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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
BROWNING-FERRIS INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 74-1673682
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(State of Incorporation or Organization) (IRS Employer Identification No.)
757 N. Eldridge, Houston, Texas 77079
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(Address of principal executive offices) (Zip Code)
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If this form relates to the registration of a If this form relates to the registration of a class
class of securities pursuant to Section 12(b) of of securities pursuant to Section 12(g) of the
the Exchange Act and is effective pursuant to Exchange Act and is effective pursuant to General
General Instruction A.(c), please check the Instruction A.(d), please check the
following box. [ X ] following box. [ ]
Securities Act registration statement file number to which this form relates: N/A
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(If applicable)
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Securities to be registered pursuant to Section 12(b) of the Act:
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Name of each exchange
Title of each class on which each class is
to be so registered to be registered
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Preferred Stock Purchase Rights New York Stock Exchange, Inc.
(Pursuant to Rights Agreement dated as of June 3, 1998) Chicago Stock Exchange, Inc.
Pacific Exchange, Inc.
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Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On June 3, 1998, the Board of Directors of Browning-Ferris
Industries, Inc. (the "Company") declared a dividend distribution of one Right
for each outstanding share of Common Stock, par value $.16-2/3 per share, of the
Company ("Common Stock"). The distribution is payable to the stockholders of
record at the close of business on June 15, 1998. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of a
series of the Company's preferred stock designated as Series B Junior
Participating Preferred Stock ("Preferred Stock") at a price of $125.00 per one
one-hundredth of a share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified in the
Rights Agreement, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten business days following
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 20% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), other than as
a result of repurchases of stock by the Company or (ii) ten business days (or
such later date as the Board shall determine) following the commencement of a
tender offer or exchange offer that would result in a person or group becoming
an Acquiring Person. Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. (New York City time) on June 15, 2008 (the "Expiration
Date"), unless such date is extended or the Rights are 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 the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate and to otherwise
be in the best interests of the Company and its stockholders, after receiving
advice from one or more investment banking firms (a "Qualified Offer"), each
holder of a Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. Notwithstanding any of the foregoing, following the occurrence of the
event set forth in this
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paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void. However, Rights are not exercisable following the occurrence of the
event set forth above until such time as the Rights are no longer redeemable by
the Company as set forth below.
For example, at an exercise price of $125.00 per Right, each
Right not owned by an Acquiring Person (or by certain related parties) following
an event set forth in the preceding paragraph would entitle its holder to
purchase $250.00 worth of Common Stock (or other consideration, as noted above)
for $125.00. Assuming that the Common Stock had a per share value of $25.00 at
such time, the holder of each valid Right would be entitled to purchase ten
shares of Common Stock for $125.00.
In the event that, on or at any time after a Stock Acquisition
Date, the Company (i) engages in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than
with an entity which acquired the shares pursuant to a Qualified Offer), (ii)
the Company engages in a merger or other business combination transaction in
which the Company is the surviving corporation and any shares of the Company's
Common Stock are changed into or exchanged for other securities or assets or
(iii) 50% or more of the assets, cash flow or earning power of the Company and
its subsidiaries (taken as a whole) are sold or transferred, then, and in each
such case, each holder of a Right (except as noted below) shall thereafter have
the right to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the acquiring
company which at the time of such transaction would have a market value
(determined as provided in the Rights Agreement) of two times the exercise price
of the Right. The events set forth in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
Up to and including the tenth business day after a Stock
Acquisition Date, the Company may redeem the rights in whole, but not in part,
at a price of $.01 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors). Promptly upon the
action of the Board of Directors of the Company electing to redeem the Rights,
the Rights will terminate and the only right of the holders of Rights will be to
receive the $.01 Redemption Price.
At any time after a person becomes an Acquiring Person and
prior to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding Common Stock, the Board may exchange the Rights (other than
Rights owned by such person or group which have become void), in whole or in
part, for Common Stock at an exchange ratio of one share of Common Stock, or one
one-hundredth of a share of Preferred Stock (or of a share of a class or series
of the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company or in the event of the
redemption of the Rights as set forth above.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended by
the Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights, or to shorten or lengthen any time
period
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under the Rights Agreement. The foregoing notwithstanding, no amendment may be
made at such time as the Rights are not redeemable.
As of June 9, 1998, there were 177,977,533 shares of Common
Stock of the Company issued and outstanding and 35,810,743 shares of Common
Stock of the Company in the treasury. As of June 9, 1998, options to purchase
10,715,685 shares of Common Stock were outstanding. Each share of Common Stock
of the Company outstanding at the close of business on June 15, 1998, will
receive one Right. So long as the Rights are attached to the Common Stock, one
additional Right (as such number may be adjusted pursuant to the provisions of
the Rights Agreement) shall be deemed to be delivered for each share of Common
Stock issued or transferred by the Company in the future. In addition, following
the Distribution Date and prior to the expiration or redemption of the Rights,
the Company may issue Rights when it issues Common Stock only if the Board deems
it to be necessary or appropriate, or in connection with the issuance of shares
of Common Stock pursuant to the exercise of stock options or under employee
plans or upon the exercise, conversion or exchange of certain securities of the
Company. Four million shares of Preferred Stock are initially reserved for
issuance upon exercise of the Rights.
The Rights may have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
the Company in a manner which causes the Rights to become discount Rights unless
the offer is conditional on a substantial number of Rights being acquired. The
Rights, however, should not affect any prospective offeror willing to make an
offer at a price that is fair and not inadequate and otherwise in the best
interest of the Company and its stockholders. The Rights should not interfere
with any merger or other business combination approved by the Board since the
Board may, at its option, at any time until ten days following the Stock
Acquisition Date redeem all but not less than all the then outstanding Rights at
the Redemption Price.
In addition, certain provisions of the Company's Restated
Certificate of Incorporation may have anti-takeover effects. The Restated
Certificate of Incorporation provides, among other things, (i) for a classified
Board of Directors divided into three classes, (ii) that a Business Combination
(as defined) with a stockholder holding 10% or more of the Voting Shares (as
defined) be approved by a majority of unaffiliated stockholders and 80% of
issued and outstanding Voting Shares unless such Business Combination is
approved by a majority of the Continuing Directors (as defined) and certain
minimum price and other criteria are satisfied, (iii) that only the Board of
Directors may call for a special meeting of stockholders, and (iv) stockholder
action only at a stockholders' meeting and not by written consent. In addition,
the By-laws of the Company provide, among other things, that stockholders
wishing to nominate a director at an annual meeting give advance written notice
of such nomination not later than 90 days in advance of the date of the
Company's proxy statement released to stockholders in connection with the
previous year's annual meeting.
