Agreement or
exchanged pursuant to the provisions of Section 24.
18. Concerning the Rights Agent. (a) The Company will pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, suit, action, proceeding or expense,
incurred without negligence, bad faith, or willful misconduct on the part of the
Rights Agent, for anything done or omitted to be done by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.
(b) The Rights Agent will be protected and will incur no liability for or
in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate evidencing Preferred Shares or Common Shares or 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.
19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the corporate trust business
of the Rights Agent or any successor Rights Agent, will 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. If at the time such successor Rights Agent
succeeds 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
25
Certificates so countersigned; and if 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 will have the full force provided in the Right Certificates and in
this Agreement.
(b) If at any time the name of the Rights Agent changes and at such time
any of the Right Certificates have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and if at that time any of the Right
Certificates have not 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 will have the full force provided in the
Right Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, will be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will 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 deems it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the President
and Chief Executive Officer, any Executive Vice President, any Senior Vice
President, any Vice President, the Secretary or the Treasurer of the Company and
delivered to the Rights Agent, and such certificate will 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 will be liable hereunder only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
execution and delivery hereof by the Rights Agent) or in respect of the validity
or execution of any Right Certificate (except its countersignature thereof); nor
will it be responsible for any breach by the Company of any covenant contained
in this Agreement or in any Right Certificate; nor will it be responsible
26
for any adjustment required under the provisions of Sections 11 or 13 (including
any adjustment which results in Rights becoming void) 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 will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of stock or other securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of stock or other securities will,
when issued, be duly authorized, validly issued, fully paid and nonassessable.
(f) The Company 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 directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President and Chief Executive Officer, any
Executive Vice President, any Senior Vice President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it will not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any 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 will preclude the Rights Agent from acting in any
other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof. The Rights Agent will not be under any duty or
responsibility to ensure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Right
Certificates.
(j) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise, transfer, split up, combination or exchange, either (i) the
certificate attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, or (ii) any other actual or suspected
irregularity exists, the Rights Agent will not take any further action with
respect to such requested exercise, transfer, split up, combination or exchange
without first consulting with the
27
Company, and will thereafter take further action with respect thereto only in
accordance with the Company's written instructions.
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
calendar days' notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by first class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30
calendar 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 Preferred Shares
and the Common Shares by registered or certified mail, and to the holders of the
Right Certificates by first class mail. If the Rights Agent resigns or is
removed or otherwise becomes incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of 30 calendar 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 will, 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,
will be a corporation or other legal entity organized and doing business under
the laws of the United States or of the State of New York (or of any other state
of the United States so long as such corporation is authorized to do business as
a banking institution in the State of New York), in good standing, having a
principal office in the State of New York, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is 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. After appointment, the successor Rights Agent will 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 will 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 will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Preferred Shares or the Common 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, will 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.
22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind of securities issuable upon
exercise of the Rights made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration Date, the
Company (a) will, with respect to Common Shares so issued or sold pursuant to
the exercise, exchange or conversion of securities (other than Rights) issued
prior to the Distribution Date which are
28
exercisable or exchangeable for, or convertible into Common Shares, and (b) may,
in any other case, if deemed necessary, appropriate or desirable by the Board of
Directors of the Company, issue Right Certificates representing an equivalent
number of Rights as would have been issued in respect of such Common Shares if
they had been issued or sold prior to the Distribution Date, as appropriately
adjusted as provided herein as if they had been so issued or sold; provided,
however, that (i) no such Right Certificate will be issued if, and to the extent
that, in its good faith judgment the Board of Directors of the Company
determines that the issuance of such Right Certificate could have a material
adverse tax consequence to the Company or to the Person to whom or which such
Right Certificate otherwise would be issued and (ii) no such Right Certificate
will be issued if, and to the extent that, appropriate adjustment otherwise has
been made in lieu of the issuance thereof.
23. Redemption. (a) Prior to the Expiration Date, the Board of Directors of
the Company may, at its option, redeem all but not less than all of the
then-outstanding Rights at the Redemption Price at any time prior to such time
as any Person becomes an Acquiring Person. Any such redemption will be effective
immediately upon the action of the Board of Directors of the Company ordering
the same, unless such action of the Board of Directors of the Company expressly
provides that such redemption will be effective at a subsequent time or upon the
occurrence or nonoccurrence of one or more specified events (in which case such
redemption will be effective in accordance with the provisions of such action of
the Board of Directors of the Company).
