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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO
SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------------------
AMRESCO CAPITAL TRUST
(Exact name of registrant as specified in its charter)
Texas 75-2744858
(State of incorporation or organization) (I.R.S. Employer Identification No.)
700 North Pearl Street
Suite 2400
Dallas, Texas 75201
(Address of principal executive offices) (Zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which
Title of each class to be so registered each class is to be registered
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None Not Applicable
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Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On February 25, 1999, the Board of Trust Managers of AMRESCO
CAPITAL TRUST (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding common share of beneficial
interest, par value $0.01 per share (the "Common Shares"), of the Company. The
dividend is payable on March 11, 1999 (or such earlier date as may be determined
by the Board of Trust Managers of the Company) to all holders of record of
Common Shares as of the close of business on March 11, 1999 (or such earlier
date as may be determined by the Board of Trust Managers of the Company (the
"Record Date"). Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of the Series A Junior Participating
Preferred Shares, par value $0.01 per share (the "Preferred Shares"), of the
Company at a price of $37.50 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement) between the
Company and the Bank of New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person"), other than any member of the AMRESCO Group, has acquired
beneficial ownership of 15% or more of the outstanding Common Shares or (ii) 10
business days (or such later date as may be determined by action of the Board of
Trust Managers of the Company prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding Common Shares (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced by the
certificates representing Common Shares with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and
thereafter, such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 1, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
At any time following the Distribution Date relating to a Flip-In
Event, Rights (other than Rights owned by an Acquiring Person and the Acquiring
Person's affiliates and associates, which
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will have become void) may be exercised (subject to their earlier termination,
expiration or exchange) to acquire, in lieu of Preferred Shares, at the then
current Purchase Price of the Right, that number of Common Shares (or if there
are insufficient Common Shares, Preferred Shares or fractions thereof) which at
such time will have a market value of two times the Purchase Price of the Right.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of (i) One Dollar and No/100
($1.00) per share or (ii) 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation payment of $100 per share and each holder
will be entitled to an aggregate payment of 100 times the payment made per
Common Share. Each Preferred Share will have 100 votes, voting together with the
Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 100 times the amount received per Common Share. These rights
are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right (other than an Acquiring
Person and the affiliates and associates of such Acquiring Person,
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whose Rights will have become void) will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the Purchase Price of the
Right. In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person or the
affiliates and associates of such Acquiring Persons (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the Purchase Price of the
Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Trust Managers of the Company may
exchange the Rights (other than Rights owned by such person or group and their
respective affiliates and associates which will have become void), in whole or
in part, at an exchange ratio of one Common Share, or one one-hundredth of a
Preferred Share (or of a share of a class or series of the Company's preferred
stock having equivalent rights, preferences and privileges), per Right (subject
to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to or within 10 business days following the
acquisition by a person or group of affiliated or associated persons of
beneficial ownership of 15% or more of the outstanding Common Shares, the Board
of Trust Managers of the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time on such basis with such conditions
as the Board of Trust Managers of the Company in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The Board of Trust Managers may supplement or amend the Rights
Agreement without the approval of the holders of Rights. From and after such
time as any person or group of affiliated or associated persons become an
Acquiring Person, the Rights Agreement may not be amended in any manner which
would adversely affect the interests of the holders of the Rights (other than
the Acquiring Person or an affiliate or associated of an Acquiring Person). The
terms of the Rights may not be amended to (i) reduce the Redemption Price
(except as required by antidilution provisions) or (ii) provide for an earlier
Final Expiration Date.
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. Pursuant to the Rights Agreement, certain
actions (e.g. redeeming outstanding Rights, amending the Rights Agreement. etc.)
may only be made with the approval of the Board of Trust Managers of the
Company.
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ITEM 2. EXHIBITS.
1. Rights Agreement, dated as of February 25, 1999, between the
Company and the Bank of New York, as Rights Agent, which
includes: as Exhibit A thereto, the Form of Statement
Designation of Series A Junior Participating Preferred Shares,
par value $0.01 per share, of the Company; as Exhibit B
thereto, the Form of Right Certificate; and as Exhibit C
thereto, the Summary of Rights to Purchase Preferred Shares.
2. Form of legend to be placed, pursuant to Section 3(d) of the
Rights Agreement, on new Common Share certificates issued by
the Company after March 11, 1999 and prior to the Distribution
Date upon transfer, exchange or issuance.
3. Amended and Restated Declaration of Trust (previously filed as
Exhibit 3.1 to the Company's Registration Statement on Form
S-11 (File No. 333-45543) (the "Registration Statement") and
incorporated herein by reference).
4. Bylaws of the Company (previously filed as Exhibit 3.2 to
Amendment No. 1 to the Registration Statement and incorporated
herein by reference).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
AMRESCO CAPITAL TRUST
Date: March 3, 1999
By: /s/ MICHAEL L. McCOY
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Michael L. McCoy
Senior Vice President and
General Counsel
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INDEX TO EXHIBITS
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SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
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1. Rights Agreement, dated as of February 25, 1999, between the
Company and the Bank of New York, as Rights Agent, which
includes: as Exhibit A thereto, the Form of Statement
Designation of Series A Junior Participating Preferred Shares,
par value $0.01 per share, of the Company; as Exhibit B
thereto, the Form of Right Certificate; and as Exhibit C
thereto, the Summary of Rights to Purchase Preferred Shares.
2. Form of legend to be placed, pursuant to Section 3(d) of the
Rights Agreement, on new Common Share certificates issued by
the Company after March 11, 1999 and prior to the Distribution
Date upon transfer, exchange or issuance.
3. Amended and Restated Declaration of Trust (previously filed as
Exhibit 3.1 to the Company's Registration Statement on Form
S-11 (File No. 333-45543) (the "Registration Statement") and
incorporated herein by reference).
4. Bylaws of the Company (previously filed as Exhibit 3.2 to
Amendment No. 1 to the Registration Statement and incorporated
herein by reference).
</TABLE>
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EXHIBIT 1
RIGHTS AGREEMENT
BY AND BETWEEN
AMRESCO CAPITAL TRUST
AND
THE BANK OF NEW YORK
AS
RIGHTS AGENT
DATED AS OF FEBRUARY 25, 1999
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This Agreement, dated as of February 25, 1999, is by and between
AMRESCO Capital Trust, a Texas real estate investment (the "Company"), and The
Bank of New York, a New York banking corporation (the "Rights Agent").