The Rights Agreement, dated as of June 3, 1998, between the
Company and First Chicago Trust Company of New York, as Rights Agent, specifying
the terms of the Rights is attached hereto as an exhibit and is incorporated
herein by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such exhibit.
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ITEM 2. EXHIBITS.
1 Rights Agreement, dated as of June 3, 1998, between
Browning-Ferris Industries, Inc. and First Chicago Trust
Company of New York, as Rights Agent, including the form of
Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Stock as Exhibit C. Pursuant to the Rights
Agreement, printed Rights Certificates will not be mailed
until after the Distribution Date (as such term is defined in
the Rights Agreement).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated June 10, 1998 BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ Jeffrey E. Curtiss
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Name: Jeffrey E. Curtiss
Title: Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Description Page
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1 Rights Agreement, dated as of June 3, 1998, between
Browning-Ferris Industries, Inc. and First Chicago Trust
Company of New York, as Rights Agent, including the form of
Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Stock as Exhibit C. Pursuant to the Rights
Agreement, printed Rights Certificates will not be mailed
until after the Distribution Date (as such term is defined in
the Rights Agreement).
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BROWNING-FERRIS INDUSTRIES, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
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Rights Agreement
Dated as of June 3, 1998
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TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions...............................................................2
Section 2. Appointment of Rights Agent.......................................................8
Section 3. Issue of Right Certificates.......................................................8
Section 4. Form of Right Certificates.......................................................10
Section 5. Countersignature and Registration................................................11
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates........................................................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....................12
Section 8. Cancellation and Destruction of Right Certificates...............................15
Section 9. Reservation and Availability of Capital Stock....................................15
Section 10. Preferred Stock Record Date......................................................17
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights...........................................................................17
Section 12. Certification of Adjusted Purchase Price or Number of Shares.....................27
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash
Flow or Earning Power............................................................28
Section 14. Fractional Rights, and Fractional Shares.........................................32
Section 15. Rights of Action.................................................................33
Section 16. Agreement of Right Holders.......................................................34
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Page
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Section 17. Right Certificate Holder Not Deemed a Stockholder................................34
Section 18. Concerning the Rights Agent......................................................35
Section 19. Merger or Consolidation or Change of Name of Rights Agent........................35
Section 20. Duties of Rights Agent...........................................................36
Section 21. Change of Rights Agent...........................................................38
Section 22. Issuance of New Right Certificates...............................................39
Section 23. Redemption.......................................................................40
Section 24. Exchange.........................................................................41
Section 25. Notice of Certain Events.........................................................42
Section 26. Notices..........................................................................43
Section 27. Supplements and Amendments.......................................................44
Section 28. Successors.......................................................................45
Section 29. Determinations and Actions Taken by the Board of Directors.......................45
Section 30. Benefits of this Agreement.......................................................45
Section 31. Severability.....................................................................46
Section 32. Governing Law....................................................................46
Section 33. Counterparts.....................................................................46
Section 34. Descriptive Headings.............................................................46
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Page
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Exhibit A Form of Certificate of Designation, Preferences and Rights......................A-1
Exhibit B Form of Right Certificate.......................................................B-1
Exhibit C Summary of Rights to Purchase Preferred Stock...................................C-1
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RIGHTS AGREEMENT
This Agreement, dated as of June 3, 1998 between Browning-Ferris
Industries, Inc., a Delaware corporation (the "Company"), and First Chicago
Trust Company of New York, a New York corporation (the "Rights Agent"):
W I T N E S S E T H
WHEREAS, on June 1, 1988 (the "1988 Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized the Rights Agreement, dated as
of June 1, 1988, as amended, between the Company and the Rights Agent thereunder
(the "1988 Agreement") and declared a dividend distribution of one right (a
"1988 Right") for each share of common stock, par value $.162/3 per share, of
the Company (the "Common Stock") outstanding at the close of business on June
13, 1988 (the "1988 Record Date"). Each 1988 Right represented the right to
purchase one one-hundredth of a share of Series A Participating Preferred Stock
of the Company;
WHEREAS, on June 3, 1998, the Board of Directors of the Company
determined it desirable and in the best interests of the Company and its
shareholders for the Company to extend the benefits afforded by the 1988
Agreement and to implement such extension by executing this Agreement;
WHEREAS, on June 3, 1998 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of Common
Stock outstanding upon the close of business on June 15, 1998 (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 share of Common Stock issued (whether as an original issuance or from the
Company's treasury) between the Record Date and the Distribution Date (as
hereinafter defined) and in certain other circumstances provided herein, each
Right initially representing the right to purchase one one-hundredth of a share
of Series B Junior Participating Preferred Stock of the Company (a "Unit")
having the rights, powers and preferences set forth in the form of Certificate
of Designation, Preferences and Rights attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the "Rights");
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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 have the meanings indicated:
(a) "1933 Act" shall have the meaning assigned to it in Section
9(b).
(b) "1988 Agreement" shall have the meaning assigned to it in
the recital.
(c) "1988 Record Date" shall have the meaning assigned to it in
the recital.
(d) "1988 Right" shall have the meaning assigned to it in the
recital.
(e) "1988 Rights Dividend Declaration Date" shall gave the
meaning assigned to it in the recital.
(f) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of a Substantial Block, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan or employee
stock plan of the Company, or of any Subsidiary of the Company, or any Person
organized, appointed, established or holding Voting Stock by, for or pursuant
to, the terms of any such plan, or (iv) any Person who becomes the Beneficial
Owner of a Substantial Block as a result of a reduction in the number of shares
of Voting Stock outstanding due to the repurchase of shares of Voting Stock by
the Company unless and until such Person, after becoming aware that such Person
has become the Beneficial Owner of a Substantial Block of the then outstanding
shares of Voting Stock, acquires beneficial ownership of additional shares of
Voting Stock representing one percent (1%) or more of the shares of Voting Stock
then outstanding.
(g) "Adjustment Shares" shall have the meaning assigned to it in
Section 11(a)(ii).
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(h) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(i) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "Beneficially Own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the exercise
of any conversion, exchange or purchase rights (other than the Rights), warrants
or options, or other wise, provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to "Beneficially Own," securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event (as hereinafter defined), or
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 (as hereinafter
defined) or pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an adjustment
made with respect to any Original Rights; or, (B) the right to vote pursuant to
any agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or indirectly
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that a Person shall not be deemed the Beneficial owner of, or
to Beneficially Own, any security if the agreement, arrangement or understanding
to
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vote such security arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to
and in accordance with, the applicable rules and regulations of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and provided, further,
that nothing in this paragraph (i) 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 until the expiration of forty days after the
date of such acquisition.