(b) Immediately upon the effectiveness of the redemption of the Rights as
provided in Section 23(a), 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 will be to receive the Redemption Price,
without interest thereon. Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will publicly announce such
redemption and, within 10 calendar days thereafter, will give notice of such
redemption to the holders of the then-outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Company; provided, however, that the failure to give, or any defect
in, any such notice will not affect the validity of the redemption of the
Rights. Any notice that is mailed in the manner herein provided will be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed to the holders of Rights will state the method by which the payment of
the Redemption Price will be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the current per share market
price of the Common Shares (determined pursuant to Section 11(d)) at the time of
redemption), or any other form of consideration deemed appropriate by the Board
of Directors of the Company (based upon the fair market value of such other
consideration, determined by the Board of Directors of the Company in good
faith) or any combination thereof. The Company may, at its option, combine the
payment of the Redemption Price with any other payment being made concurrently
to holders of Common Shares and, to the extent that any such other payment is
discretionary, may reduce the amount thereof on account of the concurrent
payment of the Redemption Price. If legal or contractual restrictions prevent
the Company from paying the Redemption Price (in the form of consideration
deemed appropriate by the Board of Directors) at the time of redemption, the
Company will pay the Redemption Price, without interest, promptly after such
time as the Company ceases to be so prevented from paying the Redemption Price.
29
24. Exchange. (a) The Board of Directors of the Company may, at its option,
at any time after the Share Acquisition Date, exchange all or part of the
then-outstanding and exercisable Rights (which will not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii)) for Common Shares
at an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the Record Date (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Any such exchange will be effective immediately upon the
action of the Board of Directors of the Company ordering the same, unless such
action of the Board of Directors of the Company expressly provides that such
exchange will be effective at a subsequent time or upon the occurrence or
nonoccurrence of one or more specified events (in which case such exchange will
be effective in accordance with the provisions of such action of the Board of
Directors of the Company). Notwithstanding the foregoing, the Board of Directors
of the Company will not be empowered to effect such exchange at any time after
any Person (other than the Company or any Related Person), who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the then-outstanding Common Shares.
(b) Immediately upon the effectiveness of the exchange of any Rights as
provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right with
respect to such Rights thereafter of the holder of such Rights will be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the effectiveness
of the exchange of any Rights as provided in Section 24(a), the Company will
publicly announce such exchange and, within 10 calendar days thereafter, will
give notice of such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent; provided,
however, that the failure to give, or any defect in, such notice will not affect
the validity of such exchange. Any notice that is mailed in the manner herein
provided will be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
will 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)) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any Common Share exchangeable for a Right (i)
equivalent common shares (as such term is used in Section 11(a)(iii)), (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as
determined pursuant to Section 11(d)(iii), equal to the current market value of
one Common Share (determined pursuant to Section 11(d)) on the Trading Day
immediately preceding the date of the effectiveness of the exchange pursuant to
this Section 24.
25. Notice of Certain Events. (a) If, after the Distribution Date, the
Company proposes (i) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular periodic cash dividend), (ii) to offer to
the holders of Preferred Shares rights, options or warrants to
30
subscribe for or to purchase any additional Preferred Shares or shares of stock
of any class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to effect
any consolidation or merger into or with, 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 assets or earning power
(including, without limitation, securities creating any obligation on the part
of the Company and/or any of its Subsidiaries) representing more than 50% of the
assets and earning power of the Company and its Subsidiaries, taken as a whole,
to any other Person or Persons other than the Company or one or more of its
wholly owned Subsidiaries, (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
reclassification of the Common Shares then, in each such case, the Company will
give to each holder of a Right Certificate, to the extent feasible and in
accordance with Section 26, a notice of such proposed action, which specifies
the record date for the purposes of such stock dividend, distribution or
offering of rights, options 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 will be so given, in the case of any action covered
by clause (i) or (ii) above, at least 10 calendar 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 calendar 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
is the earlier.
(b) In case any Triggering Event occurs, then, in any such case, the
Company will as soon as practicable thereafter give to the Rights Agent and each
holder of a Right Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which specifies the event and the consequences of the
event to holders of Rights.
26. Notices. (a) 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 will 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:
Galileo International, Inc.