RECITAL
The Board of Trust Managers of the Company has authorized and declared
a dividend of one preferred share purchase right (a "Right") for each Common
Share (as such term is hereinafter defined) of the Company outstanding as of the
close of business on March 11, 1999 or such earlier date as may be determined by
the Board of Trust Managers of the Company (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a Preferred Share (as
such term is hereinafter defined), upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance of one
Right with respect to each Common Share that shall become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall hereafter become a Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the Common Shares of the Company then
outstanding, but shall not include the Company, any Subsidiary (as such
term is hereinafter
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defined) of the Company, any employee benefit plan of the Company or
any Subsidiary of the Company, or any entity holding Common Shares for
or pursuant to the terms of any such plan. Notwithstanding the
foregoing, (i) none of AMRESCO, Inc. or any of its affiliates shall be
deemed to be an "Acquiring Person," (ii) no Person shall be deemed to
have become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number of Common
Shares outstanding, increases the proportionate number of Common Shares
beneficially owned by such Person to 15% or more of the Common Shares
of the Company then outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 15% or more of the Common Shares
of the Company then outstanding by reason of Common Share purchases by
the Company and shall, after such Common Share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of
the Company, then such Person shall be deemed to be an "Acquiring
Person" as of the time of the acquisition of such additional Common
Shares by such Person and (iii) if the Board of Trust Managers 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 Section 1(a), has become such inadvertently, and such Person
divests (within such period as of the Board of Trust Managers may deem
appropriate) a sufficient number of Common Shares so that such Person
is no longer an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not
be deemed to be, or have been, an "Acquiring Person" for any purposes
of this Agreement. All questions as to whether a Person who would
otherwise be an Acquiring Person has become such inadvertently shall be
determined in good faith by a majority of the Board of Trust Managers
of the Company, which determination shall be conclusive for all
purposes.
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(b) "ACT" shall mean the Securities Act of 1933, as amended.
(c) "AFFILIATE" and "AFFILIATES" shall have the meaning
ascribed to such terms in Rule l2b-2 promulgated under the Exchange Act
(as such term is hereinafter defined), as in effect on the date of this
Agreement.
(d) "AGREEMENT" shall mean this agreement, as it may be
amended or supplemented from time to time pursuant to Section 27
hereof.
(e) "ASSOCIATE" and "ASSOCIATES" shall have the meaning
ascribed to such terms in Rule l2b-2 promulgated under the Exchange
Act, as in effect on the date of this Agreement.
(f) A Person shall be deemed the "BENEFICIAL OWNER" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, as determined pursuant to Rule l3d-3 promulgated
under the Exchange Act;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not (pursuant to this
Section 1(f)(ii)(A)) be deemed the Beneficial Owner of, or to
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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 (B) the
right to vote pursuant to any agreement, arrangement or
understanding; provided, however that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the
Exchange Act (as such term is hereinafter defined) and (2) is
not also then reportable on Schedule 13D (or any comparable or
successor report) promulgated under the Exchange Act; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(f)(ii)(B) hereof) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to
own beneficially hereunder.
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(g) "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
(h) "CLOSE OF BUSINESS" on any given date shall mean 5:00
P.M., New York, New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York, New
York time, on the next succeeding Business Day.
(i) "COMMON SHARE" and "COMMON SHARES" when used with
reference to the Company shall mean, as applicable, one or more of the
common shares of beneficial interest, par value $0.01 per share, of the
Company. "Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other Person
is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(j) "COMPANY" shall have the meaning ascribed to such term in
the first paragraph of this Agreement.
(k) "CURRENT PER SHARE MARKET PRICE" shall have the meaning
ascribed to such term in Section 11(d)(i) of this Agreement.
(l) "DISTRIBUTION DATE" shall have the meaning ascribed to
such term in Section 3 hereof.
(m) "EQUIVALENT PREFERRED SHARES" shall have the meaning
ascribed to such term in Section 11(b) hereof.
(n) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
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(o) "EXCHANGE RATIO" shall have the meaning ascribed to such
term in Section 24(a) hereof
(p) "FINAL EXPIRATION DATE" shall have the meaning ascribed to
such term in Section 7(a) hereof.
(q) "FLIP-IN EVENT" shall have the meaning ascribed to such
term in Section 11(a)(ii) hereof.
(r) "FLIP-OVER EVENT" shall have the meaning ascribed to such
term in Section 13 hereof.
(s) "PAYMENT DATE" shall mean March 11, 1999 or such earlier
date as may be determined by the Board of Trust Managers of the
Company.
(t) "PERMITTED OFFER" shall mean a tender or exchange offer by
any Person for all outstanding Common Shares of the Company which a
majority of the Board of Trust Managers of the Company determines,
based upon the advice of a nationally recognized investment banking
firm and such other advice as such Trust Managers deem appropriate, is
fair and adequate from a financial point of view to the shareholders of
the Company (other than such Person) and is otherwise in the best
interest of the Company and its shareholders (other than such Person).
A Permitted Offer shall cease to be such if, prior to the acquisition
of the Beneficial Ownership of any Common Shares of the Company
pursuant thereto, a majority of the Board of Trust Managers of the
Company so determines, and in such event the tender or exchange offer
shall be deemed for purposes of Section 3 hereof to have commenced on
the date of such determination.
(u) "PERSON" and "PERSONS" shall mean any individual, firm,
corporation or other entity, and shall include any successor (by merger
or otherwise) of such entity or entities.
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(v) "PREFERRED SHARES" shall mean the Series A Junior
Participating Preferred Shares, par value $0.01 per share, of the
Company having the rights and preferences set forth in the Form of
Statement of Designation attached to this Agreement as EXHIBIT A.
(w) "PURCHASE PRICE" shall have the meaning ascribed to such
term in Section 4(a) hereof.
(x) "RECORD DATE" shall be deemed to have the meaning ascribed
to such term in the Recital to this Agreement.
(y) "REDEMPTION DATE" shall have the meaning ascribed to such
term in Section 7(a) hereof.
(z) "REDEMPTION PRICE" shall have the meaning ascribed to such
term in Section 23(a) hereof.
(aa) "RIGHT" and "RIGHTS" shall be deemed to have the meaning
ascribed to such terms in the Recital to this Agreement.
(bb) "RIGHT CERTIFICATE" shall be deemed to mean the form of
certificate evidencing the ownership of Rights in substantially the
form of EXHIBIT B hereto.
(cc) "RIGHTS AGENT" shall be deemed to have the meaning
ascribed to such term in the first paragraph of this Agreement and
shall include any additional or substitute rights agents hereafter
appointed pursuant to the terms of this Agreement.
(dd) "SHARES ACQUISITION DATE" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(ee) "SUBSIDIARY" of any Person shall mean any corporation or
other entity of
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which a majority of the voting power of the voting equity securities or
equity interest is beneficially owned, directly or indirectly, by such
Person.
(ff) "SUMMARY OF RIGHTS" shall have the meaning ascribed to
such term in Subsection 3(b) hereof.
(gg) "TRADING DAY" and "TRADING DAYS" shall have the meaning
ascribed to such terms in Section 11(d)(i) of this Agreement.
(hh) "TRIGGERING EVENT" shall mean any Flip-In Event or any
Flip-Over Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares of the Company) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Board of Trust Managers of the Company may, in accordance with
the provisions of Section 21 hereof, from time to time appoint such substitute
rights agents as it may deem necessary or desirable.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) One Right shall be associated with each Common Share
outstanding on the Record Date, each additional Common Share that shall
become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date,
and each additional Common Share with which Rights are issued after the
Distribution Date and prior to the earlier of the Redemption Date and
the Final Expiration Date; provided, however, that, if the number of
outstanding Rights are combined into a smaller number of outstanding
Rights pursuant to Section 11 hereof, the appropriate fractional Right
determined pursuant to such Section shall thereafter be associated with
each such Common Share.
