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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 1999
AMRESCO CAPITAL TRUST
(Exact name of registrant as specified in charter)
TEXAS 1-14029 75-2744858
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification No.)
700 North Pearl Street
Suite 2400
Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (214) 953-7700
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ITEM 5. OTHER EVENTS
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.
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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.
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.
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
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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.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(C) 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 of Designation of Series A
Junior Participating Preferred Shares, par value
$.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.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMRESCO CAPITAL TRUST
Date: March 3, 1999 By: /s/ MICHAEL L. McCOY
-----------------------------------
Michael L. McCoy
Senior Vice President and
General Counsel
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page No.
- ------- ----------- --------
<S> <C> <C>
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 of
Designation of Series A Junior Participating Preferred Shares,
par value $.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.
</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
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outstanding, but shall not include the Company, any Subsidiary (as
such term is hereinafter 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
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majority of the Board of Trust Managers of the Company, which
determination shall be conclusive for all purposes.
(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
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(pursuant to this Section 1(f)(ii)(A)) be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (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.
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(ee) "SUBSIDIARY" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity 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
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fractional Right determined pursuant to such Section shall thereafter be
associated with each such Common Share.
(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
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the foregoing provisions of this Section 3(b), not be deemed to occur until the
Payment Date.
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
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<PAGE> 13
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 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 Associate or
Affiliate) who becomes such a transferee after the Acquiring Person
becomes
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<PAGE> 14
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 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
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<PAGE> 15
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,
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
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<PAGE> 16
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.
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
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<PAGE> 17
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 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
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<PAGE> 18
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.
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
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<PAGE> 19
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 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
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<PAGE> 20
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 dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of
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<PAGE> 23
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, such Person would have owned
upon such exercise and been entitled to receive by virtue of
such
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<PAGE> 24
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 hereof that represents Rights
beneficially owned by an Acquiring Person whose Rights would
be void pursuant to
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<PAGE> 26
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 Shares (such shares of preferred stock being referred
to herein as "common share
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<PAGE> 27
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 thereof. In the
event of any such suspension, the Company shall deliver a
notice to
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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 securities so to
be offered) would purchase at such current per share market price and
the denominator of which shall
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<PAGE> 29
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 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
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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 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
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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 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
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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 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,
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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 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
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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.
(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
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<PAGE> 35
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
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
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<PAGE> 36
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 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
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<PAGE> 38
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:
(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
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<PAGE> 40
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 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
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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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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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(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
thereby
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<PAGE> 45
(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
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<PAGE> 46
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
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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(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 Certificate
(except its countersignature thereof); nor shall it be responsible for
any breach by the
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<PAGE> 49
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 become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the
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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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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
Redemption Price. The Company shall promptly give public notice of any
such redemption;
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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 such exchange at any time
after any Person (other than the Company, any Subsidiary of the
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<PAGE> 54
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 Rights as contemplated in
accordance with this Section 24, the Company shall take all such
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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 Shares or to make any other
distribution to the holders of the Preferred Shares (other than a
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<PAGE> 56
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 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.
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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.
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
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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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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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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
shares of beneficial interest, par value $.01 per share (the "Common
Shares"), of the
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<PAGE> 63
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 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.
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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, 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
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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
- ---------------------------
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<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
- --------------------------------
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<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
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<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.
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<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
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<PAGE> 80
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
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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 may
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<PAGE> 83
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
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