0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
(b) 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 will be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
31
LaSalle Bank National Association
Corporate Trust Department
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
(c) 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 (or, if
prior the Distribution Date, to the holder of any certificate evidencing Common
Shares) will 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.
27. Supplements and Amendments. Prior to the time at which the Rights cease
to be redeemable pursuant to Section 23, and subject to the last sentence of
this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such supplement or amendment shall cause the Rights
again to become redeemable or cause this Agreement again to become
supplementable or amendable otherwise than in accordance with the provisions of
this sentence. Without limiting the generality or effect of the foregoing, this
Agreement may be supplemented or amended to provide for such voting powers for
the Rights and such procedures for the exercise thereof, if any, as the Board of
Directors of the Company may determine to be appropriate. Upon the delivery of a
certificate from an officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent will execute such supplement or amendment; provided, however, that
the failure or refusal of the Rights Agent to execute such supplement or
amendment will not affect the validity of any supplement or amendment adopted by
the Board of Directors of the Company, any of which will be effective in
accordance with the terms thereof. Notwithstanding anything in this Agreement to
the contrary, no supplement or amendment may be made which decreases the stated
Redemption Price to an amount less than $.01 per Right.
28. Successors; Certain Covenants. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will be
binding on and inure to the benefit of their respective successors and assigns
hereunder.
32
29. Benefits of This Agreement. Nothing in this Agreement will be construed
to give to any Person 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. This Agreement will be for the sole and exclusive benefit of the
Company, the Rights Agent, and the registered holders of the Right Certificates
(or prior to the Distribution Date, the Common Shares).
30. Governing Law. This Agreement, each Right and each Right Certificate
issued hereunder will be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes will be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
31. 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 will remain in full force and
effect and will in no way be affected, impaired or invalidated; provided,
however, that nothing contained in this Section 31 will affect the ability of
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid, void or unenforceable term, provision,
covenant or restriction with a legal, valid and enforceable term, provision,
covenant or restriction.
32. Descriptive Headings, Etc. Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and will not control or
affect the meaning or construction of any of the provisions hereof. Unless
otherwise expressly provided, references herein to Articles, Sections and
Exhibits are to Articles, Sections and Exhibits of or to this Agreement.
33. Determinations and Actions by the Board. The Board of Directors of the
Company will have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board of
Directors of the Company or to the Company, or as may be necessary or advisable
in the administration of this Agreement, including without limitation the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including any determination as to whether particular Rights shall
have become void). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, any omission with
respect to any of the foregoing) which are done or made by the Board of
Directors of the Company in good faith will (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties and (y) not subject the Board of Directors of the Company to any
liability to any Person, including without limitation the Rights Agent and the
holders of the Rights.
34. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GALILEO INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President, General Counsel
and Secretary
LaSALLE BANK NATIONAL
ASSOCIATION
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Vice President
34
SCHEDULE I
1. Stockholders' Agreement among Galileo International, Inc., certain of its
Stockholders and certain Related Parties of such Stockholders, dated as of
July 30, 1997, as amended by the First Amendment thereto, dated as of June
30, 1998.
2. Registration Rights Agreement, among Galileo International, Inc., and Covia
Corp., USAM Corp., Resnet Holdings, Inc., Distribution Systems Inc., Roscor
A.G., Travel Industry Systems B.V., Retford Limited, Racom Teledata S.p.A.,
Travidata Inc., Olynet Inc. and Coporga, Inc., dated as of July 30, 1997.
EXHIBIT A
CERTIFICATE OF DESIGNATION
of
SERIES H JUNIOR PARTICIPATING
ORDINARY PREFERRED STOCK
of
GALILEO INTERNATIONAL, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Galileo International, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company"), DOES
HEREBY CERTIFY:
That, pursuant to authority vested in the Board of Directors of the
Company by its Restated Certificate of Incorporation and pursuant to the
provisions of Section 151 of the General Corporation Law, the Board of Directors
of the Company has adopted the following resolution providing for the issuance
of a series of Ordinary Preferred Stock:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Company (the "Board of Directors" or the
"Board") by the Restated Certificate of Incorporation of the Company, a series
of ordinary preferred stock, par value $.01 per share (the "Ordinary Preferred
Stock"), of the Company be, and it hereby is, created, and that the designation
and amount thereof and the powers, designations, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
I. Designation and Amount
The shares of such series will be designated as Series H Junior
Participating Ordinary Preferred Stock (the "Series H Preferred") and the number
of shares constituting the Series H Preferred is 2,500,000. Such number of
shares may be increased or decreased by resolution of the Board; provided,
however, that no decrease will reduce the number of shares of Series H Preferred
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
Company convertible into Series H Preferred.