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(b) Until the earlier of (i) the Close of Business on the
tenth Business Day after the Shares Acquisition Date or (ii) the Close
of Business on the tenth Business Day (or such later date as may be
determined by the Board of Trust Managers of the Company prior to such
time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares of the
Company for or pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company or any entity
holding Common Shares of the Company for or pursuant to the terms of
any such plan) to commence, a tender or exchange offer the consummation
of which would result in any Person becoming an Acquiring Person
(including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being
herein referred to as the "Distribution Date"), (A) the Rights will be
evidenced (subject to the provisions of Section 3(c) hereof) by the
certificates for Common Shares of the Company registered in the names
of the holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (B) the
right to receive Right Certificates will be transferable only in
connection with the transfer of Common Shares of the Company. If the
Distribution Date would, pursuant to the foregoing provisions of this
Section 3(b), occur prior to the Payment Date (but for the provisions
of this sentence), the Distribution Date shall, notwithstanding the
foregoing provisions of this Section 3(b), not be deemed to occur until
the Payment Date.
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As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign and
the Company (or the Rights Agent, if requested by the Company) will
send or cause to be sent by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares of the Company 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 of the Company so held. As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(c) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of EXHIBIT C hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each
record holder of Common Shares of the Company as of the close of
business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common Shares
of the Company outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of
the Summary of Rights attached thereto. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares of the
Company outstanding on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the transfer
of the Rights associated with the Common Shares of the Company
represented thereby.
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(d) Certificates for Common Shares of the Company which become
outstanding (including, without limitation, certificates issued upon
the transfer of Common Shares of the Company and certificates
representing reacquired Common Shares of the Company referred to in the
last sentence of this Section 3(d)) after the Record Date but prior to
the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to such certificates a legend in substantially the
following form:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
AMRESCO Capital Trust and The Bank of New York, dated as of
February 25, 1999 (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 AMRESCO
Capital Trust. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. AMRESCO Capital Trust will mail to the holder of
this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) may become
null and void.
With respect to such certificates representing Common Shares
of the Company (whether or not such certificates include the foregoing
legend or have appended to them the Summary of Rights), until the
Distribution Date, the Rights associated with the Common Shares of the
Company represented by such certificates shall be evidenced by such
certificates alone and registered holders of the Common Shares of the
Company shall also be the registered holders of the associated Rights,
and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
of the Company represented thereby. In the event that the Company
purchases or acquires any of its Common Shares after the Record Date
but prior to the Distribution Date, any Rights associated with such
Common
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<PAGE> 13
Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with its Common
Shares which are no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase Preferred Shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as EXHIBIT B hereto
and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Board of
Trust Managers of 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 automated quotation system on which the Rights may
from time to time be listed or traded, or to conform to usage. Subject
to the provisions of Section 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at
the price per one one-hundredth of a Preferred Share set forth therein
(the "Purchase Price"), but the number of such one one-hundredths of a
Preferred Share and the Purchase Price shall be subject to adjustment
as provided herein.
(b) Any Right Certificate issued pursuant hereto that
represents (i) Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) Rights transferred
to a transferee by an Acquiring Person (or of any such
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<PAGE> 14
Associate or Affiliate) who becomes such a transferee after the
Acquiring Person becomes such or (iii) Rights transferred to a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes such a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Trust Managers
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of the
second paragraph of Section 11(a)(ii) hereof, and any Right Certificate
issued pursuant hereto upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
11(a)(ii) of such Rights Agreement.
In the case of a determination made pursuant to clause (iii)
of this Section 4(b) the Company shall notify the Rights Agent of such
determination.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. From and after the
distribution of Right Certificates pursuant to the second paragraph of Section
3(a) hereof, (a) the Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any of its Executive Vice
Presidents, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof and shall be attested by the
Treasurer or an Assistant
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<PAGE> 15
Treasurer, or Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature; (b) the Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned; (c) in case any officer of the Company who shall have signed any
of the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery thereof, such
Right Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the Company;
and (d) any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not such
an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates, the certificate
number of each Rights Certificates and the date of each of the Right
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Section 14 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
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<PAGE> 16
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the Rights Agent's offices in
New York, New York. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificates until the registered holder shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
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<PAGE> 17
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Except as otherwise provided herein (including Section 24
hereof), each Right shall entitle the registered holder thereof, upon
exercise thereof as provided herein, to purchase for the Purchase
Price, at any time after the Distribution Date and at or prior to the
earliest of (i) the close of business on March 1, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date") and (iii) the
time at which such Rights are exchanged as provided in Section 24
hereof, one one-hundredth of a Preferred Share, subject to adjustment
from time to time as provided in Section 11 or 13 hereof.
(b) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent
at the principal office of the Rights Agent, together with payment of
the Purchase Price for each one one-hundredth of a Preferred Share as
to which the Rights are exercised, at or prior to the earliest of (i)
the close of business the Final Expiration Date, (ii) the Redemption
Date or (iii) the time at which such Rights are exchanged as provided
in Section 24 hereof.
(c) The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right shall
initially be $37.50, and shall be subject to adjustment from time to
time as provided in Section 11 or 13 hereof and shall be payable in
lawful money of the United States of America in accordance with Section
7(d) below.
(d) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares
to be purchased and an amount equal to any applicable transfer tax
required to
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<PAGE> 18
be paid by the holder of such Right Certificate in accordance with
Section 9 hereof by certified check, cashier's check or money order
payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Common
Shares of the Company and/or Preferred Shares certificates for the
number of Common Shares of the Company and/or Preferred Shares to be
purchased and the Company hereby irrevocably authorizes and directs its
transfer agent to comply with all such requests, or (B) requisition
from the depositary agent depositary receipts representing such number
of one one-hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby authorizes and directs the depositary
agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to
be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(e) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
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<PAGE> 19
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation, or, if surrendered to
the Rights Agent, shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares or any Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7
hereof. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares of the
Company and/or Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(b) In the event that there shall not be sufficient Preferred
Shares issued but not outstanding or authorized but unissued to permit
the exercise or exchange of Rights in accordance with Section 11 or 24
hereof, as the case may be, the Company covenants and
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<PAGE> 20
agrees that it will take all such action as may be necessary to
authorize additional Preferred Shares for issuance upon the exercise or
exchange of Rights pursuant to Section 11 or 24 hereof, as the case may
be; provided, however, that if the Company is unable to cause the
authorization of additional Preferred Shares, then the Company shall,
or in lieu of seeking any such authorization, the Company may, to the
extent necessary and permitted by applicable law and any agreements or
instruments in effect prior to the Distribution Date to which it is a
party, (i) upon surrender of a Right, pay cash equal to the Purchase
Price in lieu of issuing Preferred Shares and requiring payment
therefor, (ii) upon due exercise of a Right and payment of the Purchase
Price for each Preferred Share as to which such Right is exercised,
issue equity securities having a value equal to the value of the
Preferred Shares which otherwise would have been issuable pursuant to
Section 11 or 24 hereof, which value shall be determined by a
nationally recognized investment banking firm selected by the Board of
Trust Managers of the Company or (iii) upon due exercise of a Right and
payment of the Purchase Price for each Preferred Share as to which such
Right is exercised, distribute a combination of Preferred Shares, cash
and/or other equity and/or debt securities having an aggregate value
equal to the value of the Preferred Shares which otherwise would have
been issuable pursuant to Section 11 or 24 hereof, which value shall be
determined by a nationally recognized investment banking firm selected
by the Board of Trust Managers of the Company. To the extent that any
legal or contractual restrictions (pursuant to agreements or
instruments in effect prior to the Distribution Date to which it is a
party) prevent the Company from paying the full amount payable in
accordance with the foregoing sentence, the Company shall 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 as such
payments become permissible under such legal or contractual
restrictions until such payments have been paid in full.
