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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES
EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT")
CAPITAL ENVIRONMENTAL RESOURCE INC.
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(Exact Name of Registrant as Specified in Its Charter)
ONTARIO, CANADA NOT APPLICABLE
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State of Incorporation or Organization) (I.R.S. Employer Identification No.)
1005 SKYVIEW DRIVE
BURLINGTON, ONTARIO, CANADA L7P 5B1
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(Address of Principal Executive Offices) (Zip Code)
If this form relates to the registration If this form relates to the
of a class of securities pursuant to registration of a class of securities
Section 12(b) of the Exchange Act and is pursuant to Section 12(g) of the
effective pursuant to General Exchange Act and is effective
Instruction A.(c), please check the pursuant to General Instruction A.(d),
following box. /X/ please check the following box. /X/
Securities Act registration statement file number to which
this form relates: Not applicable
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(If applicable)
Securities to be registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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NONE INAPPLICABLE
Securities to be registered pursuant to Section 12(g) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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COMMON SHARE PURCHASE RIGHTS INAPPLICABLE
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Item 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On September 2, 1999, the Board of Directors of Capital
Environmental Resource Inc. (the "Company") authorized the issuance of one
right ("Right") for each outstanding share of the Company's Common Shares, no
par value per share ("Common Shares"), to the shareholders of record at the
close of business on September 2, 1999. Each Right entitles the registered
holder to purchase from the Company a unit consisting of one one-hundredth of
a Common Share ("Fractional Common Share"), at a purchase price of $60.00 per
Fractional Common Share, subject to adjustment (the "Purchase Price"). The
description and terms of the Rights are set forth in a Rights Agreement dated
as of September 2, 1999 as it may from time to time be supplemented or
amended (the "Rights Agreement") between the Company and American Stock
Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be attached to all certificates representing
outstanding Common Shares and no separate certificates for the Rights ("Rights
Certificates") will be distributed. The Rights will separate from the Common
Shares and a "Distribution Date" will occur, with certain exceptions, upon the
earlier of (i) ten days following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
aggregate of the fully-diluted Common Shares (the date of the announcement being
the "Share Acquisition Date"), or (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person's
becoming an Acquiring Person.
Notwithstanding the foregoing, so long as Environmental Opportunities
Fund I, Environmental Opportunities Fund II and Sanders Morris Mundy Inc. (the
"Existing Shareholders"), together with all their affiliates and associates, do
not become the beneficial owners of 30% or more of the aggregate of the
fully-diluted Common Shares, the Existing Shareholders, together with their
affiliates and associates, shall not be or become Acquiring Persons. In certain
circumstances, the Distribution Date may be deferred by the Board of Directors.
Certain inadvertent acquisitions will not result in a person's becoming an
Acquiring Person if the person promptly divests itself of sufficient Common
Shares.
Until the Distribution Date, (a) the Rights will be evidenced by Common
Share certificates and both will be transferred with and only with such Common
Share certificates, (b) Common Share certificates will contain a notation
incorporating the Rights Agreement by reference and (c) the surrender for
transfer of any certificate for Common Shares will also constitute the transfer
of the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on September 30, 2009, unless earlier redeemed
or exchanged
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by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Common Shares as of the close of business
on the Distribution Date and, from and after the Distribution Date, the separate
Rights Certificates alone will represent the Rights. All Common Shares issued
prior to the Distribution Date will be issued with the appropriate Rights.
Common Shares issued after the Distribution Date in connection with certain
employee benefit plans or upon conversion of certain securities will be issued
with appropriate Rights. Except as otherwise determined by the Board of
Directors, no other Common Shares issued after the Distribution Date will be
issued with Rights.
In the event (a "Flip-In Event") that a person becomes an Acquiring
Person (except pursuant to (1) a tender or exchange offer for all outstanding
Common Shares or (2) an issuance of Common Shares in connection with a merger,
consolidation or acquisition, in both cases at a price and on terms that a
majority of the independent directors of the Company determines to be fair to
and otherwise in the best interests of the Company and its shareholders (a
"Permitted Offer")), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, a number of Common Shares (or, in certain
circumstances, cash, property or other securities of the Company) having a
Current Market Price (as defined in the Rights Agreement) equal to approximately
two times the exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of any Triggering Event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by or transferred to an Acquiring Person (or by certain related parties)
will be null and void in the circumstances set forth in the Rights Agreement.
However, Rights are not exercisable following the occurrence of any Flip-In
Event until such time as the Rights are no longer redeemable by the Company as
set forth below.
For example, at an exercise price of $60.00 per Right, each Right
following a Flip-In Event would entitle its holder to purchase $120.00 worth of
Common Shares (or other consideration, as noted above) for $60.00. Assuming that
the Common Shares had a per share value of $10.00 at such time, the holder of
each valid Right would be entitled to purchase 12 Common Shares for $60.00.
Alternatively, the Company could permit the holder to surrender each Right in
exchange for shares or cash equivalent to six Common Shares (with a value of
$60.00) without the payment of any consideration other than the surrender of the
Right.
In the event (a "Flip-Over Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer) or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights that are
voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of common shares of the acquiring company having a Current
Market Price equal to two times the exercise price of the Right. Flip-In Events
and Flip-Over Events are collectively referred to as
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"Triggering Events."
The number of outstanding Rights associated with a Common Share, or the
number of Fractional Common Shares issuable upon exercise of a Right and the
Purchase Price, are subject to adjustment in the event of a dividend on, or a
subdivision, combination or reclassification of, the Common Shares occurring
prior to the Distribution Date. The Purchase Price payable, and the number of
Fractional Common Shares or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution in
the event of certain transactions affecting the Common Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Common Shares that are not integral multiples of a
Fractional Common Share are required to be issued and, in lieu thereof, an
adjustment in cash may be made based on the market price of the Common Shares on
the last trading date prior to the date of exercise or certificates of scrip or
warrants may be issued entitling the holders thereof to receive a full share in
return for such scrip or warrants aggregating a full share. Pursuant to the
Rights Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole Common Shares will be issued.
At any time until the tenth day following a Share Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right, payable, at the option of the Company, in cash, Common Shares or such
other consideration as the Board of Directors may determine. Immediately upon
the effectiveness of the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $.01 per Right redemption price.
At any time after the occurrence of a Flip-In Event and prior to a
person's becoming the beneficial owner of 50% or more of the Common Shares then
outstanding or the occurrence of a Flip-Over Event, the Company may exchange the
Rights (other than Rights owned by an Acquiring Person or an Affiliate or an
associate of an Acquiring Person, which will have become void), in whole or in
part, at an exchange ratio of one Common Share, and/or other equity securities
deemed to have the same value as one Common Share, per Right, subject to
adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights should not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
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exercisable for Common Shares (or other consideration) of the Company or for the
common shares of the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph.
Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company as long as the
Rights are redeemable. Thereafter, the provisions of the Rights Agreement other
than the redemption price may be amended by the Board of Directors in order to
cure any ambiguity, defect or inconsistency, to make changes that do not
materially adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; PROVIDED, HOWEVER, that no amendment to lengthen the
time period governing redemption shall be made at such time as the Rights are
not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired. However, the Rights should not interfere with
any merger or other business combination approved by the Company because the
Rights are redeemable under certain circumstances.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to this Registration Statement on Form 8-A.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
Item 2. EXHIBITS.
1. Rights Agreement, dated as of September 2, 1999, between
Capital Environmental Resource Inc. and American Stock
Transfer & Trust Company, as Rights Agent, which includes, as
Exhibit A thereto, the form of Rights Certificate and as
Exhibit B thereto the form of Summary of Rights to Purchase
Common Shares.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
CAPITAL ENVIRONMENTAL RESOURCE INC.
Date: September 7, 1999 By: /s/ Tony Busseri
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Tony Busseri
Chief Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description
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1. Rights Agreement, dated as of September 2, 1999,
between Capital Environmental Resource Inc. and
American Stock Transfer & Trust Company, as Rights
Agent, which includes, as Exhibit B thereto, the form
of Rights Certificate and as Exhibit B thereto the form
of Summary of Rights to Purchase Common Shares.