II. Dividends and Distributions
(a) Subject to the rights of the holders of any shares of any series
of Preferred Stock ranking prior to the Series H Preferred with
respect to dividends, the holders of shares of Series H
Preferred, in preference to the holders of common stock, par
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value $.01 per share (the "Common Stock"), of the Company, and
of any other junior stock, will be entitled to receive, when, as
and if declared by the Board out of funds legally available for
the purpose, dividends payable in cash (except as otherwise
provided below) on such dates as are from time to time
established for the payment of dividends on the Common Stock
(each such date being referred to herein as a "Dividend Payment
Date"), commencing on the first Dividend Payment Date after the
first issuance of a share or fraction of a share of Series H
Preferred (the "First Dividend Payment Date"), in an amount per
share (rounded to the nearest cent) equal to the greater of (i)
$1.00 or (ii) subject to the provision for adjustment
hereinafter set forth, one hundred times the aggregate per share
amount of all cash dividends, and one hundred times the
aggregate per share amount (payable in kind) of all non-cash
dividends, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Dividend Payment Date or, with
respect to the First Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series H
Preferred. In the event that the Company at any time (i)
declares a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such case and
regardless of whether any shares of Series H Preferred are then
issued or outstanding, the amount to which holders of shares of
Series H Preferred would otherwise be entitled immediately prior
to such event under clause (ii) of the preceding sentence will
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 Company will declare a dividend on the Series H Preferred as
provided in the immediately preceding paragraph immediately
after it declares a dividend on the Common Stock (other than a
dividend payable in shares of Common Stock). Each such dividend
on the Series H Preferred will be payable immediately prior to
the time at which the related dividend on the Common Stock is
payable.
(c) Dividends will accrue on outstanding shares of Series H
Preferred from the Dividend Payment Date next preceding the date
of issue of such shares, unless (i) the date of issue of such
shares is prior to the record date for the First Dividend
Payment Date, in which case dividends on such shares will accrue
from the date of the first issuance of a share of Series H
Preferred or (ii) the date of issue is a Dividend Payment Date
or is a date after the record date for the determination of
holders of shares of Series H Preferred entitled to receive a
dividend and before such Dividend Payment Date, in either of
which events such dividends will accrue
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from such Dividend Payment Date. Accrued but unpaid dividends
will cumulate from the applicable Dividend Payment Date but will
not bear interest. Dividends paid on the shares of Series H
Preferred in an amount less than the total amount of such
dividends at the time accrued and payable on such shares will be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board may fix a record date
for the determination of holders of shares of Series H Preferred
entitled to receive payment of a dividend or distribution
declared thereon, which record date will be not more than 60
calendar days prior to the date fixed for the payment thereof.
III. Voting Rights
In addition to any other voting rights required by law, the holders of
shares of Series H Preferred will have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth,
and subject to the limitations, if any, on voting rights of
shares of Ordinary Preferred Stock set forth in the Restated
Certificate of Incorporation, each share of Series H Preferred
will entitle the holder thereof to one hundred votes on all
matters submitted to a vote of the stockholders of the Company.
In the event the Company at any time (i) declares a dividend on
the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivides the outstanding shares of Common
Stock, (iii) combines the outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues any shares of
its capital stock in a reclassification of the outstanding
shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), then, in each such
case and regardless of whether any shares of Series H Preferred
are then issued or outstanding, the number of votes per share to
which holders of shares of Series H Preferred would otherwise be
entitled immediately prior to such event will be adjusted by
multiplying such number by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior
to such event.
(b) Except as otherwise provided herein, in any other Preferred
Stock Designation creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series H
Preferred and the holders of shares of Common Stock and any
other capital stock of the Company having general voting rights
will vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(c) Except as set forth in the Restated Certificate of Incorporation
or herein, or as otherwise provided by law, holders of shares of
Series H Preferred will have no voting rights.