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<PAGE> 21
(c) So long as the Common Shares of the Company and/or
Preferred Shares issuable and deliverable upon the exercise of the
Rights may be listed or traded on any national securities exchange or
automated quotation system, the Company shall use commercially
reasonable efforts to cause, from and after such time as the Rights
become exercisable, all Common Shares of the Company and/or Preferred
Shares reserved for such issuance to be listed on such exchange or
automated quotation system upon official notice of issuance upon such
exercise.
(d) The Company shall use commercially reasonable efforts to
(i) file, as soon as practicable following the earliest date after the
first occurrence of a Flip-In Event, a registration statement under the
Act with respect to the securities purchasable upon exercise of the
Rights on an appropriate form and (ii) cause such registration
statement to become effective (with a prospectus at all times meeting
the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B)
the date of the expiration of the Rights. The Company 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 not to exceed one hundred fifty (150)
days after the date set forth in clause (i) of the first sentence of
this Section 9(d), the exercisability of the Rights in order to prepare
and file such registration statement and permit it to become effective.
The Company will notify the Rights Agent of any such suspension. Upon
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the
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<PAGE> 22
Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction if the exercise thereof shall not be permitted under
applicable law.
(e) From and after the Distribution Date, the Company further
covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Common Shares of the Company and/or Preferred Shares upon the exercise
of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a person other than, or the issuance
or delivery of certificates or depositary receipts for the Common
Shares of the Company and/or Preferred Shares in a name other than that
of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depositary receipts for Common Shares of the Company and/or Preferred
Shares upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established
to the Company's reasonable satisfaction that no such tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE. Each Person in whose name
any certificate for Common Shares of the Company and/or Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares of the Company and/or Preferred
Shares represented thereby on, and such certificate shall be
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<PAGE> 23
dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the transfer books of the Company relating to the
Common Shares of the Company and/or Preferred Shares are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding day on which such transfer books
are open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF RIGHTS. The Purchase Price, the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Shares transfer
books of the Company were open,
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<PAGE> 24
such Person would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one
Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be
in addition to and shall be made prior to any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this Agreement,
in the event any Person becomes an Acquiring Person (the
"Flip-In Event"), proper provision shall be made so that each
holder of a Right (except as provided below) shall thereafter
have a right to receive, upon exercise thereof at a price
equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result
obtained by (A) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and (B) dividing that
product by 50% of the then "current per share market price"
(determined pursuant to Section 11(d) hereof) of the Common
Shares of the Company on the date of the occurrence of such
event. In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company
shall not, except as permitted by Section 23 hereof, take any
action which would eliminate or diminish the benefits intended
to be afforded by this Agreement or the benefits intended to
be afforded by the Rights.
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<PAGE> 25
From and after the occurrence of a Flip-In Event, any
Rights (1) that are or were acquired or beneficially owned by
any Acquiring Person (or any Associate or Affiliate of such
Acquiring Person), (2) transferred to a transferee by an
Acquiring Person (or of any such Associate or Affiliate) who
becomes such a transferee after the Acquiring Person becomes
such or (3) transferred to a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes such a
transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (x)
a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (y) a
transfer which the Board of Trust Managers of the Company has
determined is part of a plan, arrangement or understanding
which has a primary purpose or effect the avoidance of this
second paragraph of Section 11(a)(ii) shall be void and any
holder and/or subsequent holder of such Rights shall
thereafter have no right to exercise such Rights under any
provision of this Agreement or to exercise any rights under
this Agreement with respect to such Rights. The Company shall
use all commercially reasonable efforts to insure that the
provisions of this Section 11(a)(ii) and Section 4(b) hereof
are complied with, but shall have no liability to any holder
of Right Certificates or other Person as a result of its
failure to make any determination with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
No Right Certificate shall be issued pursuant to Section 3
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<PAGE> 26
hereof that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the
second preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon
the transfer of any Rights to an Acquiring Person whose Rights
would be void pursuant to the second preceding sentence or any
Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the
second preceding sentence shall be cancelled.
(iii) In the event that there shall not be sufficient
Common Shares of the Company issued but not outstanding or
authorized but unissued to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii) hereof (the
difference between the number of Common Shares of the Company
issuable upon the full exercise of the Rights and the actual
number of Common Shares available for issuance at such time
being referred to herein as the "Adjustment Shares"), the
Company shall, to the extent permitted by applicable law and
regulation: (A) determine the excess of (1) the value of the
Common Shares of the Company issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such
excess to be referred to hereinafter as the "Spread"), and (B)
with respect to each Right, make adequate provision to
substitute for the Common Shares of the Company, upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) other equity securities of the Company
(including, without limitation, shares, or units of shares, of
preferred stock which the Board of Trust Managers of the
Company has deemed to have the same value as the Common
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<PAGE> 27
Shares (such shares of preferred stock being referred to
herein as "common share equivalents")), (4) debt securities of
the Company, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current
Value as determined by the Board of Trust Managers of the
Company; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause
(B) above within 150 days following the first occurrence of a
Flip-In Event (the "Flip-In Trigger Date"), 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/or cash have an aggregate
value equal to the Spread. If the Board of Trust Managers of
the Company determines in good faith that it is likely that
sufficient additional Common Shares of the Company 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 no to more than 120 days after the
Flip-In Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution
Period"). To the extent 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) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization
of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value
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<PAGE> 28
thereof. In the event of any such suspension, the Company
shall deliver a notice to the Rights Agent and issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a notice to the Rights
Agent and a public announcement at such time as the suspension
is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Shares of the Company
shall be the current per share market price (as determined
pursuant to Section 11(d) hereof) of the Common Shares of the
Company on the Flip-In Trigger Date, and the value of any
common share equivalent shall be deemed to have the same value
as the Common Shares of the Company on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares
(or shares having substantially the same rights, privileges and
preferences as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred
shares at a price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then
current per share market price of the Preferred Shares on such record
date, the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the number of Preferred Shares outstanding on such record date plus
the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion price of the
convertible
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<PAGE> 29
securities so to be offered) would purchase at such current per share
market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board of
Trust Managers of the Company, whose determination shall be described
in a statement filed with the Rights Agent. Preferred Shares owned by
or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event
that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly
cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
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immediately prior to such record date by a fraction, the numerator of
which shall be the then current per share market price of the Preferred
Shares on such record date, less the fair market value (as determined
in good faith by the Board of Trust Managers of the Company, whose
determination shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable to
one Preferred Share and the denominator of which shall be such current
per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder,
the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive
Trading Days immediately prior to such date; provided,
however, that in the event that the current per share market
price of the Security is determined during a period following
the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or
(B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after
the ex-dividend date for such dividend or distribution, or the
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record date for such subdivision, combination or
reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect
the current market price per share equivalent of such
Security. The closing price for each day shall be the last
sale price or, in case no such sale takes place on such day,
the average of the closing bid and asked prices in either case
as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") Stock Market's
National Market System ("NMS") or if the Security is not
listed or admitted to trading on the NMS, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by the NASDAQ or such other system then in use,
or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in
the Security selected by the Board of Trust Managers of the
Company. The term "Trading Day" shall mean a day on which the
principal securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business
or, if the Security is not listed or admitted to trading on
any securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares
shall be determined in accordance with the method set forth in
Section 11(d)(i) hereof. If the Preferred Shares are not
publicly
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<PAGE> 32
traded, the "current per share market price" of the Preferred
Shares shall be conclusively deemed to be the current per
share market price of the Common Shares of the Company as
determined pursuant to Section 11(d)(i) hereof (appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by
one hundred. If neither the Common Shares of the Company nor
the Preferred Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Trust
Managers of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-millionth of a Preferred Share or one
ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other
than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment
from
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time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares
contained in Sections 11(a) through (c) hereof, inclusive, and the
provisions of Sections 7, 9, 10 and 13 hereof with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c)
hereof, each Right outstanding immediately prior to the making of such
adjustment shall 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) multiplying (A) the number of one
one-hundredths of a Preferred Share covered by a Right immediately
prior to this adjustment by (B) 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
lieu of any adjustment in the number of one one-hundredths of a
Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall
be exercisable
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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 shall
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 shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Distribution Date shall have occurred,
shall be at least 10 days later than the date of the public
announcement. If the Distribution Date shall have occurred, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the
public announcement.