(j) "Business Day" shall mean any other than a Saturday, Sunday or
day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
(k) "Close of Business" on any given date shall mean 5:00 P.M.,
Houston time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Houston time, on the next succeeding
Business Day.
(l) "Common Stock" shall have the meaning assigned to it in the
recital, and "common stock" (i) when used with reference to any Person other
than the Company shall mean the capital stock with the greatest voting power of
such Person or, if such Person is a Subsidiary of another Person, the Person
which ultimately controls such first-mentioned Person and (ii) when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which (A) shall represent
the right to participate generally in the profits and losses of such Person
(including, without limitation, any flow-through tax benefits resulting from an
ownership interest in such Person) and which (B) shall be entitled to exercise
the greatest voting power of such Person or, in the case of a limited
partnership, shall have the power to remove the general partner or partners.
(m) "Common Stock Equivalents" shall have the meaning assigned to
it in Section 11(a)(iii).
(n) "Company" shall have the meaning assigned to it in the first
paragraph of this Agreement.
(o) "Current Market Price" shall have the meaning assigned to it
in Section 11(d)(i).
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(p) "Current Value" shall have the meaning assigned to it in
Section 11(a)(iii).
(q) "Distribution Date" shall have the meaning assigned to it in
Section 3.
(r) "Equivalent Preferred Stock" shall have the meaning assigned
to it in Section 11(b).
(s) "Equivalent Stock" shall have the meaning assigned to it in
Section 7.
(t) "Exchange Act" shall have the meaning assigned to it in
Section 1(c).
(u) "Exchange Ratio" shall have the meaning assigned to it in
Section 24.
(v) "Expiration Date" shall have the meaning assigned to it in
Section 7.
(w) "Final Expiration Date" shall have the meaning assigned to it
in Section 7.
(x) "NASDAQ" shall have the meaning assigned to it in Section
11(d)(i).
(y) "Person" shall mean any individual, firm, corporation, or
other entity and shall include any successor by merger or otherwise of such
entity.
(z) "Preferred Stock" shall mean shares of Series B Junior
Participating Preferred Stock, without par value, of the Company and, to the
extent that there are not a sufficient number of shares of Series B Junior
Participating Preferred Stock authorized to permit the full exercise of the
Rights, any other series of preferred stock of the Company designated for such
purpose containing terms substantially similar to the terms of the Series B
Junior Participating Preferred Stock.
(aa) "Principal Party" shall have the meaning assigned to it in
Section 13.
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(bb) "Purchase Price" shall have the meaning assigned to it in
Section 4.
(cc) "Qualified Offer" shall have the meaning assigned to it in
Section 11(a)(ii).
(dd) "Record Date" shall have the meaning assigned to it in the
recital.
(ee) "Redemption Price" shall have the meaning assigned to it in
Section 23.
(ff) "Right Certificate" shall have the meaning assigned to it in
Section 3.
(gg) "Rights" shall have the meaning assigned to it in the
recital.
(hh) "Rights Agent" shall have the meaning assigned to it in the
first paragraph of this Agreement.
(ii) "Rights Dividend Declaration Date" shall have the meaning
assigned to it in the recital.
(jj) "Section 11(a)(ii) Event" shall have the meaning assigned to
it in Section 7(e).
(kk) "Section 11(a)(ii) Trigger Date" shall have the meaning
assigned to it in Section 11(a)(iii).
(ll) "Section 13 Event" shall have the meaning assigned to it in
Section 7(e).
(mm) "Spread" shall have the meaning assigned to it in Section
11(a)(iii).
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(nn) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(oo) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person and any
Affiliate of such Person.
(pp) "Substantial Block" shall mean a number of shares of Voting
Stock having in the aggregate 20% or more of the general voting power.
(qq) "Substitution Period" shall have the meaning assigned to it
in Section 11(a)(iii).
(rr) "Summary of Rights" shall have the meaning assigned to it in
Section 3(b).
(ss) "Trading Day" shall have the meaning assigned to it in
Section 11(d).
(tt) "Triggering Event" shall mean a Section 11(a)(ii) Event or
Section 13 Event.
(uu) "Unit" shall have the meaning assigned to it in the recital.
(vv) "Voting Stock" shall mean shares of the Company's capital
stock having general voting power. For the purposes hereof, "voting power," when
used with reference to the capital stock of, or units of equity interests in,
any Person shall mean the power under ordinary circumstances (and not merely
upon the happening of a contingency) to vote in the election of directors of
such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation).
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, shall prior to the Distribution Date also be the
holders of Common Stock) in accordance with the terms and conditions
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hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agent or Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. The "Distribution Date" shall
mean the earlier of (i) the tenth Business Day (or such later date as may be
determined by the Board of Directors) after the date of the commencement of a
tender or exchange offer (as determined by reference to Rule 14d-2(a) (or any
successor rule) under the Exchange Act) by any Person (other than the Company,
any Subsidiary of the Company, or any employee benefit plan or employee stock
plan of the Company or any Subsidiary of the Company) for a number of shares of
the outstanding Voting Stock having 20% or more of the general voting power (or,
if the tenth Business Day after such date occurs before the Record Date, the
close of business on the Record Date), or (ii) the tenth Business Day after a
Stock Acquisition Date. Up to and including the Distribution Date, (x) the
Rights will be evidenced by the certificates for Common Stock registered in the
names of the holders of Common Stock (which certificates for Common Stock shall
be deemed also to be Right Certificates) and not by separate Right Certificates,
and (y) the right to receive Right Certificates will be transferable only in
connection with the transfer of Common Stock. As soon as practicable after the
Distribution Date, the Rights Agent will mail, by first-class, insured, postage
prepaid mail, to each record holder of Common Stock as of the Close of Business
on the Distribution Date, as shown by the records of the Company at the Close of
Business on the Distribution Date, at the address of such holder shown on such
records, a Right Certificate (the "Right Certificate"), in substantially the
form of Exhibit B hereto, evidencing one Right for each share of Common Stock so
held. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Right Certificates, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Right 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 Right
Certificates.
(a) The Company will make available, as promptly as practicable
following the Record Date, a copy of a Summary of Rights, in substantially the
form attached hereto as Exhibit C (the "Summary of Rights") to any holder of
Rights who may so request from time to time prior to the Expiration Date. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
for the Common
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<PAGE> 13
Stock and the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section
7(a) hereof), the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock. As soon as
practicable, the Company will cause certificates for Common Stock issued after
June 15, 1998, but prior to the earlier of the Distribution Date or the
Expiration Date or the date, if any, on which the Rights are redeemed, to have
impressed on, printed on, written on or otherwise affixed to them the following
legend (or the legend required under the 1988 Agreement):
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Browning-Ferris Industries, Inc. and the Rights Agent
thereunder (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is
on file at the principal executive offices of Browning-Ferris
Industries, Inc. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. Browning-Ferris Industries, Inc. will mail to the
holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement) or
one of certain transferees thereof, whether currently held by
or on behalf of such Person or by any subsequent holder, may
be limited as provided in Section 7(e) of the Rights
Agreement.