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IV. Certain Restrictions
(a) Whenever dividends or other dividends or distributions payable
on the Series H Preferred are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or
not declared, on shares of Series H Preferred outstanding have
been paid in full, the Company will 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 shares of Series H
Preferred;
(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 shares of Series
H Preferred, except dividends paid ratably on the shares of Series H
Preferred and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) Redeem, purchase or otherwise acquire for consideration
shares of any stock ranking junior to the shares of Series H Preferred
(either as to dividends or upon liquidation, dissolution or winding
up); provided, however, that the Company may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Company ranking junior (either
as to dividends or upon dissolution, liquidation or winding up) to the
shares of Series H Preferred; or
(iv) Redeem, purchase or otherwise acquire for consideration any
shares of Series H Preferred, or any shares of stock ranking on a
parity with the shares of Series H Preferred (except as to dividends or
upon liquidation, dissolution or winding up) except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board) to all holders of such shares upon such terms as the Board,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
may determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(b) The Company will not permit any majority-owned subsidiary of the
Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under
paragraph (a) of this Article IV, purchase or otherwise acquire
such shares at such time and in such manner.
V. Reacquired Shares
Any shares of Series H Preferred purchased or otherwise acquired by the
Company in any manner whatsoever will be retired and canceled promptly after the
acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Ordinary Preferred Stock without designation
as to series and may be reissued as part of a new series of Ordinary Preferred
Stock without designation as to series, subject to the conditions and
restrictions on issuance set forth herein, in the Restated Certificate of
Incorporation of the Company, or in any
A-4
other Ordinary Preferred Stock Designation creating a series of Ordinary
Preferred Stock or any similar stock or as otherwise required by law.
VI. Liquidation, Dissolution or Winding Up
Upon any liquidation, dissolution or winding up of the Company, no
distribution will be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
shares of Series H Preferred unless, prior thereto, the holders of shares of
Series H Preferred have received $100 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided, however, that the holders of shares of Series H
Preferred will be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to one hundred times
the aggregate amount to be distributed per share to holders of shares of Common
Stock or (b) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the shares of
Series H Preferred, except distributions made ratably on the shares of Series H
Preferred and all such parity stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such liquidation, dissolution
or winding up. In the event the Company at any time (i) declares a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues any shares of its capital stock in a reclassification of the outstanding
shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such case and regardless of whether any shares of
Series H Preferred are then issued or outstanding, the aggregate amount to which
each holder of shares of Series H Preferred would otherwise be entitled
immediately prior to such event under the proviso in clause (a) of the preceding
sentence will 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.
VII. Consolidation, Merger, Etc.
In the event that the Company enters 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 each such case, each share of Series H Preferred will at the
same time be similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
hundred 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 Company at any
time (a) declares a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (b) subdivides the outstanding shares of Common
Stock, (c) combines the outstanding shares of Common Stock in a smaller number
of shares, or (d) issues any shares of its capital stock in a reclassification
of the outstanding shares of Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then,
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in each such case and regardless of whether any shares of Series H Preferred are
then issued or outstanding, the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series H Preferred will 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.
VIII. Redemption
The shares of Series H Preferred are not redeemable.
IX. Rank
The Series H Preferred rank, with respect to the payment of dividends
and upon liquidation, dissolution or winding up, junior to all other series of
the Company's Preferred Stock, except any series that specifically provides that
such series ranks junior to the Series H Preferred.
X. Amendment
Notwithstanding anything contained in the Restated Certificate of
Incorporation of the Company to the contrary and in addition to any other vote
required by applicable law, the Restated Certificate of Incorporation of the
Company may not be amended in any manner that would materially alter or change
the powers, preferences or special rights of the Series H Preferred so as to
affect them adversely without the affirmative vote of the holders of at least
80% of the outstanding shares of Series H Preferred, voting together as a single
series.
XI. Fractional Shares
Series H Preferred may be issued in fractions of a share that shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of shares of Series H Preferred.
A-6
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Company by its Vice President and attested by its ____________
this ___ day of February __, 2001.
GALILEO INTERNATIONAL, INC.