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(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the
number of one one-hundredths of a Preferred Share which were expressed
in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares
at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Board of Trust Managers of the Company shall be
entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and to the
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<PAGE> 36
extent that it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the Preferred Shares,
issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable
for Preferred Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or warrants referred to
in Section 11(b) hereof, hereafter made by the Company to holders of
its Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on its Common Shares payable in Common
Shares of the Company or (ii) effect a subdivision, combination or
consolidation of its Common Shares (by reclassification or otherwise
than by payment of dividends in Common Shares of the Company) into a
greater or lesser number of its Common Shares, then in any such case
(A) the number of one one-hundredths of a Preferred Share purchasable
after such event upon proper exercise of each Right shall be determined
by multiplying the number of one one-hundredths of a Preferred Share so
purchasable immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares of the Company
outstanding immediately before such event and the denominator of which
is the number of Common Shares of the Company outstanding immediately
after such event, and (B) each Common Share of the Company outstanding
immediately after such event shall have issued with respect to it that
number of Rights which each Common Share of the Company outstanding
immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
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SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (i) the Company shall
consolidate with, or merge with and into, any other Person and the
Company shall not be the continuing or surviving entity of such
consolidation or merger, (ii) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be
the continuing or surviving entity of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the
Common Shares of the Company shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash
or any other property or (iii) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person other than
the Company or one or more of its wholly-owned Subsidiaries (any such
event being a "Flip-Over Event"), then, and in each such case, proper
provision shall be made so that (A) each holder of a Right (except as
otherwise provided
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herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this
Agreement and, in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid and non-assessable Common Shares of
the Principal Party (as such term is hereinafter defined), which shares
shall not be subject to any liens, encumbrances, rights of first
refusal, transfer restrictions or other adverse claims, as shall equal
the result obtained by (1) multiplying the then current Purchase Price
by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable and dividing that product by (2) 50% of the
then current per share market price of the Common Shares of the
Principal Party (determined pursuant to Section 11(d) hereof) on the
date of consummation of such Flip-Over Event; (B) the Principal Party
shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (D) such
Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation
as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation
to the Common Shares thereafter deliverable upon the exercise of the
Rights. The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement so providing and further providing that, as soon
as practicable after the date of any such consolidation, merger or sale
of assets, the Principal Party, at its own expense, will:
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(x) prepare and file a registration statement under
the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will 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 Act) until the
Expiration Date;
(y) use commercially reasonable efforts either (1) to
list (or continue the listing of) the Common Shares of the
Principal Party on a national securities exchange or (2) cause
such Common Shares to be reported by NASDAQ or such other
transaction reporting system then in use; and
(z) 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 under the Exchange Act.
The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
(b) "Principal Party" shall mean:
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<PAGE> 40
(i) In the case of any transaction described in
clause (i) or (ii) of the first sentence of Section 13(a)
hereof, the Person that is the issuer of any securities into
which Common Shares of the Company are converted in such
transaction, or if there is more than one issuer, the issuer
of the Common Shares with the greatest aggregate market value,
and if no securities are so issued, the Person that is the
other party to such transaction, or if there is more than one
such Person, the Person having Common Shares with the greatest
aggregate market value; and
(ii) In the case of any transaction described in
clause (iii) of the first sentence of Section 13(a) hereof,
the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any
such case, (A) if the Common Shares of such Person are not at
such time and have not been continuously over the preceding
twelve-month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect
Subsidiary of any Person the Common Shares of which are and
have been so registered, "Principal Party" shall refer to such
other Person; and (B) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest
aggregate market value.
(c) If the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of
its authorized securities or in its charter or bylaws or other
instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, Common Shares of such
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<PAGE> 41
Principal Party at less than the then current market price per share
(determined pursuant to Section 11(d) hereof) or securities exercisable
for, or convertible into, Common Shares of such Principal Party at less
than such then current market price (other than the holders of Rights
pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common
Shares of such Principal Party pursuant to the provisions of this
Section 13, then, in such event, the Company shall not consummate any
such transaction unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agents a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that
the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence
of, the consummation of such proposed transaction.
(d) Notwithstanding anything in this Agreement to the
contrary, the provisions of this Section 13 shall not be applicable to
a transaction described in clause (i) or (ii) of Section 13(a) if (i)
such transaction is consummated with a Person or Persons who acquired
Common Shares of the Company pursuant to a Permitted Offer (or a
wholly-owned Subsidiary of any such Person or Persons), (ii) the price
per Common Share of the Company being offered in such transaction is
not less than the price per Common Share of the Company paid to all
holders of the Common Shares of the Company who shares are purchased
pursuant to such Permitted Offer and (iii) the form of consideration
being offered to the remaining holders of Common Shares of the Company
pursuant to such transaction is the same as the form of consideration
paid to holders of the Common Shares of the Company pursuant to such
Permitted Offer.
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<PAGE> 42
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right. For
the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if
on any such date the Rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the
Board of Trust Managers of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Trust
Managers of the Company shall be used.
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<PAGE> 43
(b) The Company shall 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 shall provide that the
holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary receipts.
In lieu of fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred
Share shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18 hereof, are vested in the respective
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registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares of the Company); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares of the Company), without the consent of the Rights Agent or
of the holder of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares of the Company), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares
of the Company;
(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, 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 Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
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<PAGE> 45
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates 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 shall be
affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of the
Company's or Rights Agent's inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation
or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as
soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of trust managers or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
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SECTION 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares of the Company or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation
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<PAGE> 47
succeeding to the stock transfer or corporate trust powers of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
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<PAGE> 48
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter 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 Chief
Executive Officer, the President, any Executive Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own gross negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right
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<PAGE> 49
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Section 3, 11, 13, 23
or 24 hereof, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice
that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether
any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(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 Chief
Executive Officer, the President, any Executive Vice President, the
Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions, in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good
faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.