With respect to such certificates containing the foregoing legend (or the legend
required under the 1988 Agreement), until the Distribution Date or the
Expiration Date, the Rights associated with Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Stock certificate.
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<PAGE> 14
(b) Until the Distribution Date, the surrender for transfer of any
of the certificates for Common Stock outstanding on or after the Close of
Business on June 15, 1998, shall also constitute the transfer of the Rights
associated with Common Stock represented by such certificates. After the
Distribution Date, the Rights will be evidenced solely by the Right
Certificates.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of assignment and of election to purchase shares to be printed on the
reverse thereof) shall be in substantially the form of Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights may from time
to time be listed, or to conform to usage. Subject to the provisions of Section
11, Section 13 and Section 22, the Right Certificates, whenever issued, shall be
dated as of June 15, 1998, and on their face shall entitle the holders thereof
to purchase such number of shares of Preferred Stock as shall be set forth
therein at the price per one one-hundredth of a share set forth therein (the
"Purchase Price"), but the number and type of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(a) Any Right Certificate issued pursuant to Section 3(a), Section
11(i), or Section 22 that represents Rights Beneficially Owned by: (i) an
Acquiring Person or any Associate or Affiliate of such Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e), and any
Right Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible and reasonably
identifiable as such) the following legend:
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<PAGE> 15
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) or one of certain transferees thereof.
Accordingly, under certain circumstances as provided in the Rights
Agreement, this Right Certificate and the Rights represented hereby may
be limited as provided in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
President or any Vice President, either manually or by facsimile signature,
and 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 Right 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 Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, issued and delivered
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(a) 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 Right Certificates upon exercise or transfer,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each Right
Certificate, the date of each Right Certificate and the number of each Right
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 4(b), Section 7(e) and Section 14, 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 or the day prior to the day, if
any, on which the rights are to
11
<PAGE> 16
be redeemed pursuant to Section 23, any Right Certificate or Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase such number of
shares of Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing, signed by the registered holder
with such signature guaranteed in such manner as is reasonably satisfactory to
the Rights Agent, delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal stock transfer office of the Rights Agent. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14, countersign
and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(a) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. Subject to Section 7(e), at any time after the Distribution Date, the
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9, Section 11(a)(iii) and
Section 23) in whole or in
12
<PAGE> 17
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
principal stock transfer office of the Rights Agent, together with payment of
the Purchase Price for each one one-hundredth of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, at or prior to the earlier of (i) the Close of Business on
June 15, 2008 or such later date as may be established by the Board of Directors
prior to the expiration of the Rights (such date being hereinafter referred to
as the "Final Expiration Date") or (ii) the time at which the Rights are
redeemed or exchanged as provided in Section 23 and Section 24 (the earlier of
(i) and (ii) being herein referred to as the "Expiration Date"). If at any time
after the Rights become exercisable hereunder but prior to the Expiration Date
the Company is prohibited by its Restated Certificate of Incorporation from
issuing Preferred Stock upon the exercise of all of the outstanding Rights, the
Company may issue upon the exercise of the Rights shares of stock or other
securities of the Company of equivalent value to the Preferred Stock
("Equivalent Stock"), as determined by the Board of Directors.
(a) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $125,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 and shall be payable in accordance with paragraph (c) below.
(b) Upon receipt of a Right Certificate representing exercisable
rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax in cash, or by certified check or
money order payable to the order of the Company, the Rights Agent shall, subject
to this Section 7 and Section 20(k), thereupon promptly (i) (A) requisition from
any transfer agent of Preferred Stock (or any Equivalent Stock then issuable) a
certificate for the number of shares of Preferred Stock (or any Equivalent Stock
then issuable) to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred Stock issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock 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) when
appropriate, requisition from the Company the amount of
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<PAGE> 18
cash to be paid in lieu of issuance of a fractional share in accordance with
Section 14 and (iii) promptly after receipt of such certificate, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and, when appropriate, after receipt promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate. The payment
of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified bank check or bank
draft payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(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 any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock would be
issued.
(c) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to, or upon the order of, the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14.
(d) Notwithstanding any provision of this Agreement to the
contrary, upon the occurrence of any of the events described in Section
11(a)(ii) (a "Section 11(a)(ii) Event") or in clauses (a), (b) or (c) of the
first sentence of Section 13 (a "Section 13 Event"), the adjustments provided
for under Section 11(a)(ii) and Section 13 with respect to the amount (but not
the type) of securities receivable upon exercise of a Right shall not apply with
respect to any Rights that are at the time of the occurrence of such event
Beneficially Owned by (i) an Acquiring Person or by any Associate or Affiliate
of such Acquiring Person or (ii) a transferee of an Acquiring Person or of any
Associate or Affiliate of such Acquiring Person (A) who becomes a transferee
after the Acquiring Person becomes such, or (B) who becomes a transferee prior
or to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (1) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (2)
a transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the
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<PAGE> 19
avoidance of this Section 7(e). Upon the exercise of such Rights, the holders
thereof shall be entitled to receive, upon payment of the Purchase Price, the
type of securities issuable upon exercise of a Right but without giving effect
to the adjustments with respect to the amount of securities receivable upon
exercise of a Right provided for under Section 11(a)(ii) and Section 13. The
Company shall use all reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) are complied with, but shall have no liability to
any holder of Right Certificates or other Person as a result of its making or
failing to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
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 Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of Preferred Stock
(and, following the occur-
15
<PAGE> 20
rence of a Triggering Event, Common Stock and/or other securities) that will be
sufficient to permit the exercise in full of all outstanding Rights,
(a) take all such action as may be necessary to insure that all
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) 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, (c) pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) upon the exercise of Rights and (d) take all such action, from and
after the date the Rights become exercisable hereunder, as may be necessary to
permit the exercise of the Rights for Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities),
including any required registration under the Securities Act of 1933, as
amended (the "1933 Act"), and, in connection therewith and if deemed desirable
by the Company, use its best efforts to list (or continue the listing of) the
Preferred Stock on a national securities exchange and to cause all shares of
Preferred Stock reserved for issuance upon exercise of Rights to be listed on
such exchange upon official notice of issuance upon such exercise. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days, the exercisability of the Rights
in order to comply with all applicable Federal and state securities laws. Upon
any such suspension, the Company shall issue a public announcement (and shall
provide written notice to the Rights Agent) stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement has been declared
effective. Notwithstanding the provisions of clause (c) of the first sentence of
this Section 9, the Company shall not be required to pay any transfer tax which
may be payable in respect of any transfer involved in the transfer or delivery
of Right Certificates or the issuance or delivery of certificates for Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) in a name other than that of the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue or
deliver
16
<PAGE> 21
any certificates for shares of Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock and/or other securities) upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) 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 Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) transfer
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a stockholder 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 of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation
17
<PAGE> 22
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), then and in each such event , the number of shares of
Preferred Stock issuable upon the exercise of a Right and the Purchase
Price payable after such event shall be the number of shares of
Preferred Stock issuable immediately prior to such event multiplied by
a fraction the numerator of which is the number of Rights outstanding
immediately prior to such event and the denominator of which is the
number of Rights outstanding immediately after such event and the
Purchase Price after such event shall be the Purchase Price in effect
immediately prior to such event multiplied by such fraction. If an
event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(i) In the event that any Person shall, at any time after
the Rights Dividend Declaration Date, become an Acquiring Person,
unless the event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof, or is an acquisition of
shares of Common Stock pursuant to a tender offer or an exchange offer
for all outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair to stockholders and not
inadequate (taking into account all factors which such members of the
Board deem relevant, including, without limitation, prices which 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 stockholders (a "Qualified
Offer"); then, and in each such case, proper provision shall be made so
that each holder of a Right, except as provided below and in Section
7(e), shall thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredths of a share of
Preferred Stock, such number of shares of Common Stock as shall, equal
the result obtained by (x) multiplying the then current Purchase Price
by the then number of one
18
<PAGE> 23
one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of
the Current Market Price (determined pursuant to Section 11(d) hereof)
per share of Common Stock on the date of such first occurrence (such
number of shares, the "Adjustment Shares").