By:
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President, General Counsel
and Secretary
Attest:
--------------------------------
Name:
Title:
A-7
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
------------- ---------
NOT EXERCISABLE AFTER MARCH 8, 2011 (SUBJECT TO POSSIBLE EXTENSION AT THE OPTION
OF THE COMPANY) OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 11(a)(ii) OR SECTION 13 OF THE RIGHTS
AGREEMENT.](1)
Right Certificate
GALILEO INTERNATIONAL, 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 February 22, 2001 (the "Rights Agreement"), between
Galileo International, Inc., a Delaware corporation (the "Company"), and LaSalle
Bank National Association (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (New York City time) on the Expiration Date
(as such term is defined in the Rights Agreement) at the principal office or
offices of the Rights Agent designated for such purpose, one one-hundredth of a
fully paid nonassessable share of Series H Junior Participating Ordinary
Preferred Stock, par value $.01 per share (the "Preferred Shares"), of the
Company, at a purchase price of $90 per one one-hundredth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related Certificate duly
executed. If this Right Certificate is exercised in part, the holder will be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised. The number of Rights
evidenced by this Right Certificate
--------
(1) If applicable, insert this bracketed portion of the legend and delete the
preceding sentence.
B-1
(and the number of one one-hundredths of a Preferred Share which may be
purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of the date of the Rights
Agreement, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and/or the
number and/or kind of securities issuable upon the exercise of the Rights
evidenced by this Right Certificate are subject to adjustment upon the
occurrence of certain events.
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 of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and can
be obtained from the Company without charge upon written request therefor. Terms
used herein with initial capital letters and not defined herein are used herein
with the meanings ascribed thereto in the Rights Agreement.
Pursuant to the Rights Agreement, from and after the occurrence of a
Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (ii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the occurrence of a Flip-in Event, or (iii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-in Event pursuant to
either (a) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (b) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding certain
provisions of the Rights Agreement, and subsequent transferees of any of such
Persons, will be void without any further action and any holder of such Rights
will thereafter have no rights whatsoever with respect to such Rights under any
provision of the Rights Agreement. From and after the occurrence of a Flip-in
Event, no Right Certificate will be issued that represents Rights that are or
have become void pursuant to the provisions of the Rights Agreement, and any
Right Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of the Rights Agreement will be
canceled.
This Right Certificate, with or without other Right Certificates, may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one
one-hundredths of a Preferred Share (or other securities, as the case may be) as
the Right Certificate or Right Certificates surrendered entitled such holder (or
former holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for such
purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.
B-2
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right or may be exchanged in whole or in part. The Rights
Agreement may be supplemented and amended by the Company, as provided therein.
The Company is not required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or other securities issuable upon the exercise of any Right
or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares
or other securities, the Company may make a cash payment, as provided in the
Rights Agreement.
No holder of this Right Certificate, as such, will 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 upon the exercise of the Right or Rights represented hereby, nor will
anything contained herein or in the Rights Agreement 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 have been exercised in accordance with the
provisions of the Rights Agreement.
This Right Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
B-3
WITNESS the facsimile signatures of the authorized officers of the
Company and its corporate seal. Dated as of ________, 20__.
[SEAL]
ATTEST: GALILEO INTERNATIONAL, INC.
By:
---------------------------- ----------------------------
Name:
Title:
Countersigned:
LaSALLE BANK NATIONAL ASSOCIATION
By:
--------------------------------
Authorized Signature
B-4
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:
----------------------------------------------------------
B-5
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ,
---------- ----
-----------------------------------
Signature
B-6
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if the registered holder desires to
exercise Rights evidenced by the Right Certificate)
To Galileo International, Inc.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the one one-hundredths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of and
delivered to:
Please insert social security
or other identifying number:
----------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:
Please insert social security
or other identifying number:
----------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: ,
---------- ----
-----------------------------------
Signature
Signature Guaranteed:
-----------------------------------------------------------
B-7
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was, or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ,
---------- ----
-----------------------------------
Signature
NOTICE
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved medallion signature program) pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended.
B-8
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On February 22, 2001, the Board of Directors of Galileo International,
Inc., a Delaware corporation, declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$.01 per share. The dividend is payable on March 8, 2001 to the stockholders of
record on that date.
Our Board adopted this Rights Agreement as part of its goal of
maximizing stockholder value and to protect stockholders from coercive takeover
practices or takeover bids that are inconsistent with the interests of
stockholders. In general terms, the Rights Agreement imposes a significant
penalty upon any person or group that acquires 15% or more of our outstanding
common stock (or, in the case of a person or group that beneficially owned 15%
or more of our outstanding common stock as of the date the plan was adopted, 20%
or more of our outstanding common stock) without the approval of our Board. A
person that acquires beneficial ownership in excess of the applicable threshold
is called an "Acquiring Person". The Rights Agreement would not interfere with
any merger or other business combination approved by our Board.