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<PAGE> 50
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares of the Company or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Board of Trust Managers of the Company may remove the Rights Agent or
any successor Rights Agent upon 30 days' prior written notice, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares of the Company or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
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<PAGE> 51
become incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York or Texas (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 or Texas) in good standing, having an office in the
State of New York or Texas, 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 shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
or Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
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<PAGE> 52
SECTION 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 Trust Managers to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION.
(a) The Board of Trust Managers of the Company may at its
option, at any time prior to the earlier of (i) the Close of Business
on the tenth Business Day following the date on which any Person
becomes an Acquiring Person (or if such date shall have occurred prior
to the Record Date, the Close of Business on the tenth Business Day
following the Record Date) or (ii) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption
price of $.001 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Trust
Managers of the Company may be made effective at such time, on such
basis and with such conditions as the Board of Trust Managers of the
Company in its sole discretion may establish.
(b) Immediately upon the action of the Board of Trust Managers
of the Company ordering the redemption of the Rights pursuant to
Section 23(a) hereof, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the
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<PAGE> 53
Redemption Price. The Company shall promptly give public notice of any
such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Trust
Managers of the Company ordering the redemption of the Rights, the
Company shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares of
the Company. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically
set forth in this Section 23 or in Section 24 hereof and other than in
connection with the purchase of Common Shares prior to the Distribution
Date.
SECTION 24. EXCHANGE.
(a) The Board of Trust Managers of the Company may at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares of the
Company at an exchange ratio of one such Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Trust Managers of the
Company shall not be empowered to effect
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<PAGE> 54
such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
any such Subsidiary or any entity holding Common Shares of the Company
for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares of the Company then outstanding.
(b) Immediately upon the action of the Board of Trust Managers
of the Company ordering the exchange of any Rights pursuant to Section
24(a) hereof and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number
of Common Shares of the Company equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange of the Common Shares of the Company for Rights will be
effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares of the Company issued but not outstanding or authorized but
unissued to permit any exchange of
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<PAGE> 55
Rights as contemplated in accordance with this Section 24, the Company
shall take all such action as may be necessary to authorize additional
Common Shares of the Company for issuance upon exchange of the Rights.
In the event the Company shall, after good faith effort, be unable to
take all such action as may be necessary to authorize such additional
Common Shares of the Company, the Company shall substitute, for each
Common Share of the Company that would otherwise be issuable upon
exchange of a Right, a number of Preferred Shares or fraction thereof
such that the current per share market price of such Preferred Shares
or fraction thereof is equal to the current per share market price of
one Common Share of the Company as of the date of issuance of such
Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
its Common Shares or to distribute certificates which evidence
fractional Common Shares of the Company. In lieu of such fractional
Common Shares of the Company, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional
Common Shares of the Company would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole
Common Share of the Company. For the purposes of this Section 24(d),
the current market value of a whole Common Share of the Company shall
be the closing price of a Common Share of the Company (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) If at any time subsequent to the Shares Acquisition Date,
the Company shall propose (i) to pay any dividend payable in stock of
any class to the holders of the Preferred
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<PAGE> 56
Shares or to make any other distribution to the holders of the
Preferred Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of the Preferred Shares rights or warrants to
subscribe for or to purchase any additional Preferred Shares or shares
of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of the 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 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person,
(v) to effect the liquidation, dissolution or winding up of the Company
or (vi) to declare or pay any dividend on the Common Shares of the
Company payable in its Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares of the Company (by
reclassification or otherwise than by payment of dividends in its
Common Shares), then, in each such case, the Company shall give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is to
take place and the date of participation therein by the holders of the
Common Shares of the Company and/or Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common
Shares of the Company and/or Preferred Shares, whichever shall be the
earlier.
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(b) In case a Flip-In Event shall occur, then the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and
the consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
AMRESCO Capital Trust
700 North Pearl Street
Suite 2400, LB-342
Dallas, Texas 75201-7424
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be 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:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: James N. Dimino, Assistant Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by
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first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company or the Rights Agent,
as applicable.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Board of Trust Managers of
the Company may from time to time supplement or amend this Agreement without the
approval of any holders of Right Certificates in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other provisions
with respect to the Rights which the Board of Trust Managers of the Company may
deem necessary or desirable, any such supplement or amendment to be evidenced by
a writing signed by the Company and the Rights Agent; provided, however, that
from and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); and provided further, however,
that this Agreement may not be supplemented or amended to lengthen (a) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable or (b) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment; provided, however, that the Rights
Agent may, but shall not be obligated to, enter into any such supplement or
amendment which affects its own rights, duties or immunities under this
Agreement. Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made that (i) reduces the Redemption Price
(except as required hereunder by appropriate adjustment to reflect any stock
split, stock dividend or similar transaction occurring after the date of this
Agreement) or (ii) provides for an earlier Final Expiration Date.
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SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares of the Company) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares of the Company).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of Trust
Managers of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Trust
Managers of the Company.
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<PAGE> 60
SECTION 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Texas and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State; provided, however, that the rights and
responsibilities of the Rights Agent set forth in Sections 18, 19, 20 and 21
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 34. DETERMINATIONS AND ACTIONS BY THE BOARD OF TRUST MANAGERS.
The Board of Trust Managers of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Trust Managers 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 (a) interpret
the provisions of this Agreement and (b) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend this Agreement).
All such actions, calculations, interpretations and determinations (including,
for the purposes of clause (ii) below, all omissions with respect to the
foregoing) which are done or made by the Board of Trust Managers of the Company
in good faith and in accordance with the provisions of this Agreement, shall (i)
be final, conclusive and binding on the Company, the Rights Agent, the holders
of the rights and all other parties, and (ii) not subject the Board of Trust
Managers of the Company to any liability to the holder of the Rights.