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CAPITAL ENVIRONMENTAL RESOURCE INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
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RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 2, 1999
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TABLE OF CONTENTS
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Section 1. Certain Definitions.............................................................................1
Section 2. Appointment of Rights Agent.....................................................................8
Section 3. Issue of Rights Certificates....................................................................8
Section 4. Form of Rights Certificates....................................................................10
Section 5. Countersignature and Registration..............................................................11
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates..............................11
Section 7. Exercise of Rights; Purchase Price.............................................................12
Section 8. Cancellation and Destruction of Rights Certificates............................................14
Section 9. Reservation and Availability of Common Shares..................................................14
Section 10. Common Shares Record Date......................................................................16
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights....................16
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................25
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................25
Section 14. Fractional Rights and Fractional Shares........................................................28
Section 15. Rights of Action...............................................................................29
Section 16. Agreement of Rights Holders....................................................................29
Section 17. Rights Certificate Holder Not Deemed a Shareholder.............................................30
Section 18. Concerning the Rights Agent....................................................................30
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................31
</TABLE>
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Section 20. Duties of Rights Agent.........................................................................31
Section 21. Change of Rights Agent.........................................................................33
Section 22. Issuance of New Rights Certificates............................................................34
Section 23. Redemption and Termination.....................................................................35
Section 24. Exchange.......................................................................................35
Section 25. Notice of Certain Events.......................................................................37
Section 26. Notices........................................................................................37
Section 27. Supplements and Amendments.....................................................................38
Section 28. Successors.....................................................................................39
Section 29. Determinations and Actions by the Board of Directors, Etc......................................39
Section 30. Benefits of This Agreement.....................................................................39
Section 31. Severability...................................................................................39
Section 32. Governing Law..................................................................................40
Section 33. Counterparts...................................................................................40
Section 34. Descriptive Headings...........................................................................40
Exhibit A - Form of Rights Certificate
Exhibit B - Summary of Rights to Purchase Common Shares
</TABLE>
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RIGHTS AGREEMENT
This Rights Agreement, dated as of September 2, 1999
(the "Agreement"), between Capital Environmental Resource Inc., an Ontario
corporation (the "Company"), and American Stock Transfer & Trust Company (the
"Rights Agent"),
WITNESSETH:
WHEREAS, on September 2, 1999 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company authorized the
issuance of one right ("Right") for each Common Share (as hereinafter defined)
of the Company outstanding at the close of business on September 2, 1999 (the
"Record Date"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each Common Share issued (whether originally issued or delivered from the
Company's treasury) between the Record Date and the earlier of the Distribution
Date (as hereinafter defined) and the Expiration Date (as hereinafter defined),
and, in certain circumstances provided for in Section 22 hereof, after the
Distribution Date, each Right initially representing the right to purchase one
Fractional Common Share (as hereinafter defined) of the Company upon the terms
and subject to the conditions hereinafter set forth;
WHEREAS, the Rights will be held by the Rights Agent under
this Agreement as trustee for the shareholders of the Company until the
Distribution Date; and
WHEREAS, the Board of Directors of the Company has considered
whether approval of this Agreement and the distribution of the Rights is in the
best interests of the Company and all other pertinent factors; and
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Shares then outstanding, PROVIDED,
HOWEVER, that a Person shall not be or become an Acquiring Person if such
Person, together with its Affiliates and Associates, shall become the Beneficial
Owner of 20% or more of the Common Shares then outstanding solely as a result of
a reduction in the number of Common Shares outstanding due to the repurchase of
Common Shares by the Company, unless and until such time as such Person or any
Affiliate or Associate of such Person shall purchase or otherwise become
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the Beneficial Owner of additional Common Shares constituting 1% or more of the
then outstanding Common Shares or any other Person (or Persons) who is (or
collectively are) the Beneficial Owner of Common Shares constituting 1% or more
of the then outstanding Common Shares shall become an Affiliate or Associate of
such Person, unless, in either such case, such Person, together with all
Affiliates and Associates of such Person, is not then the Beneficial Owner of
20% or more of the Common Shares then outstanding; and PROVIDED, FURTHER, that
if the Board of Directors, with the concurrence of a majority of the members of
the Board of Directors who are not, and are not representatives of, nominees,
Affiliates or Associates of, such Person or an Acquiring Person, determines in
good faith that a Person that would otherwise be an "Acquiring Person" has
become such inadvertently (including, without limitation, because (i) such
Person was unaware that it beneficially owned a percentage of Common Shares that
would otherwise cause such Person to be an "Acquiring Person" or (ii) such
Person was aware of the extent of its Beneficial Ownership of Common Shares but
had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or influencing control of
the Company, and if such Person as promptly as practicable divested or divests
itself of Beneficial Ownership of a sufficient number of Common Shares, so that
such Person would no longer be an "Acquiring Person," then such Person shall not
be deemed to be or to have become an "Acquiring Person" for any purposes of this
Agreement.
Notwithstanding anything in this definition of "Acquiring
Person" to the contrary, (i) no Exempt Person shall be deemed to be or become an
"Acquiring Person" or an Affiliate or Associate of an Acquiring Person and (ii)
so long as the Existing Shareholder, together with its Affiliates and Associates
thereof, does not become the Beneficial Owner of 30% or more of the
Fully-Diluted Common Shares, the Existing Shareholder, together with its
Affiliates and Associates, shall not be or become an Acquiring Person.
At any time that the Rights are redeemable, the Board of
Directors may, generally or with respect to any specified Person or Persons,
determine to increase to a specified percentage greater than that set forth
herein or decrease to a specified percentage lower than that set forth herein or
determine a number of shares to be (but in no event less than or equal to the
percentage or number of Common Shares then beneficially owned by such Person),
the level of Beneficial Ownership of Common Shares at which a Person or such
Person or Persons becomes an Acquiring Person.
"Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
"Affiliate" shall mean a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"Associate" shall mean, with reference to any Person, (i) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a Subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any
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class of equity securities, (ii) any trust or other estate in which such Person
has a substantial beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity and (iii) any relative or spouse of
such Person, or any relative of such spouse, who has the same home as such
Person.
A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to
acquire (whether such right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an
event) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, other rights, warrants or options, or otherwise; PROVIDED,
HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," (A) securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event or (C)
securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) or (p) hereof in
connection with an adjustment made with respect to any Original Rights;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, is the "beneficial owner" of (as
determined pursuant to Rule 13d-3 under the Exchange Act as in effect
on the date of this Agreement) or otherwise has the right to vote or
dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy or consent given in response to a public
(I.E., not including a solicitation exempted by Rule 14a-2(b)(2) under
the Exchange Act as in effect on the date of this Agreement) proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions rules under the Exchange Act and (B) is not then
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by
(A) any other Person (or any Affiliate or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy or consent as
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described in the proviso to subparagraph (i) of this definition) or
disposing of any voting securities of the Company or (B) any group (as
that term is used in Rule 13d-5(b) under the Exchange Act) of which
such Person is a member;
PROVIDED, HOWEVER, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the "Beneficial Owner" of, or
to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting (including,
without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M promulgated under
the Exchange Act or to cover over-allotments created in connection with a public
offering) until the expiration of forty days after the date of such acquisition.
For purposes of this Agreement, "voting" a security shall include voting,
granting a proxy, acting by consent, making a request or demand relating to
corporate action (including, without limitation, calling a shareholder meeting)
or otherwise giving an authorization (within the meaning of Section 14(a) of the
Exchange Act as in effect on the date of this Agreement) in respect of such
security.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York or the
Province of Ontario are authorized or obligated by law or executive order to
close.
"close of business" on any given date shall mean 5:00 p.m.,
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 time, on the next succeeding
Business Day.
"Closing Price" of a security for any day shall mean the last
sale price, regular way, on such day or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, on such
day, in either case as reported in the principal transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if such security is not listed or
admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by NASDAQ or such other
self-regulatory organization or registered securities information processor or
alternative trading system (as such terms are used under the Exchange Act) that
then reports information concerning such security, or, if sales price
information is not so reported, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by NASDAQ or such other
entity, or, if on such day such security is not quoted by any such entity, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such security selected by the Board of Directors
of the Company. If on such day no market maker is making a market in such
security, the fair value of such security on such day as determined in good
faith by the Board of Directors of the Company shall be used.