(ii) In the event that the number of shares of Common Stock
which are authorized by the Company's Restated Certificate of
Incorporation, but which are not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights, are 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
(A) determine the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), and (B) with respect to each
Right (subject to Section 7(e) hereof), make adequate provision to
substitute for the Adjustment Shares, upon the exercise of a Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock, such as the Preferred Stock, which the Board has
deemed to have essentially the same value or economic rights as shares
of Common Stock (such shares of preferred stock being referred to as
"Common Stock 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 (less the amount of any
reduction in the Purchase Price), where such aggregate value has been
determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a Section 11(a)(ii)
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 "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise
of Right and without requiring
19
<PAGE> 24
payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have
an aggregate value equal to the Spread. For purposes of the preceding
sentence, the term "Spread" shall mean the excess of (i) the Current
Value over (ii) the Purchase Price. If the Board determines in good
faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is herein called
the "Substitution Period"). To the extent that action is to be taken
pursuant to the first and/or third sentences of this Section
11(a)(iii), the Company (1) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (2) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek such shareholder
approval for such 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. For purposes of this Section 11(a)(iii), the value of
each Adjustment Share shall be the current market price per share of
the Common Stock on the Section 11(a)(ii) Trigger Date and the per
share or per unit value of any Common Stock Equivalent shall be deemed
to equal the current market price per share of the Common Stock on such
date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock (or having a conversion
price per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the current
20
<PAGE> 25
market price per share of Preferred Stock (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be
deter mined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, of which the numerator shall be the number of
shares of Preferred Stock outstanding on such record date plus the number of
shares of Preferred Stock which the aggregate offering price of the total number
of shares of Preferred Stock and/or Equivalent Preferred Stock 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 of which the
denominator shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities to be offered are initially convertible). In
case such subscription price may be paid in a 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. Shares of
Preferred Stock 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 which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing 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 Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or evidences
of indebtedness, or of subscription rights or warrants (excluding those referred
to in Section ll(b)), 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, of which the numerator shall be the
current market price per share of Preferred Stock (as defined in Section ll(d))
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) of the portion of the cash, assets
or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Preferred Stock, and of which the
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<PAGE> 26
denominator shall be such current market price per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "current market price" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the 30 consecutive Trading
Days immediately prior to such date, and for pur poses of computations made
pursuant to Section 11(a)(iii) hereof, the "Current Market Price" per share of
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the event that the
current market price per share of such stock is determined during a period
following the announcement by the issuer of such stock of (A) a dividend or
distribution on such stock payable in shares of such stock or securities
convertible into shares of such stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, 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 thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, then, and in each such case, the current market
price shall be appropriately adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of such
stock are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
shares of such stock are listed or admitted to trading or, if the shares of such
stock are not listed or admitted to trading on any national securities exchange,
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or such
other
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<PAGE> 27
system then in use. If on any such date the shares of such stock are not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock
selected by the Board. If on any such date no market maker is making a market in
the Common Stock, the fair value of such shares on such date as determined in
good faith by the Board shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of such
stock are listed or admitted to trading is open for the transaction of business
or, if the shares of such stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If such stock is not publicly held
or not so listed or traded, "current market price" per share shall mean the fair
value per 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.
(i) For the purpose of any computation hereunder, the current
market price per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current
market price per share of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause (i)
of this Section 11(d), the current market price per share of Preferred
Stock shall be conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current
market price per share of the Common Stock. If neither the Common Stock
nor the Preferred Stock is publicly held or so listed or traded, current
market price per share of the Preferred Stock shall mean the fair value
per share as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes. For all purposes of this Agreement, the
current market price of a Unit shall be equal to the current market price
of one share of Preferred Stock divided by 100.
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<PAGE> 28
(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 such price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section ll(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) In the event that at any time, as a result of an adjustment
made pursuant to Section ll(a)(ii) or Section 13(a), the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital
stock of the Company other than shares of Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a) , (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the shares of
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, al1 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 Section 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 one
one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths
of a share covered by a Right immediately prior to such adjustment by (y) the
Purchase Price in effect immediately prior to such
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<PAGE> 29
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for an
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of shares of Preferred
Stock of which a Right related 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 ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i) the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and 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 Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth share
and the number of shares which were expressed in the initial Right Certificates
issued hereunder.
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<PAGE> 30
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the shares
of Preferred Stock issuable upon exercise of the Rights, the Company shall take
all corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of such Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares (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 Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to hereinabove
in this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), or
(ii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of
26
<PAGE> 31
related transactions, assets, cash flow 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 (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof, if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the shareholders 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 and Associates.
(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 at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary notwithstanding,
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 shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock 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 share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the matter numerator
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock out standing immediately
following the occurrence of such event.