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<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
AMRESCO CAPITAL TRUST
Attest:
By: By:
------------------------------ ----------------------------------
Title: Title:
------------------------ ----------------------------
Attest: THE BANK OF NEW YORK
By: By:
------------------------------ ----------------------------------
Title: Title:
------------------------ ----------------------------
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<PAGE> 62
EXHIBIT A
STATEMENT OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED SHARE
OF
AMRESCO CAPITAL TRUST
(PURSUANT TO SECTION 3.30 OF THE
TEXAS REAL ESTATE INVESTMENT TRUST ACT)
----------------------------
AMRESCO Capital Trust, a real estate investment trust organized and
existing under the Texas Real Estate Investment Trust Act (the "Company"),
hereby certifies that the following resolution was adopted by the Board of Trust
Managers of the Company as required by Section 3.30 of the Texas Real Estate
Investment Trust Act (the "Texas REIT Act") at a meeting duly called and held on
February 25, 1999:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Trust Managers of the Company (the "Board of Trust Managers" or the
"Board") in accordance with the provisions of the Declaration of Trust of the
Company, the Board of Trust Managers hereby creates a series of Preferred
Shares, par value $.01 per share (the "Preferred Shares"), of the Company and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Share:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Shares" (the "Series A
Preferred Shares") and the number of shares constituting the Series A Preferred
Shares shall be 350,000. Such number of shares may be increased or decreased by
resolution of the Board of Trust Managers; provided, that no decrease shall
reduce the number of Series A Preferred Shares 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 A
Preferred Shares.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any series of
Preferred Shares (or any similar stock) ranking prior and superior to
the Series A Preferred Shares with respect to dividends, the holders of
Series A Preferred Shares, in preference to the holders of common
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<PAGE> 63
shares of beneficial interest, par value $.01 per share (the "Common
Shares"), of the Company, and of any other junior shares, shall be
entitled to receive, when, as and if declared by the Board of Trust
Managers out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a Series A Preferred
Share, or fraction thereof, 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, 100 times the aggregate
per share amount of all cash dividends, and 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares (by reclassification or
otherwise), declared on the Common Shares since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any Series
A Preferred Share or fraction thereof. In the event the Company shall
at any time declare or pay any dividend on the Common Shares payable in
Common Shares, or effect a subdivision or combination or consolidation
of the outstanding Common Shares (by reclassification or otherwise than
by payment of a dividend in Common Shares) into a greater or lesser
number of Common Shares, then in each such case the amount to which
holders of Series A Preferred Shares were entitled immediately prior to
such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of Common Shares outstanding immediately after such
event and the denominator of which is the number of Common Shares that
were outstanding immediately prior to such event.
(b) The Company shall declare a dividend or distribution on
the Series A Preferred Shares as provided in paragraph (a) of this
Section 2 immediately after it declares a dividend or distribution on
the Common Shares (other than a dividend payable in Common Shares),
provided that in the event no dividend or distribution shall have been
declared on the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per Series A Preferred Share shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of Series A
Preferred Shares entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the Series A Preferred Shares in an amount
less
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than the total amount of such dividends at the time accrued and payable
on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Trust
Managers may fix a record date for the determination of holders of
Series A Preferred Shares entitled to receive the payment of a dividend
or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of Series A Preferred Shares
shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each Series A Preferred Share shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of
the Company. In the event the Company shall at any time declare or pay
any dividend on the Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend
in Common Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the number of votes per share to which
holders of Series A Preferred Shares were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number
of Common Shares that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other
Statement of Designation creating a series of Preferred Shares or any
similar shares, or by law, the holders of Series A Preferred Shares and
the holders of Common Shares and any other shares of the Company having
general voting rights shall vote together as one class on all matters
submitted to a vote of shareholders of the Company.
(c) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Shares shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Shares as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Shares as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on Series A
Preferred Shares outstanding shall have been paid in full, the Company
shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Shares;
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(ii) declare or pay dividends, or make any other
distributions, on any shares ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Shares, except dividends paid ratably
on the Series A Preferred Shares and all such parity shares on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Shares, provided that the Company may at any time
redeem, purchase or otherwise acquire any such junior shares
in exchange for shares of the Company ranking junior (either
as to dividends or upon dissolution, liquidation or winding
up) to the Series A Preferred Shares; or
(iv) redeem or purchase or otherwise acquire for
consideration any Series A Preferred Shares, or any shares
ranking on a parity with the Series A Preferred Shares, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Trust Managers) to
all holders of such shares upon such terms as the Board of
Trust Managers, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of the
Company unless the Company could, under paragraph (a) of this Section
4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares. Any Series A Preferred Shares purchased
or otherwise acquired by the Company in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued Preferred Shares and may be
reissued as part of a new series of Preferred Shares subject to the conditions
and restrictions on issuance set forth herein, in the Company's Declaration of
Trust, or in any other Statement of Designation creating a series of Preferred
Shares or any similar shares or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (a) to the holders of shares ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Shares unless,
prior thereto, the holders of Series A Preferred Shares shall have received $100
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon,
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<PAGE> 66
whether or not declared, to the date of such payment, provided that the holders
of Series A Preferred Shares shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per share to holders of
Common Shares, or (b) to the holders of shares ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Shares, except distributions made ratably on the Series A Preferred
Shares and all such parity shares 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 shall at any time declare or pay any
dividend on the Common Shares payable in Common Shares, or effect a subdivision
or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of Series A Preferred Shares were entitled
immediately prior to such event under the proviso in clause (a) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the Common Shares are exchanged for or changed into other securities, cash
and/or any other property, then in any such case each Series A Preferred Share
shall at the same time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount of securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each Common Share
is changed or exchanged. In the event the Company shall at any time declare or
pay any dividend on the Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of Series A Preferred Shares shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Shares shall not be
redeemable.
Section 9. Rank. The Series A Preferred Shares shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of Preferred Shares.
Section 10. Amendment. The Declaration of Trust of the Company shall
not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Shares so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding Series A Preferred Shares, voting together as a
single class.
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This Statement of Designation is executed to be effected as of February
25, 1999.
By:
------------------------------------------
Robert L. Adair, III, Trust Manager
By:
------------------------------------------
John C. Deterding, Trust Manager
By:
------------------------------------------
Bruce W. Duncan, Trust Manager
By:
------------------------------------------
Mark D. Gibson, Trust Manager
By:
------------------------------------------
Christopher B. Leinberger, Trust Manager
By:
------------------------------------------
James C. Leslie, Trust Manager
By:
------------------------------------------
Robert H. Lutz, Trust Manager
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<PAGE> 68
STATE OF ___________ )
)
COUNTY OF _________ )
Acknowledged before me this _____ day of __________ 1999, by Richard L.
Adair, III, Trust Manager of AMRESCO Capital Trust, a Texas real estate
investment trust, on behalf of said real estate investment trust.
----------------------------------------
Notary Public in and for
the State of Texas
My commission expires:
----------------------------------------
Printed Name of Notary Public
- ----------------------------------
STATE OF ___________ )
)
COUNTY OF _________ )
Acknowledged before me this _____ day of __________ 1999, by John C.
Deterding, Trust Manager of AMRESCO Capital Trust, a Texas real estate
investment trust, on behalf of said real estate investment trust.
----------------------------------------
Notary Public in and for
the State of Texas
My commission expires:
----------------------------------------
Printed Name of Notary Public
- ----------------------------------
A-7
<PAGE> 69
STATE OF ___________ )
)
COUNTY OF _________ )
Acknowledged before me this _____ day of __________ 1999, by Bruce W.
Duncan, Trust Manager of AMRESCO Capital Trust, a Texas real estate investment
trust, on behalf of said real estate investment trust.
----------------------------------------
Notary Public in and for
the State of Texas
My commission expires:
----------------------------------------
Printed Name of Notary Public
- ----------------------------------
STATE OF ___________ )
)
COUNTY OF _________ )
Acknowledged before me this _____ day of __________ 1999, by Mark D.
Gibson, Trust Manager of AMRESCO Capital Trust, a Texas real estate investment
trust, on behalf of said real estate investment trust.