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"Common Share Value Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
"Common Shares" shall mean a share of Common Shares, no par
value per share, of the Company and, to the extent that there are not a
sufficient number of Common Shares authorized to permit the full exercise of the
Rights, shares of any other class or series of the Company designated for such
purpose containing terms substantially similar to the terms of the Common
Shares, except that "common shares" when used with reference to equity interests
issued by any Person other than the Company shall mean the capital shares of
such Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
"Company" shall mean Capital Environmental Resource Inc.,
until a successor Person shall have become such or until a Principal Party shall
assume, and thereafter be liable for, all obligations and duties of Capital
Environmental Resource Inc. hereunder, pursuant to the applicable provisions of
this Agreement, and thereafter "Company" shall mean such successor Person or
Principal Party.
"Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
"Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Distribution Date" shall mean the earlier of (i) the close of
business on the tenth day (or, if such Share Acquisition Date results from the
consummation of a Permitted Offer, such later date as may be determined by the
Company's Board of Directors as set forth below before the Distribution Date
occurs) after the Share Acquisition Date (or, if the tenth day after the Share
Acquisition Date occurs before the Record Date, the close of business on the
Record Date) or (ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Company's Board of Directors as set forth
below before the Distribution Date occurs) after the date that a tender offer or
exchange offer by any Person (other than any Exempt Person) is first published
or sent or given within the meaning of Rule 14d-2(a) under the Exchange Act as
then in effect, if upon consummation thereof, such Person would be an Acquiring
Person, other than a tender or exchange offer that is determined before the
Distribution Date occurs to be a Permitted Offer. The Board of Directors of the
Company may, to the extent set forth in the preceding sentence, defer the date
set forth in clause (i) or (ii) of the preceding sentence to a specified later
date or to an unspecified later date to be determined by a subsequent action or
event (but in no event to a date later than the close of business on the tenth
day after the first occurrence of a Triggering Event).
"Equivalent Common Shares" shall have the meaning set forth in
Section 11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934
of the United States, as amended.
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"Exchange Ratio" shall have the meaning set forth in Section
24 hereof.
"Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, and any Person organized, appointed or established by the Company for
or pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or any
Subsidiary of the Company.
"Existing Shareholders" shall mean Environmental Opportunities
Fund I, Environmental Opportunities Fund II and Sanders Morris Mundy Inc. and
any Affiliate or Associate thereof.
"Expiration Date" shall mean the earliest of (i) the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, (iii) the time at which the Rights expire pursuant to Section
13(d) hereof and (iv) the time at which all Rights then outstanding and
exercisable are exchanged pursuant to Section 24 hereof.
"Final Expiration Date" shall mean the close of business on
September 30, 2009.
"Flip-In Event" shall mean an event described in Section 11(a)
(ii) hereof.
"Flip-In Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Flip-Over Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof, that occurs from and after the time
when an Acquiring Person has become such, but excluding any transaction
described in Section 13(d) hereof that causes the Rights to expire.
"Fractional Common Share" with respect to the Common Shares
shall mean one one-hundredth of a Common Share.
"Fully-Diluted Common Shares" means, at any time of
determination, all then outstanding Common Shares plus (without duplication) all
Common Shares issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the conversion, exercise or exchange of all
then outstanding securities that are convertible into, exercisable for or
exchangeable into, directly or indirectly, Common Shares.
"NASDAQ" shall mean the trading system operated by the NASDAQ
Stock Market, Inc.
"Original Rights" shall have the meaning set forth in the
definition of "Beneficial Owner."
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"Permitted Offer" shall mean (i) a tender offer or an exchange
offer for all outstanding Common Shares or (ii) an issuance of Common Shares or
other equity securities of the Company in connection with a merger,
consolidation or acquisition, in both cases at a price and on terms determined
by at least a majority of the members of the Board of Directors, and concurred
in by a majority of those members who are not officers or employees of the
Company and who are not, and are not representatives, Affiliates or Associates
of, an Acquiring Person or the person making the offer in the case of (i) or the
entity the Company is seeking to merge or consolidate with or acquire, as the
case may be, in the case of (ii), after receiving advice from one or more
investment banking firms, to be (a) at a price and on terms that are fair to
shareholders (taking into account all factors that such members of the Board
deem relevant including, without limitation, prices that could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the Company
and its shareholders.
"Person" shall mean any individual, firm, corporation,
partnership, limited liability company, association, trust, unincorporated
organization or other entity.
"Principal Party" shall have the meaning set forth in Section
13(b) hereof.
"Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
"Record Date" shall have the meaning set forth in the Recitals
at the beginning of this Agreement.
"Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
"Right" shall have the meaning set forth in the Recitals at
the beginning of this Agreement.
"Rights Agent" shall mean American Stock Transfer & Trust
Company, until a successor Rights Agent shall have become such pursuant to the
applicable provisions hereof, and thereafter "Rights Agent"shall mean such
successor Rights Agent. If at any time there is more than one Person appointed
by the Company as Rights Agent pursuant to the applicable provisions of this
Agreement, "Rights Agent" shall mean and include each such Person.
"Rights Certificates" shall mean the certificates evidencing
the Rights.
"Rights Dividend Declaration Date" shall have the meaning set
forth in the Recitals at the beginning of this Agreement.
"Securities Act" shall mean the Securities Act of 1933 of the
United States, as amended.
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"Share Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition and Section 23, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
"Spread" shall have the meaning set forth in Section 11(a)
(iii) hereof.
"Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights to
Purchase Common Shares sent pursuant to Section 3(b) hereof.
"Trading Day" with respect to a security shall mean a day on
which the principal national securities exchange on which such security is
listed or admitted to trading is open for the transaction of business, or, if
such security is not listed or admitted to trading on any national securities
exchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
such security is not so quoted, a Business Day.
"Triggering Event" shall mean any Flip-In Event or any
Flip-Over Event.
Unless otherwise specified, where reference is made in this
Agreement to sections of, and the General Rules and Regulations under, the
Exchange Act, such reference shall mean such sections and rules as amended from
time to time and any successor provisions thereto.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and to take certain
actions in respect of the holders of the Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the Distribution Date, (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Shares registered in the names of the holders of Common
Shares (which certificates for Common Shares shall be deemed also to be
certificates for beneficial interests in the Rights) and not by separate
certificates, and (y) the Rights and beneficial interests therein will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company). As soon as practicable after the
Distribution
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Date, the Rights Agent will send by first-class, insured, postage prepaid mail,
to each record holder of Common Shares as of the close of business on the
Distribution Date (other than any Person referred to in the first sentence of
Section 7(e)), at the address of such holder shown on the records of the
Company, one or more Rights Certificates, evidencing one Right for each Common
Share so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Common Shares, in
substantially the form attached hereto as Exhibit B, by first-class, postage
prepaid mail, to each record holder of Common Shares as of the close of business
on the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as of the
Record Date, until the Distribution Date or the earlier surrender for transfer
thereof or the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates for
Common Shares together with the Summary of Rights to Purchase Common Shares, and
the registered holders of the Common Shares shall also be the registered holders
of the beneficial interests in the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any of the
certificates for Common Shares in respect of which Rights have been issued, with
or without a copy of the Summary of Rights to Purchase Common Shares, shall also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificates.
(c) Rights shall be issued in respect of all Common Shares
that are issued (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date or, in certain circumstances provided in Section 22
hereof, after the Distribution Date. Certificates issued for Common Shares that
shall so become outstanding or shall be transferred or exchanged after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date shall also be deemed to be certificates for Rights, and shall bear the
following legend (which legend may be modified as necessary on the certificates
for the Common Shares to reflect the application of this Agreement to the Common
Shares):
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between Capital
Environmental Resource Inc. (the "Company") and American Stock Transfer
& Trust Company (the "Rights Agent") as it may from time to time be
supplemented or amended (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may be exchanged, may expire or may be evidenced by separate
certificates and
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<PAGE>
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of
a written request therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO
ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), AND CERTAIN TRANSFEREES THEREOF, WILL BECOME NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and registered holders of Common Shares shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Shares represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof), when, as and
if issued, shall be substantially in the form set forth in Exhibit A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or quotation system
on which the Rights may from time to time be listed or quoted, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever issued, shall be dated as of the Record Date and on their
face shall entitle the holders thereof to purchase such number of Fractional
Common Shares as shall be set forth therein at the price set forth therein (such
exercise price per Fractional Common Share (or, as set forth in this Agreement,
for other securities), the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by a Person
described in the first sentence of Section 7(e), and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any such Rights, shall contain (to the extent
feasible) the following legend, modified as applicable to apply to such Person:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring
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Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby
will have become null and void in the circumstances and with the effect
specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificate. The
Company shall give notice to the Rights Agent promptly after it becomes aware of
the existence of any Acquiring Person or any Associate or Affiliate thereof.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its Chief
Operating Officer, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof, which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the certificate number and the date of
each of the Rights Certificates.