Section 12. Certification of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13, the Company
shall (a) promptly prepare a certificate setting forth such
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<PAGE> 32
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
Preferred Stock and Common Stock, a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 27. 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, Cash
Flow or Earning Power. In the event on or at any time after a Stock Acquisition
Date, directly or indirectly, (a) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (b) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, 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 shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (c) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
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 of its Subsidiaries in one or more transactions each of which complies
with Section 11(o)), then, and in each such case:
(A) proper provision shall be made so that (i) each holder of a
Right (except as provided in Section 7(e)) shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of common stock of the Principal Party (as 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 (1)
multiplying the then current Purchase Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right is
exercisable immediately prior to
28
<PAGE> 33
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-hundredths of a share for which a
Right was exercisable immediately prior to the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2) 50% of the Current
Market Price (determined pursuant to Section 11(d)(i) hereof) per share
of the Common Stock of such Principal Party, on the date of consummation
of such Section 13 Event; (ii) the Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement; (iii)
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 only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) the Principal Party shall take
such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with such
consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reason ably may be, in
relation to the shares of its Common Stock thereafter deliver able upon
the exercise of the Rights; and (v) the provisions of Section 11(a)(ii)
hereof shall be of no effect following the first occurrence of any
Section 13 Event.
(B) "Principal Party" shall mean:
(1) in the case of any transaction described in (a) or (b) of
the first sentence of this Section 13, (i) the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the common stock of which has the
greatest market value or (ii) if no securities are so issued, (x) the
Person that is the other party to the merger or consolidation and that
survives said merger or consolidation or, if there is more than one
such Person, the Person the common stock of which has the greatest
market value or (y) if the Person that is the other party to the merger
or consolidation does not survive the merger or consolidation, the
Person that does survive the merger or consolidation (including the
Company if it survives);
(2) in the case of any transaction described in (c) of the
first sentence of this Section 13, 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 sale portion of the assets or earning power so
29
<PAGE> 34
transferred or it the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons
as is the issuer of common stock having the greatest market value of
shares outstanding;
provided, however, that in any such case, (w) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the common stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation, (x) if the common stock of such Person is not and has not been so
registered and such Person is not a direct or indirect Subsidiary of another
corporation the common stock of which is and has been so registered, "Principal
Party" shall refer to the corporation which ultimately controls such Person, (y)
in case such Person is a Subsidiary, directly or indirectly, of more than one
corporation, the common stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such corporations is the issuer of
the common stock having the greatest market value of shares held by the public,
and (z) in case 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 (w) - (y) 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.
The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent a supplemental agreement making
valid provision for the results described in subsections (A) and (B) above and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in this Section 13, the
Principal Party will:
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and
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<PAGE> 35
(B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) take such all such other action as may be necessary to
enable the Principal Party to issue the securities purchasable upon
exercise of the Rights, including but not limited to the registration
or qualification of such securities under all requisite securities laws
of jurisdictions of the various states and the listing of such
securities on such exchanges and trading markets as may be necessary or
appropriate; and
(iii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act;
provided, however, that in no case may the Company consummate any such
consolidation, merger, sale or transfer if (i) at the time of or immediately
after such transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (ii) prior to, simultaneously with or immediately after such
transaction, the shareholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13 shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidation or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in clauses (a) and
(b) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all out standing shares of Common Stock which is a Qualified
Offer as such term is defined in Section 11(a)(ii) hereof (or a wholly owned
subsidiary of any such Person or Persons), (ii) the price per share of Common
Stock offered in such transaction is not less than the price per share of Common
Stock paid to all holders of shares of Common Stock whose shares were purchased
pursuant to such tender offer or
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<PAGE> 36
exchange offer and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights, and Fractional Shares. 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 Right
Certificates which evidence fractional Rights. If the Company shall determine
not to issue such 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 current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated by transaction reporting system with respect to securities listed
on the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights, selected by the Board
of Directors of the Company. If on any such date no such market maker is making
a market in the Rights, the fair value of the Rights on such date as determined
in good faith by the Board of Directors of the Company shall be used.
(a) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of the
fraction of a share for which a Right is then exercisable) upon exercise of the
Rights or to distribute certificates which evidence fractional shares (other
than fractions which are integral multiples of the fraction of share for which a
Right is
32
<PAGE> 37
exercisable). In lieu of fractional shares that are not integral multiples of
the fraction for which a Right is then exercisable, the Company may pay to the
registered holders of Right Certificates at the time such Right Certificates are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share of Preferred Stock. For purposes of this Section
14, the current market value of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as deter mined pursuant to the second
sentence of Section 11(d)) for the Trading Day immediately prior to the date of
such exercise.
(b) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, 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 the
current market value of one (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Rights
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.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, any registered holder of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, any registered holder of the Common Stock), may,
on his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the
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obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transfer
able only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent and then if
surrendered at the principal stock transfer office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed; and
(c) subject to Sections 6(a) and 7(f), the Company and the Rights
Agent may deem and treat the person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(e), shall be
required to be affected by any notice to the contrary.
(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 executive order promulgated or
enacted by any govern mental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stock holder. No
holder, as such, of any Right Certificate shall be entitled to vote,
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receive dividends or be deemed for any purpose the holder of Preferred Stock or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote at the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25),or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reason able
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agree 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.
(a) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corpora tion
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust, stock transfer or other shareholder services business of the
Rights
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Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned, and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates, either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent: and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(a) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates, either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent under takes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates by
their acceptance thereof, shall be bound:
(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 act or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be
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conclusively proved and established by a certificates signed by the Chairman of
the Board, the President, 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.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates, or be required to verify the same (except its
countersignature thereof), but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11, 13 or 24 or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock or Preferred Stack 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 reason ably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
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(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 President, 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 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 cf the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(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
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Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of Common Stock and Preferred Stock by registered or certified
mail, and, if such resignation occurs after the Distribution Date, to the
registered holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of Common Stock and Preferred Stock by
registered or certified mail, and, if such removal occurs after the Distribution
Date, to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then any registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a legal business entity
organized and doing business under the laws of the United States or of a state
of the United States in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer or shareholders services powers and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a legal business entity
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 Common Stock and Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the
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contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price per share and in the
number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, granted or awarded as
of the Distribution Date, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, 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. The Board Directors may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth Business Day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth
Business Day following the Record Date), or (ii) the Final Expiration Date, and
as provided herein, elect to redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any combination or subdivision of the
outstanding Common Stock, any dividend payable in Common Stock in respect of the
outstanding Common Stock or any other similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights, evidence of which shall have been
filed with the Rights Agent, without any further action and without any further
notice, the only right of the holders of Rights shall be to receive the
Redemption Price and such holders shall have no right to exercise the Rights.