For those interested in the general terms of the Rights Agreement, by
and between Galileo International and LaSalle Bank National Association, as
rights agent, dated February 22, 2001, we provide the following summary
description. This description, however, is only a summary and is not complete.
It should be read together with the entire Rights Agreement, which is
incorporated herein by reference and has been filed as an exhibit to our
registration statement on Form 8-A filed with the Securities and Exchange
Commission.
The Rights. Our Board authorized the issuance of one Right per each outstanding
share of common stock on March 8, 2001. The Rights currently trade with and are
inseparable from the common stock. The Rights are currently evidenced by the
same certificates that represent shares of common stock.
Exercise Price. Once the Rights become exercisable, each Right allows its holder
to purchase from our Company one one-hundredth of a share of Series H Junior
Participating Ordinary Preferred Stock ("Preferred Share") for an exercise price
of $90. This fraction of a Preferred Share gives the stockholder approximately
the same dividend, voting, and liquidation rights as would one share of common
stock except, as required by Galileo International's Restated Certificate of
Incorporation, that the right to vote in the election of Directors is not
permitted other than in the limited circumstances required by NYSE rules. Prior
to exercise, however, the Right does not give its holder any dividend, voting,
or liquidation rights.
Exercisability. The Rights will not be exercisable until the earlier of:
o 10 days after a public announcement or disclosure that a person or
group has become an Acquiring Person; and
o 10 business days (or a later date determined by our Board) after a
person or group begins a tender or exchange offer which, if completed,
would result in that person or group becoming an Acquiring Person.
C-1
We refer to the date when the Rights become exercisable as the
"Distribution Date." Until that date, the common stock certificates will also
evidence the Rights, and any transfer of shares of common stock will constitute
a transfer of the associated Rights. After that date, the Rights will separate
from the common stock and be evidenced by Rights certificates that will be
mailed to all eligible holders of Rights that have not become void. Any Rights
held by an Acquiring Person are void and may not be exercised.
Consequences of a Person or Group Becoming an Acquiring Person.
Flip-in. If a person or group becomes an Acquiring Person, all holders
of Rights, except the Acquiring Person, may exercise the Rights upon payment of
the purchase price, to purchase shares of our common stock (or other securities
or assets as determined by the Board) with a market value of two times the
purchase price.
Flip-over. If Galileo International is later acquired in a merger or
similar transaction after the Distribution Date, all holders of Rights except
the Acquiring Person may exercise the Rights upon payment of the purchase price,
to purchase shares of the acquiring corporation with a market value of two times
the purchase price.
Expiration. The Rights will expire on March 8, 2011.
Redemption. Our Board may redeem all (but not less than all) of the Rights for
$0.01 per Right at any time before any Person becomes an Acquiring Person. Once
the Rights are redeemed, the only right of the holders of Rights will be to
receive the redemption price of $0.01 per Right. The redemption price will be
adjusted if we have a stock split or issue stock dividends on our common stock.
Exchange. After the time it is announced that a person or group has become an
Acquiring Person, but before an Acquiring Person owns 50% or more of our
outstanding common stock, our Board may exchange each Right (other than Rights
that have become void) for one share of common stock or an equivalent security.
Anti-Dilution Provisions. Our Board may adjust the purchase price of the
Preferred Shares, the number of Preferred Shares issuable and the number of
outstanding Rights to prevent dilution that may occur from a stock dividend, a
stock split, or a reclassification of the Preferred Shares or common stock. No
adjustments to the purchase price of less than 1% will be made.
Amendments. The terms of the Rights Agreement may be amended by our Board
without the consent of the holders of the Rights as follows: before the time
Rights become redeemable, the Board may freely amend or supplement any portion
of the rights agreement without Rights holder approval. At any time thereafter,
the Board of Directors may amend or supplement the Rights Agreement to cure any
ambiguity, to alter time period provisions, to correct inconsistent provisions
or to make any additional changes to the agreement, but only to the extent that
those changes do not impair or adversely affect any Rights holder and do not
result in the Rights again becoming redeemable.
C-2