Section 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e),
Section 13(d), Section 14 and Section 24 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates,
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<PAGE>
entitling the registered holder to purchase a like number of Fractional Common
Shares (or, following a Triggering Event, Common Shares) as the Rights
Certificate or Rights Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) thereof or of the Affiliates or Associates thereof as
the Company shall reasonably request. Thereupon the Rights Agent shall, subject
to Section 4(b), Section 7(e), Section 13(d), Section 14 and Section 24 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment by the holder 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 Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and 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 Rights
Certificate if mutilated, the Company will, subject to Section 4(b), Section
7(e), Section 13(d), Section 14 and Section 24, execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE.
(a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly completed and executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of Fractional Common Shares (or other securities,
cash or other assets, as the case may be) as to which such surrendered Rights
are then exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each Fractional Common Share
pursuant to the exercise of a Right shall initially be $60.00, and shall be
subject to adjustment from time to time as
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<PAGE>
provided in Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate on
the reverse side thereof duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per Fractional Common Share (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer tax,
the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly
(i)(A) requisition from any transfer agent of the Common Shares (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of Fractional Common Shares to be purchased,
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company, in its sole discretion, shall have
elected to deposit the Common Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent of
depositary receipts representing interests in such number of Common Shares as
are to be purchased (in which case certificates for the Common Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu 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 Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) may be made in cash or by certified check, cashier's or official bank
check or bank draft payable to the order of the Company or the Rights Agent. In
the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a) or
Section 13(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon exercise of
Rights, a number of Rights be exercised so that only whole Common Shares would
be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise fewer than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by or transferred to (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person other than any such Person that
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<PAGE>
became such pursuant to a Permitted Offer and the Board of Directors in good
faith determines was not involved in and did not cause or facilitate, directly
or indirectly, such Triggering Event, (ii) a direct or indirect transferee of
such Rights from such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after such Triggering Event or (iii) a direct or indirect
transferee of such Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with such Triggering Event and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from such Acquiring Person (or such Affiliate or Associate) to
holders of equity interests in such Acquiring Person (or such Affiliate or
Associate) or to any Person with whom such Acquiring Person (or such Affiliate
or Associate) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board of Directors
of the Company determines is part of a plan, arrangement or understanding that
has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise, and such Rights shall not be
transferable. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES. All Rights Certificates surrendered for the purpose of exercise,
transfer, split-up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF COMMON SHARES.
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(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common Shares,
the number of Common Shares that, as provided in this Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.
(b) So long as any Common Shares issuable and deliverable upon
the exercise of the Rights are listed on any national securities exchange or
quoted on any trading system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange, or quoted on such system, upon
official notice of issuance upon such exercise. Following the occurrence of a
Triggering Event, the Company will use its best efforts to list (or continue the
listing of) the Rights and the securities issuable and deliverable upon the
exercise of the Rights on one or more national securities exchanges or to cause
the Rights and the securities purchasable upon exercise of the Rights to be
reported by NASDAQ or such other transaction reporting system then in use.
(c) The Company shall use its best efforts to (i) prepare and
file, as soon as practicable following the first occurrence of a Flip-In Event
or, if applicable, as soon as practicable following the earliest date after the
first occurrence of a Flip-In Event on which the consideration to be delivered
by the Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) cause
such registration statement to become effective as soon as practicable after
such filing and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various States within the United States
in connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective. In addition, if the Company shall determine that the
Securities Act requires an effective registration statement under the Securities
Act following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as such a registration statement
has been declared effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights have been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law
or any required registration statement shall not have been declared effective.
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(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Fractional Common Shares
(and, following a Triggering Event, Common Shares) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all United States and Canadian federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for a number of
Fractional Common Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in respect of
any transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of Fractional Common Shares in respect of a
name other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for a number of Fractional Common Shares in a name other than that
of the registered holder upon the exercise of any Rights until such tax shall
have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. COMMON SHARES RECORD DATE. Each Person in whose
name any certificate for a number of Fractional Common Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such shares (fractional or otherwise) of Common Shares represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; PROVIDED, HOWEVER,
that if the date of such surrender and payment is a date upon which the Common
Shares transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate shall be dated, the next succeeding Business Day on which the
Common Shares transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall
not be entitled to any rights of a shareholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares or
other securities subject to purchase upon exercise of each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company shall at any time
after the Rights Dividend Declaration Date (A) declare a dividend on
the outstanding Common Shares payable in
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Common Shares, (B) subdivide the outstanding Common Shares, (C) combine
the outstanding Common Shares into a smaller number of Common Shares or
(D) otherwise reclassify the outstanding Common Shares (including any
such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e) hereof,
the Purchase Price in effect at the time of the record date for such
dividend or at the time of the effective date of such subdivision,
combination or reclassification, and the number and kind of Common
Shares issuable on such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of Common Shares which, if such Right had
been exercised immediately prior to such date and at a time when the
Common Shares transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event
occurs that 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 (such event being hereinafter referred to as a "Flip-In
Event") at any time after the Rights Dividend Declaration Date: (A) any
Person shall become an Acquiring Person, unless the event causing such
Person to become an Acquiring Person is (1) a Flip-Over Event or (2) an
acquisition of Common Shares or other equity securities of the Company
pursuant to a Permitted Offer (PROVIDED, HOWEVER, that this clause (2)
shall cease to apply if such Acquiring Person thereafter becomes the
Beneficial Owner of any additional Common Shares or other equity
securities of the Company other than pursuant to such Permitted Offer
or a transaction set forth in Section 13(a) or 13(d) hereof); (B) an
Acquiring Person shall merge into the Company or otherwise combine with
the Company and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Shares of the
Company or other equity securities of the Company shall remain
outstanding; (C) an Acquiring Person shall, in one transaction or a
series of transactions, transfer any assets to the Company or to any of
its Subsidiaries in exchange (in whole or in part) for Common Shares,
for shares of other equity securities of the Company, or for securities
exercisable for or convertible into shares of equity securities of the
Company (Common Shares or otherwise) or otherwise obtain from the
Company, with or without consideration, any additional shares of such
equity securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a pro rata
distribution to all holders of Common Shares); (D) an Acquiring Person
shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of assets in one transaction or a series
of transactions, to, from or with (as the case may be) the Company or
any of its Subsidiaries, on terms and conditions less favorable to the
Company than the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, other than pursuant to a
Flip-Over Event; (E) an Acquiring Person shall sell, purchase,
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lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of assets having an aggregate fair market value of more than
$5,000,000 in one transaction or a series of transactions, to, from or
with (as the case may be) the Company or any of the Company's
Subsidiaries (other than incidental to the lines of business, if any,
engaged in as of the date hereof between the Company and such Acquiring
Person or Associate or Affiliate), other than pursuant to a Flip-Over
Event; (F) an Acquiring Person shall receive any compensation from the
Company or any of the Company's Subsidiaries other than compensation
for full-time employment as a regular employee at rates in accordance
with the Company's (or its Subsidiaries') past practices; (G) an
Acquiring Person shall receive the benefit, directly or indirectly
(except proportionately as a shareholder and except if resulting from a
requirement of law or governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or
other tax advantage provided by the Company or any of its Subsidiaries;
or (H) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse share split),
or recapitalization of the Company, or any merger or consolidation of
the Company with any of its Subsidiaries or any other transaction or
series of transactions involving the Company or any of its
Subsidiaries, other than a Flip-Over Event or series of such Events
(whether or not with or into or otherwise involving an Acquiring
Person) that has the effect, directly or indirectly, of increasing by
more than 1% the proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its Subsidiaries
that is directly or indirectly beneficially owned by any Acquiring
Person or any Associate or Affiliate of any Acquiring Person, then (x)
the Purchase Price shall be adjusted to be the Purchase Price
immediately prior to the first occurrence of a Flip-In Event multiplied
by the number of Fractional Common Shares for which a Right was
exercisable immediately prior to such first occurrence and (y) each
holder of a Right (except as provided below in Section 11(a)(iii) and
in Section 7(e) hereof) shall thereafter have the right to receive,
upon exercise thereof at a price equal to the Purchase Price in
accordance with the terms of this Agreement such number of Common
Shares as shall equal the result obtained by dividing the Purchase
Price by 50% of the Current Market Price per share of Common Shares on
the date of such first occurrence (such number of shares, the
"Adjustment Shares"); PROVIDED that the Purchase Price and the number
of Adjustment Shares shall be further adjusted as provided in this
Agreement to reflect any events occurring after the date of such first
occurrence.