Promptly after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing such notice
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to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent, or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(a)(ii) Event until the expiration of
the Company's right of redemption hereunder. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the Current
Market Price, as defined in Section 11(d)(i) hereof, of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate by the
Board of Directors.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Stock for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such
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exchange; provided, how ever, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Stock (or Equivalent Preferred Stock, as
such term is defined in paragraph (b) of Section 11 hereof) for Common Stock
exchange able for Rights, at the initial rate of one one-hundredth of a share of
Preferred Stock (or Equivalent Preferred Stock) for each share of Common Stock,
as appropriately adjusted to reflect stock splits, stock dividends and other
similar transactions after the date hereof.
(d) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional shares
of Common Stock. In lieu of such fractional shares of Common Stock, there shall
be paid to the registered holders of the Rights Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this subsection (e), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company, at any
time after the Distribution Date, shall propose (i) to pay any dividend payable
in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular periodic
cash dividend at a rate
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not in excess of 130% of the rate of the last cash dividend thereto fore paid),
or out of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or a series of related
transactions, of more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons,
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 a Right, to
the extent feasible and in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Preferred Stock, 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 twenty days prior to the record date for determining holders
of Preferred Stock for purposes of such action, and in the case of any such
other action, at least twenty days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of Preferred
Stock, whichever shall be the earlier.
(a) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and 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) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock 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 Right Certificate
to or on the Company shall be sufficiently given or made if sent by
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first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Browning-Ferris Industries, Inc.
P.O. Box 3151
Houston, Texas 77253
Attention: Secretary
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 Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Blvd.
Suite 4650
Jersey City, New Jersey 07310
Attention: Tenders and Exchanges Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if prior
to the Distribution Date, to the holder of certificates representing shares of
Common Stock) 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 Rights Agent.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to change or supplement the provisions hereof in
any manner which the Company may
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deem necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates; provided this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (B) any other time period, unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock. Notwithstanding
anything herein to the contrary, this Agreement may not be amended at a time
when the Rights are not redeemable.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions Taken by the Board of Directors.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock or of any other class of capital stock outstanding at any
particular time, including for purposes of determining the particular percentage
of the outstanding Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) (as in
effect on the date of this Agreement) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board 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 a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board, or any of the directors on the Board to any liability to the
holders of the Rights.
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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 Right Certificates (and, prior to the Distribution
Date, registered holders of Common Stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, registered holders
of the Common Stock).
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, 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 Business Day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision requiring a specific
group of Directors of the Company to act is held to by any court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board of Directors of the Company in
accordance with applicable law and the Company's Restated Certificate of
Incorporation and By-laws.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
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.
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<PAGE> 51
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.
47
<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
Attest: BROWNING-FERRIS INDUSTRIES, INC.
By /s/ Eileen B. Schuler By /s/ Jeffrey E. Curtiss
------------------------------------ -----------------------------------
Title: Assistant Secretary Title: Senior Vice
President and Chief
Financial Officer
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By /s/ David Cohn By /s/ Joanne Gorostiola
------------------------------------ -----------------------------------
Title: Customer Service Officer Title: Assistant Vice President
48
<PAGE> 53
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
BROWNING - FERRIS INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, William D. Ruckelshaus, Chairman of the Board, and Edward
C. Norwood, Vice President and Secretary, of Browning-Ferris Industries, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the said Corporation,
the said Board of Directors on June 3, 1998, adopted the following resolution
creating a series of 4,000,000 shares of Preferred Stock designated as Series B
Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series B Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 4,000,000.
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Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series B Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series B Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of January, April, July and October in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series B Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, par
value $.16 2/3 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series B Junior Participating Preferred Stock. In the
event the Corporation shall at any time after June 3, 1998 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series B Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series B Junior Participating Preferred Stock as provided in Paragraph
(A) above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent
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Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series B
Junior Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series B Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series B Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series B Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series B Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B
Junior Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series B Junior Participating Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series B Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
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number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series B Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series B
Junior Participating Preferred Stock shall be in arrears in an amount
equal to six (6) quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Series B
Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the Series
B Junior Participating Preferred Stock) with dividends in arrears in an
amount equal to six (6) quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two (2)
directors.
(ii) During any default period, such voting right of
the holders of Series B Junior Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of
any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of directors shall be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by
the holders of Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right,
voting as a class, to elect directors to fill such vacancies, if any,
in the Board of Directors as may then exist up to two (2) directors or,
if such right is exercised at an annual meeting, to elect two (2)
directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Preferred
Stock
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shall have the right to make such increase in the number of directors
as shall be necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have exercised
their right to elect directors in any default period and during the
continuance of such period, the number of directors shall not be
increased or decreased except by vote of the holders of Preferred Stock
as herein provided or pursuant to the rights of any equity securities
ranking senior to or pari passu with the Series B Junior Participating
Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice-President or the Secretary
of the Corporation. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to this
Paragraph (C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later than 60 days
after such order or request or in default of the calling of such
meeting within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning in
the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding. Notwithstanding the provisions
of this Paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date fixed
for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of directors
until the holders of Preferred Stock shall have exercised their right
to elect two (2) directors voting as a class, after the exercise of
which right (x) the directors so elected by the holders of Preferred
Stock shall continue in office until their successors shall have been
elected
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<PAGE> 58
by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
Paragraph (C)(ii) of this Section 3) be filled by vote of a majority of
the remaining directors theretofore elected by the holders of the class
of stock which elected the director whose office shall have become
vacant. References in this Paragraph (C) to directors elected by the
holders of a particular class of stock shall include directors elected
by such directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a class to
elect directors shall cease, (y) the term of any directors elected by
the holders of Preferred Stock as a class shall terminate, and (z) the
number of directors shall be such number as may be provided for in the
certificate of incorporation or by-laws irrespective of any increase
made pursuant to the provisions of Paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or by-laws). Any
vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a
majority of the remaining directors.
(D) Except as set forth herein, holders of Series B Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
B Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
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dividends or upon liquidation, dissolution or winding up) to the
Series B Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make
any other distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Junior Participating Preferred Stock, except
dividends paid ratably on the Series B Junior Participating Preferred
Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Junior Participating Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series B Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series B Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series B
Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series B Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in
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<PAGE> 60
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series B Junior Participating
Preferred Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to date of such payment (the
"Series B Liquidation Preference"). Following the payment of the full amount of
the Series B Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series B Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series B Liquidation Preference by (ii) 100 (as appropriately
adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series B Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series B Junior Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series B Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series B Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
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(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such even shall be adjusted by multiplying such Adjustment
Number by a fraction of the numerator of which is the number of shares of Common
Stock outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series B Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series B Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series B Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Seris B Junior Participating
Preferred Stock shall rank junior to all other series of the Corporation's
Preferred Stock as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
Section 10. Amendment. At any time when any shares of
Series B Junior Participating Preferred Stock are outstanding, neither the
Restated Certificate of Incorporation of the Corporation nor this Certificate of
Designation shall be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Junior
Participating Preferred Stock so as
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to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series B Junior Participating
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series B Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series B Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this ___ day of June, 1998.