----------------------------------------
Notary Public in and for
the State of Texas
My commission expires:
----------------------------------------
Printed Name of Notary Public
- ----------------------------------
A-8
<PAGE> 70
STATE OF ___________ )
)
COUNTY OF _________ )
Acknowledged before me this _____ day of __________ 1999, by
Christopher B. Leinberger, Trust Manager of AMRESCO Capital Trust, a Texas real
estate investment trust, on behalf of said real estate investment trust.
----------------------------------------
Notary Public in and for
the State of Texas
My commission expires:
----------------------------------------
Printed Name of Notary Public
- ----------------------------------
STATE OF ___________ )
)
COUNTY OF _________ )
Acknowledged before me this _____ day of __________ 1999, by James C.
Leslie, Trust Manager of AMRESCO Capital Trust, a Texas real estate investment
trust, on behalf of said real estate investment trust.
----------------------------------------
Notary Public in and for
the State of Texas
My commission expires:
----------------------------------------
Printed Name of Notary Public
- ----------------------------------
STATE OF ___________ )
)
COUNTY OF _________ )
Acknowledged before me this _____ day of __________ 1999, by Robert H.
Lutz, Trust Manager of AMRESCO Capital Trust, a Texas real estate investment
trust, on behalf of said real estate investment trust.
----------------------------------------
Notary Public in and for
the State of Texas
My commission expires:
----------------------------------------
Printed Name of Notary Public
- ----------------------------------
A-9
<PAGE> 71
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- ______ Rights
CUSIP ________
NOT EXERCISABLE AFTER MARCH 1, 2009, OR EARLIER IF REDEEMED OR
EXCHANGED. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND
TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT PURSUANT TO
WHICH THIS RIGHT CERTIFICATE HAS BEEN ISSUED. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS AND
DEFINITIONS IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER WILL
BECOME NULL AND VOID.
Right Certificate
AMRESCO CAPITAL TRUST
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 25, 1999 (the "Rights Agreement"), between
AMRESCO Capital Trust, a Texas real estate investment trust (the "Company"),
and, The Bank of New York, a New York banking corporation (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, New
York time, on March 1, 2009, at the principal office of the Rights Agent, or at
the office of its successor as rights agent, one one-hundredth of a fully paid
non-assessable share of the Series A Junior Participating Preferred Shares, par
value $.01 per share (the "Preferred Shares"), of the Company, at a purchase
price of $37.50 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 duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a
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<PAGE> 72
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
________________, based on the Preferred Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of one
one-hundredths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor evidencing Rights
entitling the holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's common shares of beneficial interest, par
value $0.01 per share (the "Common Shares").
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<PAGE> 73
No fractional Preferred Shares or Common Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions of
Preferred Shares which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise or exchange hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of trust managers or upon any matter submitted to shareholders at
any meeting thereof or to give or withhold consent to any Company action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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<PAGE> 74
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________________, _______.
ATTEST: AMRESCO CAPITAL TRUST
- --------------------------------- ------------------------------------
Countersigned:
- ---------------------------------
By
-------------------------------
Authorized Signature
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<PAGE> 75
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, address and taxpayer identification number or social
security number (as applicable) of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
--------------------------
Signature
------------------------------
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States. The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). Signature
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<PAGE> 76
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: AMRESCO CAPITAL TRUST
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the securities issuable upon
the exercise of such Rights and requests that certificates for such securities
be issued in the name of:
Please insert social security or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
(Please print name and address)
The undersigned elects to purchase (check one) _______ Preferred Shares or
______ Common Shares of the Company. Dated:__________, ____
------------------------------------
Signature
B-6
<PAGE> 77
Form of Reverse Side of Right Certificate -- continued
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
------------------------------------
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-7
<PAGE> 78
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 25, 1999, the Board of Trust Managers of AMRESCO CAPITAL
TRUST (the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding common share of beneficial interest, par value
$0.01 per share (the "Common Shares"), of the Company. The dividend is payable
on March 11, 1999 (or such earlier date as may be determined by the Board of
Trust Managers of the Company) to all holders of record of Common Shares as of
the close of business on March 11, 1999 (or such earlier date as may be
determined by the Board of Trust Managers of the Company (the "Record Date").
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of the Series A Junior Participating Preferred Shares,
par value $0.01 per share (the "Preferred Shares"), of the Company at a price of
$37.50 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement) between the Company and the Bank of
New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person"), other than any member of the AMRESCO Group, has acquired
beneficial ownership of 15% or more of the outstanding Common Shares or (ii) 10
business days (or such later date as may be determined by action of the Board of
Trust Managers of the Company prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the
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<PAGE> 79
beneficial ownership by a person or group of 15% or more of the outstanding
Common Shares (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced by the certificates representing Common Shares with
a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and
thereafter, such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 1, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
At any time following the Distribution Date relating to a Flip-In
Event, Rights (other than Rights owned by an Acquiring Person and the Acquiring
Person's affiliates and associates, which will have become void) may be
exercised (subject to their earlier termination, expiration or exchange) to
acquire, in lieu of Preferred Shares, at the then current Purchase Price of the
Right, that number of Common Shares (or if there are insufficient Common Shares,
Preferred Shares or fractions thereof) which at such time will have a market
value of two times the Purchase Price of the Right.
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<PAGE> 80
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of (i) One Dollar and No/100
($1.00) per share or (ii) 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation payment of $100 per share and each holder
will be entitled to an aggregate payment of 100 times the payment made per
Common Share. Each Preferred Share will
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<PAGE> 81
have 100 votes, voting together with the Common Shares. Finally, in the event of
any merger, consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100 times the amount
received per Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right (other than an Acquiring
Person and the affiliates and associates of such Acquiring Person, whose Rights
will have become void) will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the Purchase Price of the
Right. In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person or the
affiliates and associates of such Acquiring Persons (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the Purchase Price of the
Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Trust Managers of the Company may
exchange the Rights (other than Rights owned by such
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<PAGE> 82
person or group and their respective affiliates and associates which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to or within 10 business days following the
acquisition by a person or group of affiliated or associated persons of
beneficial ownership of 15% or more of the outstanding Common Shares, the Board
of Trust Managers of the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time on such basis with such conditions
as the Board of Trust Managers of the Company in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The Board of Trust Managers may supplement or amend the Rights
Agreement without the approval of the holders of Rights. From and after such
time as any person or group of affiliated or associated persons become an
Acquiring Person, the Rights Agreement may not be amended in any manner which
would adversely affect the interests of the holders of the Rights (other than
the Acquiring Person or an affiliate or associated of an Acquiring Person). The
terms of the Rights
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<PAGE> 83
may not be amended to (i) reduce the Redemption Price (except as required by
antidilution provisions) or (ii) provide for an earlier Final Expiration Date.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. Pursuant to the Rights Agreement, certain
actions (e.g. redeeming outstanding Rights, amending the Rights Agreement. etc.)
may only be made with the approval of the Board of Trust Managers of the
Company.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
C-6
<PAGE> 1
EXHIBIT 2
FORM OF LEGEND
This certificate also evidences and entitles the holder hereof to certain rights
as set forth in a Rights Agreement between AMRESCO Capital Trust and The Bank of
New York, dated as of February 25, 1999 (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 AMRESCO Capital Trust. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. AMRESCO Capital Trust will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement) may become null and void.