(iii) In the event that the number of Common Shares
that are authorized by the Company's articles of incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (ii) of
this Section 11(a), the Company shall, to the extent permitted by
applicable law and regulation, (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a Right
(computed using the Current Market Price used to determine the number
of Adjustment Shares) (the "Current Value") over (2) the Purchase Price
(such excess is herein referred to as
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<PAGE>
the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon the exercise of
the Rights and 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, preferred shares, or units of
preferred shares that the Board of Directors of the Company has
determined to have the same value as Common Shares (such preferred
shares or other equity securities of the Company are herein referred to
as "Common Share Value 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, where such
aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company;
PROVIDED, HOWEVER, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Flip-In Event and
(y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to
herein as 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
Directors of the Company shall determine in good faith that it is
likely that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set
forth above may be extended to the extent necessary, but not more than
90 days after the Flip-In Trigger Date, in order that the Company may
seek shareholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution Period").
To the extent that the Company or the Board of Directors determines
that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, 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 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.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Shares (or shares having the same
rights, privileges and preferences as the Common Shares ("Equivalent Common
Shares")) or securities convertible into Common Shares or Equivalent Common
Shares at a price per Common Share or per Equivalent Common Share (or having a
conversion price per share, if a security convertible into Common Shares or
Equivalent Common Shares) less than the Current Market Price per Common Share on
such record date, the Purchase Price to be in effect after such record date
shall be determined
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<PAGE>
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 Common Shares
outstanding on such record date, plus the number of Common Shares that the
aggregate offering price of the total number of Common Shares and/or Equivalent
Common Shares so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional Common Shares
and/or Equivalent Common Shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery of
consideration, part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Common 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 or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price that would then be in effect if
such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Common Shares, but
including any dividend payable in shares other than Common 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 Current Market
Price per Common Share on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a Common Share and the denominator of which shall be such
Current Market Price per Common Share. 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 be adjusted to be the
Purchase Price that would have been in effect if such record date had not been
fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per Common Share on any date shall be deemed to be the average of the
daily Closing Prices per Common Share for the 30 consecutive Trading Days
immediately prior to such date, and for purposes of computations made pursuant
to Section 11(a)(iii) hereof, the "Current Market Price" per Common Share on any
date shall be deemed to be the average of the daily Closing Prices per Common
Share for the 10 consecutive Trading Days
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immediately following such date; PROVIDED, HOWEVER, that in the event that the
Current Market Price per Common Share is determined during a period following
the announcement of (A) a dividend or distribution on such Common Shares other
than a regular quarterly cash dividend or the dividend of the Rights or (B) any
subdivision, combination or reclassification of such Common Shares and the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, shall not have occurred prior to
the commencement of the requisite 30 Trading Day or 10 Trading Day period, as
set forth above, then, and in each such case, the Current Market Price shall be
properly adjusted to take into account ex-dividend trading. If the Common Shares
are not publicly held or so listed or traded, "Current Market Price" per Common
Share shall mean the fair value per Common Share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, 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 that 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-hundredth of a Fractional Common Share or
other share. 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 mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive in respect of such Right any shares of the
Company other than Common Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof 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 Common Shares
contained in Sections 11(a), (b), (c), (e), (f), (g), (h), (i), (j), (k), (m)
and (q) hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Common 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 Fractional Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Fractional Common Shares (calculated to the nearest one-hundredth of a
Fractional Common Share) obtained by (i)
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<PAGE>
multiplying (x) the number of Fractional Common Shares covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Rights in lieu of any
adjustment in the number of Fractional Common Shares purchasable upon the
exercise of Rights. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Fractional Common Shares
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-hundredth 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 Rights Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Rights Certificates
have been issued, 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 Rights Certificates on such record date
Rights 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 Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights 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 Fractional Common Shares issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Fractional Common Share and the
number of Fractional Common Shares that were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, or the stated
capital of the number of Fractional Common Shares or other securities issuable
upon exercise of a Right, the Company shall take any corporate action that may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue
22
<PAGE>
fully paid and nonassessable such number of Common Shares or other securities 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 issuance to the holder of any Right exercised after such record date
the number of Fractional Common Shares and other capital or securities of the
Company, if any, issuable upon such exercise over and above the number of
Fractional Common Shares and other shares 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 (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Shares, (ii) issuance wholly for cash
of any Common Shares at less than the Current Market Price, (iii) issuance
wholly for cash of Common Shares or securities that by their terms are
convertible into or exchangeable for Common Shares, (iv) share dividends or (v)
issuance of rights, options or warrants referred to in this Section 11 hereafter
made by the Company to holders of its Common Shares shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, at any
time that there is an Acquiring Person, (i) consolidate with any other Person,
(ii) merge with or into any other Person or (iii) sell, lease or transfer (or
permit one or more Subsidiaries to sell, lease or transfer), in one transaction
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons, if (x) at the time of or
immediately after such consolidation, merger, sale, lease or transfer there are
any rights, warrants or other instruments or securities of the Company or any
other Person outstanding or agreements, arrangements or understandings in effect
that would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights, (y) prior to, simultaneously with or immediately
after such consolidation, merger, sale, lease or transfer, the shareholders or
other equity owners of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates, or (z) the identity, form or nature of organization of the
Principal Party (including without limitation the selection of the Person that
will be the Principal Party as a result of the Company's entering into one or
more consolidations, mergers, sales, leases, transfers or transactions with more
than one party) would preclude or limit the exercise of Rights or otherwise
diminish substantially or eliminate the benefits intended to be afforded by the
Rights.
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<PAGE>
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if the
purpose of such action is to, or if at the time such action is taken it is
reasonably foreseeable that such action will, diminish substantially or
eliminate the benefits intended to be afforded by the Rights, other than Rights
that have become null and void pursuant to Section 7(e) hereof.
(p) Notwithstanding Section 3(c) hereof or any other provision
of this Agreement to the contrary, in the event that the Company shall at any
time after the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, (iii) combine the
outstanding Common Shares into a smaller number of shares or (iv) otherwise
reclassify the outstanding Common Shares, (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), the number of Rights associated with each
Common Share then outstanding or issued or delivered thereafter but prior to the
Distribution Date shall be proportionately adjusted so that the number of Rights
thereafter associated with each Common Share following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction (the "Adjustment
Fraction") the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of Common Shares outstanding immediately
following the occurrence of such event. In lieu of such adjustment in the number
of Rights associated with each Common Share, the Company may elect to adjust the
number of Fractional Common Shares purchasable upon the exercise of one Right
and the Purchase Price. If the Company makes such election, the number of Rights
associated with each Common Share shall remain unchanged, and the number of
Fractional Common Shares purchasable upon exercise of one Right and the Purchase
Price shall be proportionately adjusted so that (i) the number of Fractional
Common Shares purchasable upon exercise of a Right following such adjustment
shall equal the product of the number of Fractional Common Shares purchasable
upon exercise of a Right immediately prior to such adjustment multiplied by the
Adjustment Fraction and (ii) the Purchase Price following such adjustment shall
equal the product of the Purchase Price immediately prior to such adjustment
multiplied by the Adjustment Fraction.