--------------------------
Chairman of the Board
Attest:
- ---------------------------
Secretary
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<PAGE> 63
Exhibit B
[Form of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER _________ __, 200_ UNLESS EXTENDED PRIOR
THERETO BY THE BOARD OF DIRECTORS OR EARLIER IF RE DEEMED 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, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[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 PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF SUCH AGREEMENT.]1
- ------------------------------
1 The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
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<PAGE> 64
RIGHT CERTIFICATE
BROWNING-FERRIS INDUSTRIES, 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 June 3, 1998 (the
"Rights Agreement"), between Browning-Ferris Industries, Inc., a Delaware
corporation (the "Company"), and First Chicago Trust Company of New York, a New
York corporation (the "Rights Agent"), to purchase from the Company, at any
time prior to 5:00 P.M. (New York City time) on June 15, 2008 (unless such time
is extended prior thereto by the Board of Directors) at the principal stock
transfer office of the Rights Agent, or its successor as Rights Agent, one
one-hundredth (1/100) of a fully paid and nonassessable share of the Series A
Participating Preferred Stock of the Company ("Preferred Stock"), at a purchase
price of $125 per one one-hundredth of a share (the "Purchase Price") upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per one
one-hundredth of a share set forth above, are the number and Purchase Price as
of June 3, 1998 based on the shares of Preferred Stock of the Company 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 shares of
Preferred Stock will be issued.
Upon the occurrence of a Section ll(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such 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, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities which may
be
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<PAGE> 65
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates,
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 at the principal office of the
Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal stock transfer office of the
Rights Agent, may be ex changed for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase such number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right at any time prior to the earlier of the close
of business on (i) the tenth Business Day following the Stock Acquisition Date,
and (ii) the Final Expiration Date. In addition, under certain circumstances
following the Stock Acquisition Date, the Rights may be exchanged, in whole or
in part, for shares of the Common Stock, or shares of preferred stock of the
Company having essentially the same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of the Company authorizing
any such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate and
the Rights will only enable holders to receive the shares issuable upon such
exchange.
No fractional shares of Preferred Stock (other than fractions
which are integral multiples of the fraction of a share for which a Right is
then exercisable) will
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be issued upon the exercise of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment shall be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give consent to or withhold consent from any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
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<PAGE> 67
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ____________, _____.
Attest: BROWNING-FERRIS
INDUSTRIES, INC.
By
- ---------------------------------- -------------------------------------
Secretary Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By
------------------------------
Authorized Signature
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________ Attorney to
transfer the within Right Certificate on the books of the within-named Rights
Agent, with full power of substitution.
Dated: , ----------------------------------
----------- -------- Signature
Signature Guaranteed:
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<PAGE> 69
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [ ] is 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 in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ___________, ____ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To Browning-Ferris Industries, Inc.:
The undersigned hereby irrevocably elects to exercise ________
___________________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights (or such
other securities of the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
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 Right Certificate, a new Right 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:
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<PAGE> 71
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ___________, ____ __________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
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Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On June 3, 1998, the Board of Directors of Browning-Ferris
Indus tries, Inc. (the "Company") declared a dividend distribution of one Right
for each outstanding share of Common Stock, par value $.16-2/3 per share, of the
Company ("Common Stock"). The distribution is payable to the stockholders of
record at the close of business on June 15, 1998. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of a
series of the Company's preferred stock designated as Series B Junior
Participating Preferred Stock ("Preferred Stock") at a price of $125 per one
one-hundredth of a share (the "Pur chase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified in the
Rights Agreement, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 business days following
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 20% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), other than as
a result of repurchases of stock by the Company or (ii) 10 business days (or
such later date as the Board shall determine) following the commencement of a
tender offer or exchange offer that would result in a person or group becoming
an Acquiring Person. Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. Pursuant to
the Rights Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event (as defined below) that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock will be issued.
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The Rights are not exercisable until the Distribution Date
and will expire at 5:00 P.M. (New York City time) on June 15, 2008 (the
"Expiration Date"), unless such date is extended or the Rights are 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 the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate to and to
otherwise be in the best interests of the Company and its stockholders, after
receiving advice from one or more investment banking firms (a "Qualified
Offer"), each holder of a Right will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. Notwithstanding any of the foregoing, following the occurrence of
the event set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of the event set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $125 per Right, each
Right not owned by an Acquiring Person (or by certain related parties) following
an event set forth in the preceding paragraph would entitle its holder to
purchase $250 worth of Common Stock (or other consideration, as noted above) for
$125. Assuming that the Common Stock had a per share value of $25 at such time,
the holder of each valid Right would be entitled to purchase 10 shares of Common
Stock for $125.
In the event that, on or at any time after a Stock Acquisition
Date, the Company (i) engages in a merger or other business combination
transaction (in which the Company is not the surviving corporation other than
with an entity which acquired the shares pursuant to a Qualified Offer), (ii)
the Company engages in a merger or other business combination transaction in
which the Company is the surviving corporation and any shares of the Company's
Common Stock are changed into or exchanged for other securities or assets or
(iii) 50% or more of the assets,
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cash flow or earning power of the Company and its subsidiaries (taken as a
whole) are sold or transferred so that each holder of a Right (except as noted
below) shall thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction would have
a market value (deter mined as provided in the Rights Agreement) of two times
the exercise price of the Right. The events set forth in this paragraph and in
the second preceding paragraph are referred to as the "Triggering Events."
Up to and including the tenth business day after a Stock
Acquisition Date, the Company may redeem the rights in whole, but not in part,
at a price of $.01 per Right, (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors). Promptly upon the
action of the Board of Directors of the Company electing to redeem the Rights,
the Rights will terminate and the only right of the holders of Rights will be to
receive the $.01 Redemption Price.
At any time after a person becomes an Acquiring Person and
prior to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding Common Stock, the Board may exchange the Rights (other than
Rights owned by such person or group which have become void), in whole or in
part, for Common Stock at an exchange ratio of one share of Common Stock, or one
one-hundredth of a share of Preferred Stock (or of a share of a class or series
of the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company or in the event of the
redemption of the Rights as set forth above.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended by
the Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights, or to shorten or lengthen any time
period under the
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Rights Agreement. The foregoing notwithstanding, no amendment may be made at
such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated __________, 1998 and a Current Report on Form 8-K dated
__________, 1998. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
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