(q) In the event that the Rights become exercisable following
a Flip-In Event, the Company may permit the Rights, subject to Section 7(e)
hereof, to be exercised for 50% of the Common Shares (or cash or other
securities or assets to be substituted for the Adjustment Shares pursuant to
subsection (a)(iii) that would otherwise be purchasable under subsection (a), in
consideration of the surrender to the Company of the Rights so exercised and
without other payment of the Purchase Price. Rights exercised under this
subsection (q) shall be deemed to have been exercised in full and shall be
canceled.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly
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<PAGE>
prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Common Shares, a copy of such certificate
and (c) mail a brief summary thereof to each registered holder of a Rights
Certificate (or, if prior to the Distribution Date, to each registered holder of
a certificate representing Common Shares) in accordance with Section 26 hereof.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) In the event that, from and after the time an Acquiring
Person has become such, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person, and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger, and, in connection with such consolidation or
merger, all or part of the outstanding Common Shares shall be changed into or
exchanged for shares or other securities of the Company or any other Person or
cash or any other property or (z) the Company shall sell, lease or otherwise
transfer (or one or more of its Subsidiaries shall sell, lease or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any wholly owned Subsidiary of the Company or any
combination thereof in one or more transactions each of which complies (and all
of which together comply) with Section 11(o) hereof, with each such event set
forth on clause (x), (y) or (z) of this Section 13(a) being hereinafter referred
to as a "Flip-Over Event"), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made so that:
(i) the Purchase Price shall be adjusted to be the Purchase Price immediately
prior to the first occurrence of a Triggering Event multiplied by the number of
Fractional Common Shares for which a Right was exercisable immediately prior to
such first occurrence; (ii) on and after the Distribution Date, each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the Purchase Price in accordance
with the terms of this Agreement, in lieu of Common Shares of the Company, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradeable common shares of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by dividing the
Purchase Price by 50% of the Current Market Price per share of the common shares
of such Principal Party on the date of consummation of such Flip-Over Event;
PROVIDED that the Purchase Price and the number of common shares of such
Principal Party issuable upon exercise of each Right shall be further adjusted
as provided in this Agreement to reflect any events occurring after the date of
such first occurrence of a Triggering Event or after the date of such Flip-Over
Event, as applicable; (iii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Flip-Over Event, all the obligations and
duties of the Company pursuant to this Agreement; (iv) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply
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<PAGE>
only to such Principal Party following the first occurrence of a Flip-Over
Event; (v) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its common
shares) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its common shares thereafter
deliverable upon the exercise of the Rights; and (vi) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any Flip-Over
Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer the common shares of which has the greatest
aggregate market value, or (B) if no securities are so issued, (x) the
Person that survives such consolidation or is the other party to the
merger and survives such merger, or, if there is more than one such
Person, the Person the common shares of which has the greatest
aggregate market value or (y) if the Person that is the other party to
the merger does not survive the merger, the Person that does survive
the merger (including the Company if it survives); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred, or if the
Person receiving the greatest portion of the assets or earning power
cannot be determined, the Person the common shares of which has the
greatest aggregate market value;
PROVIDED, HOWEVER, that in any such case, 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 if (1)
such Person is a direct or indirect Subsidiary of another Person the common
shares of which are and have been so registered, "Principal Party" shall refer
to such other Person; (2) such Person is a Subsidiary, directly or indirectly,
of more than one Person, the common shares of all 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; and (3)
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
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(c) The Company shall not consummate any Flip-Over Event
unless each Principal Party (or Person that may become a Principal Party as a
result of such Flip-Over Event) shall have a sufficient number authorized of its
common shares that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and each such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of such Flip-Over Event, the
Principal Party at its own expense will
(i) prepare and file a registration statement under the
Securities 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 (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the
"blue sky" laws of such jurisdictions as may be necessary or
appropriate;
(iii) use its best efforts, if the common shares of the
Principal Party are or shall become listed on a national securities
exchange, to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on such securities
exchange and, if the common shares of the Principal Party shall not be
listed on a national securities exchange, to cause the Rights and the
securities purchasable upon exercise of the Rights to be reported by
NASDAQ or such other transaction reporting system then in use; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Flip-Over Event
shall occur at any time after the occurrence of a Flip-In Event, the Rights that
have not theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a transaction described in
clauses (x) and (y) of Section 13(a) if (i) such transaction is consummated with
a Person or Persons who acquired Common Shares pursuant to a Permitted Offer (or
a wholly owned subsidiary of any such Person or Persons), (ii) the price per
Common Share offered in such transaction is not less than the price per Common
Share paid to all holders of Common Shares whose shares were purchased pursuant
to such Permitted Offer and (iii) the form of
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consideration being offered to the remaining holders of Common Shares pursuant
to such transaction is the same as the form of consideration paid pursuant to
such Permitted Offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
(e) In the event that the Rights become exercisable under
Section 13(a) (except as provided in Section 13(d)), the Company may agree with
the Principal Party that the Principal Party shall permit the Rights to be
exercised for 50% of the Common Shares of the Principal Party that would
otherwise be purchasable under Section 13(a), in consideration of the surrender
to the Principal Party, as the successor to the Company under Section 13(a), of
the Rights so exercised and without other payment of the Purchase Price. Rights
exercised under this Section 13(e) shall be deemed to have been exercised in
full and shall be cancelled.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates or scrip evidencing fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Closing Price of one Right for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of
Common Shares (other than, except as provided in Section 7(c) hereof, fractions
that are integral multiples of a Fractional Common Share) upon exercise of the
Rights or to distribute certificates or scrip evidencing fractional shares of
Common Shares (other than, except as provided in Section 7(c) hereof, fractions
that are integral multiples of a Fractional Common Share). Interests in
fractions of Common Shares in integral multiples of a Fractional Common Share
may, at the election of the Company in its sole discretion, 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 Common
Shares represented by such depositary receipts. In lieu of fractional shares of
Common Shares that are not integral multiples of a Fractional Common Share, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of one one-hundredth of the Closing Price of one Common Share 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 permitted by this Section 14.
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Section 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, other than rights of action vested in the Rights Agent
pursuant to Section 18 hereof, are vested in the respective registered holders
of the Rights and, where applicable, the Company; and any registered holder of
any Rights without the consent of the Rights Agent or of the holders of any
other Rights, may, in such holder's own behalf and for such holder's own benefit
and the benefit of other holders of Rights, 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 such holder's Rights
evidenced by such Rights Certificate in the manner provided in such Rights
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 shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
After a Triggering Event, holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred by them in
any action to enforce the provisions of this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by Rights Certificates and will be transferable only in connection
with the transfer of Common Shares;
(b) after the Distribution Date, the Rights Certificates will
be transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof and the
certificate contained therein duly completed and fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Share certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights 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 its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or
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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. RIGHTS CERTIFICATE HOLDER NOT DEEMED A
SHAREHOLDER. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number of
Fractional Common Shares or any other securities of the Company that may at any
time be issuable upon the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other reasonable 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
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.
(b) 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 Rights
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it, after proper inquiry or examination, to be
genuine and to be signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any
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corporation succeeding to the corporate trust or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; PROVIDED, HOWEVER, 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
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights 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
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete 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 (including, without limitation, the identity of any Acquiring Person and
the determination of Current Market Price) be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President, the Chief Financial Officer, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant 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.
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(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct. In no event shall the Rights
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.
(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
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), 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 Rights Certificate (except its counter signature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of actual knowledge of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Common
Shares or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Common Shares or other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President, the Chief Financial Officer, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or
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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, omission, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company resulting from
any such act, omission, default, neglect or misconduct; PROVIDED, HOWEVER, that
reasonable care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Common Shares, by registered or certified mail, and to the
registered holders, if any, of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent (with or
without cause) upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares, by registered or certified mail, and to the registered holders of
the Rights Certificates, if any, 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. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after 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 registered holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the Rights Agent or the registered holder
of any Rights Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of the State
of New York (or of any other State of the
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United States so long as such corporation is authorized to conduct a stock
transfer or corporate trust business in the State of New York), in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by United
States Federal or State authority and which has at the time of its appointment
as Rights Agent a combined capital and surplus of at least $100,000,000 or (b)
an affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares, and mail
a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and prior to the Expiration Date, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of options
or under any employee plan or arrangement granted or awarded on or prior to the
Distribution Date, or upon the exercise, conversion or exchange of securities
issued by the Company on or prior to the Distribution Date, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; PROVIDED, HOWEVER, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the close of business on the tenth
(10th) day following a Share Acquisition Date (or, if such date shall have
occurred prior to the Record Date, the close of business on the tenth day
following the Record Date) and (ii) the Expiration Date, cause the Company to
redeem all but not less than all the then outstanding Rights at a redemption
price of $0.01 per Right, as such amount may be appropriately
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adjusted, if necessary, to reflect any share split, dividend or similar
transaction occurring after the Rights Dividend Declaration Date (such
redemption price being hereinafter referred to as the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Flip-In Event until
such time as the Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the Current Market Price of the Common Shares at the time of
redemption), or any other form of consideration deemed appropriate by the Board
of Directors.
(b) Immediately upon the effectiveness of the action of the
Board of Directors of the Company ordering the redemption of the Rights (the
effectiveness of which action may be conditioned on the occurrence of one or
more events or on the existence of one or more facts or may be effective at some
future time), evidence of which shall be filed with the Rights Agent 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 for each Right so held. Promptly after the
effectiveness of the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the Rights Agent
and the registered holders of the then outstanding Rights by mailing such notice
to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Company for the Common Shares. Any notice that is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state the method by
which the payment of the Redemption Price will be made.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option,
at any time and from time to time after the occurrence of a Flip-In Event,
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
7(e) hereof) for Common Shares or Common Share Value Equivalents or any
combination thereof, in the case of an exchange for Rights, at an exchange ratio
of one Common Share or such number of Common Share Value Equivalents or units
representing fractions thereof as would be deemed to have the same value as one
Common Share per Right, appropriately adjusted, if necessary, to reflect any
share split, dividend or similar transaction occurring after the Rights Dividend
Declaration Date (such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(b) Immediately upon the effectiveness of the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant
to and in accordance with subsection (a) of this Section 24 (the effectiveness
of which action may be conditioned on the occurrence of one or more events or on
the existence of one or more facts or may be effective at some future time) 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 and/or Common Share Value
Equivalents equal to the number of Rights held by such holder multiplied by the
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applicable 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 registered 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
and/or Common Share Value Equivalents for Rights will be effected and, in the
event of any partial exchange, the number of Rights that will be exchanged. Any
partial exchange shall be effected as nearly pro rata as possible based on the
number of Rights (other than Rights that have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Common Shares
that are authorized by the Company's articles of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company may, at its option, take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Shares. In lieu of such fractional shares of Common Shares, the
Company shall, in the sole discretion of the Board of Directors, either (i) pay
to the registered holders of Rights with regard to which such fractional shares
of Common Shares would otherwise be issuable an amount in cash equal to the same
fraction of the value of a whole Common Share or (ii) issue scrip or warrants in
registered form (either represented by a certificate or uncertificated) or in
bearer form (represented by a certificate) which shall entitle the holder to
receive a full share upon the surrender of such scrip or warrants aggregating a
full share. For purposes of this Section 24, the value of a whole Common Share
shall be the Closing Price per Common Share for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24, and the value of any
Common Share Value Equivalents shall be deemed to have the same value as the
Common Shares on such date.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in shares of any class to the
holders of Common Shares or to make any other distribution to the holders of
Common Shares (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), (ii) to offer to the holders of Common Shares
rights or warrants to subscribe for or to purchase any additional Common Shares
or shares of another class or any other securities, rights or options, (iii) to
effect any reclassification of its Common Shares (other than a reclassification
involving only the subdivision of outstanding Common Shares), (iv) to effect any
consolidation or merger into or with any other Person (other than a wholly owned
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), or to effect any sale, lease or other
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transfer of all or substantially all the Company's assets to any other Person or
Persons (other than a wholly owned Subsidiary of the Company in a transaction
that complies with Section 11(o) hereof) or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of record of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, lease, transfer, liquidation, dissolution or
winding up is to take place and the date of participation therein by the holders
of the Common 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
20 days prior to the record date for determining holders of the Common Shares
for purposes of such action, and in the case of any such other action, at least
20 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, whichever shall be
the earlier. The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case any Flip-In Event or Flip-Over Event shall occur,
then (i) the Company shall as soon as practicable thereafter give to each
registered holder of a Rights Certificate (or if occurring prior to the
Distribution Date, the registered holders of Common Shares), in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) or Section 13(a) hereof, and (ii) all references in the preceding
paragraph to Common Shares shall be deemed thereafter to refer to Common Shares
and/or, if appropriate, other securities.
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 Rights
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:
Capital Environmental Resource Inc.
1005 Skyview Drive
Burlington, Ontario L7P 5B1
Canada
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
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:
37
<PAGE>
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Except as provided in
the last sentence of this Section 27, at any time when the Rights are then
redeemable, the Company may in its sole and absolute discretion and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of Rights or
holders of Common Shares. At any time when the Rights are not redeemable, except
as provided in the last sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable; PROVIDED, HOWEVER, that no such amendment or supplement shall
materially adversely affect the interests of the holders of Rights (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person); and
FURTHER, PROVIDED, HOWEVER, that this Agreement may not be supplemented or
amended pursuant to this sentence to lengthen (A) a time period relating to when
the Rights may be redeemed or (B) any other time period unless the lengthening
of such other time period is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights (other
than any Acquiring Person and its Affiliates and Associates). 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 that affects the Rights Agent's 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 decreases the Redemption Price.
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.
38
<PAGE>
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in
effect on the date of this Agreement. The Board of Directors of the Company (or,
as set forth herein, certain specified members thereof) shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or to
amend this Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) that are done or made by the Board of Directors of the
Company in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights, as such, and all other
parties, and (y) not subject the Board of Directors to any liability to the
holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Shares) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Shares).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement 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
Directors 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, then 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 Directors
of the Company or, if earlier, immediately prior to any such merger. Without
limiting the foregoing, if any provision requiring that a determination be made
by less than the entire Board of Directors of the Company, or by the Board of
Directors of the Company with the concurrence of a majority of certain members
of the Board of Directors, is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination shall then be
made by the entire Board of Directors of the Company.
39
<PAGE>
Section 32. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. 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 34. 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.
40
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
CAPITAL ENVIRONMENTAL RESOURCE INC.
By:
---------------------------------------
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
---------------------------------------
Name:
Title:
41
<PAGE>
EXHIBIT A
Form of Rights Certificates
Certificate No. R-________ ________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2009 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
RIGHTS CERTIFICATE
CAPITAL ENVIRONMENTAL RESOURCE INC.
This certifies that _________ , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of September 2, 1999 as it may from time to time be
supplemented or amended (the "Rights Agreement"), between Capital Environmental
Resource Inc., an Ontario corporation (the "Company"), and American Stock
Transfer &Trust Company (the "Rights Agent"), to purchase from the Company at
any time prior to 5:00 p.m. (New York time) on September 2, 1999 at the
principal office or offices of the Rights Agent designated for such purpose, or
its successors as Rights Agent, one one-hundredth of a fully paid, nonassessable
Common Share of the Company ("Fractional Common Share"), at a purchase price of
$60.00 per Fractional Common Share, upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related Certificate
set forth on the reverse hereof duly executed. The Purchase Price may be paid in
cash or by certified check, cashier's or official bank check or bank draft
payable to the order of the Company or the Rights Agent. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
Fractional Common Share set forth above, are the number and Purchase Price as of
September 2, 1999, based on the Common Shares as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights Agreement) that a number of Rights
be exercised so that only whole Common Shares will be issued.
A-1
<PAGE>
From and after the first occurrence of a Triggering Event (as
such term is defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by or transferred to (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate or (iii) under certain circumstances specified in
the Rights Agreement, a transferee of a person who, concurrently with or after
such transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, such Rights shall, with certain exceptions, become null and
void in the circumstances set forth in the Rights Agreement, and no holder
hereof shall have any rights whatsoever with respect to such Rights from and
after the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of Common Shares or other securities or assets that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights 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 Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Fractional Common
Shares as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights 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 its option
at a redemption price of $0.01 per Right, payable, at the election of the
Company, in cash or Common Shares of the Company or such other consideration as
the Board of Directors may determine, at any time prior to the earlier of the
close of business on (a) the date of the first public announcement of the
occurrence of a Flip-In Event (as such time period may be extended or shortened
pursuant to the Rights Agreement) and (b) the Expiration Date (as such term is
defined in the Rights Agreement) or (ii) may be exchanged in whole or in part
for Common Shares and/or other equity securities of the Company deemed to have
the same value as
A-2
<PAGE>
Common Shares, at any time prior to a person's becoming the beneficial owner of
50% or more of the Common Shares outstanding or the occurrence of a Flip-Over
Event.
No fractional Common Shares are required to be issued upon the
exercise of any Right or Rights evidenced hereby (other than, except asset forth
above, fractions that are integral multiples of a Fractional Common Share, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment may be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Common Shares or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors 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 the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
A-3
<PAGE>
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ___________, ____
ATTEST: CAPITAL ENVIRONMENTAL RESOURCE INC.
By
- --------------------------------- ----------------------------------
Title: Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By
--------------------------------
Authorized Signature
A-4
<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer any Rights evidenced by the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells, assigns
and transfers unto ____________________________________________________________
(Please print name and address of transferee)
______ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
____________________________ Attorney, to transfer the said Rights 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 national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
A-5
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate of an
Acquiring Person.
Dated: ___________, ____ ---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
A-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: CAPITAL ENVIRONMENTAL RESOURCE INC.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the Common Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person that may be issuable upon the exercise of the Rights) and
requests that certificates for such shares (or other securities) be issued in
the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _____________, ____
---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
A-7
<PAGE>
A-8
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or who is a direct or indirect transferee of an
Acquiring Person or of an Affiliate or Associate of an Acquiring Person.
Dated: ___________, ____ ---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
A-9
<PAGE>
EXHIBIT B
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES THEREOF, WILL BECOME NULL AND
VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On September 2, 1999, the Board of Directors of Capital
Environmental Resource Inc. (the "Company") authorized the issuance of one right
("Right") for each outstanding share of the Company's Common Shares, no par
value per share ("Common Shares"), to the shareholders of record at the close of
business on September 2, 1999. Each Right entitles the registered holder to
purchase from the Company a unit consisting of one one-hundredth of a Common
Share ("Fractional Common Share"), at a purchase price of $60.00 per Fractional
Common Share, subject to adjustment (the "Purchase Price"). The description and
terms of the Rights are set forth in a Rights Agreement dated as of September 2,
1999 as it may from time to time be supplemented or amended (the "Rights
Agreement") between the Company and American Stock Transfer & Trust Company, as
Rights Agent.
Initially, the Rights will be attached to all certificates
representing outstanding Common Shares and no separate certificates for the
Rights ("Rights Certificates") will be distributed. The Rights will separate
from the Common Shares and a "Distribution Date" will occur, with certain
exceptions, upon the earlier of (i) ten days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the aggregate of the fully-diluted Common Shares (the date of the
announcement being the "Share Acquisition Date"), or (ii) ten business days
following the commencement of a tender offer or exchange offer that would result
in a person's becoming an Acquiring Person.
Notwithstanding the foregoing, so long as Environmental
Opportunities Fund I, Environmental Opportunities Fund II and Sanders Morris
Mundy Inc. (the "Existing Shareholders"), together with all their affiliates and
associates, do not become the beneficial owners of 30% or more of the aggregate
of the fully-diluted Common Shares, the Existing Shareholders, together with
their affiliates and associates, shall not be or become Acquiring Persons. In
certain circumstances, the Distribution Date may be deferred by the Board of
Directors. Certain inadvertent acquisitions will not result in a person's
becoming an Acquiring Person if the person promptly divests itself of sufficient
Common Shares.
B-1
<PAGE>
Until the Distribution Date, (a) the Rights will be evidenced
by Common Share certificates and both will be transferred with and only with
such Common Share certificates, (b) Common Share certificates will contain a
notation incorporating the Rights Agreement by reference and (c) the surrender
for transfer of any certificate for Common Shares will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on September 30, 2009, unless earlier
redeemed or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Common Shares as of the
close of business on the Distribution Date and, from and after the Distribution
Date, the separate Rights Certificates alone will represent the Rights. All
Common Shares issued prior to the Distribution Date will be issued with the
appropriate Rights. Common Shares issued after the Distribution Date in
connection with certain employee benefit plans or upon conversion of certain
securities will be issued with appropriate Rights. Except as otherwise
determined by the Board of Directors, no other Common Shares issued after the
Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person becomes an
Acquiring Person (except pursuant to (1) a tender or exchange offer for all
outstanding Common Shares or (2) an issuance of Common Shares in connection with
a merger, consolidation or acquisition, in both cases at a price and on terms
that a majority of the independent directors of the Company determines to be
fair to and otherwise in the best interests of the Company and its shareholders
(a "Permitted Offer")), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, a number of Common Shares (or, in certain
circumstances, cash, property or other securities of the Company) having a
Current Market Price (as defined in the Rights Agreement) equal to approximately
two times the exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of any Triggering Event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by or transferred to an Acquiring Person (or by certain related parties)
will be null and void in the circumstances set forth in the Rights Agreement.
However, Rights are not exercisable following the occurrence of any Flip-In
Event until such time as the Rights are no longer redeemable by the Company as
set forth below.
For example, at an exercise price of $60.00 per Right, each
Right following a Flip-In Event would entitle its holder to purchase $120.00
worth of Common Shares (or other consideration, as noted above) for $60.00.
Assuming that the Common Shares had a per share value of $10.00 at such time,
the holder of each valid Right would be entitled to purchase 12 Common Shares
for $60.00. Alternatively, the Company could permit the holder to surrender each
Right in exchange for shares or cash equivalent to 6 Common Shares (with a value
of $60.00) without the payment of any consideration other than the surrender of
the Right.
B-2
<PAGE>
In the event (a "Flip-Over Event") that, at any time from and
after the time an Acquiring Person becomes such, (i) the Company is acquired in
a merger or other business combination transaction (other than certain mergers
that follow a Permitted Offer) or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights that
are voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of common shares of the acquiring company having a Current
Market Price equal to two times the exercise price of the Right. Flip-In Events
and Flip-Over Events are collectively referred to as "Triggering Events."
The number of outstanding Rights associated with a Common
Share, or the number of Fractional Common Shares issuable upon exercise of a
Right and the Purchase Price, are subject to adjustment in the event of a
dividend on, or a subdivision, combination or reclassification of, the Common
Shares occurring prior to the Distribution Date. The Purchase Price payable, and
the number of Fractional Common Shares or other securities or property issuable,
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution in the event of certain transactions affecting the Common
Shares.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Common Shares that are not integral multiples of a
Fractional Common Share are required to be issued and, in lieu thereof, an
adjustment in cash may be made based on the market price of the Common Shares on
the last trading date prior to the date of exercise or certificates of scrip or
warrants may be issued entitling the holders thereof to receive a full share in
return for such scrip or warrants aggregating a full share. Pursuant to the
Rights Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole Common Shares will be issued.
At any time until the tenth day following a Share Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price of
$.01 per Right, payable, at the option of the Company, in cash, Common Shares or
such other consideration as the Board of Directors may determine. Immediately
upon the effectiveness of the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 per Right redemption price.
At any time after the occurrence of a Flip-In Event and prior
to a person's becoming the beneficial owner of 50% or more of the Common Shares
then outstanding or the occurrence of a Flip-Over Event, the Company may
exchange the Rights (other than Rights owned by an Acquiring Person or an
Affiliate or an associate of an Acquiring Person, which will have become void),
in whole or in part, at an exchange ratio of one Common Share, and/or other
equity securities deemed to have the same value as one Common Share, per Right,
subject to adjustment.
B-3
<PAGE>
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
should not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Shares (or other consideration) of the
Company or for the common shares of the acquiring company as set forth above or
are exchanged as provided in the preceding paragraph.
Other than the redemption price, any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company as long
as the Rights are redeemable. Thereafter, the provisions of the Rights Agreement
other than the redemption price may be amended by the Board of Directors in
order to cure any ambiguity, defect or inconsistency, to make changes that do
not materially adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), or to shorten or lengthen any time
period under the Rights Agreement; PROVIDED, HOWEVER, that no amendment to
lengthen the time period governing redemption shall be made at such time as the
Rights are not redeemable.
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 references to the Rights Agreement,
which is incorporated herein by reference.
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