<PAGE> 1
================================================================================
COMMISSION FILE NO. 0-8630
FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AMRESCO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 59-1781257
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
700 NORTH PEARL STREET, SUITE 2400, LB 342, DALLAS, TX 75201
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
NONE NONE
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF DEBT SECURITIES
AND IS EFFECTIVE UPON FILING PURSUANT TO GENERAL INSTRUCTION A.(c)(1), PLEASE
CHECK THE FOLLOWING BOX. []
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF DEBT SECURITIES
AND IS TO BECOME EFFECTIVE SIMULTANEOUSLY WITH THE EFFECTIVENESS OF A
CONCURRENT REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 PURSUANT TO
GENERAL INSTRUCTION A.(c)(2), PLEASE CHECK THE FOLLOWING BOX. []
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
RIGHTS TO PURCHASE
SERIES A PREFERRED STOCK
(TITLE OF CLASS)
================================================================================
<PAGE> 2
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED
On May 28, 1997, the Board of Directors of AMRESCO, INC. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of the Company's common stock, par value $0.05 per share (the "Common
Stock"), to stockholders of record at the close of business on June 9, 1997.
Each Right entitles the registered holder to purchase from the Company one
one-thousandth (1/1,000) of a share of Series A Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), at a Purchase Price of $125 per one
one-thousandth (1/1,000) of a share, subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and The Bank of New York, as Rights Agent (the
"Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock upon the earlier of (i) ten (10) business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of fifteen percent (15%) or more of the outstanding shares of Common
Stock (the "Stock Acquisition Date"), or (ii) ten (10) business days (or such
later date as the Board of Directors determines) following the commencement of
a tender or exchange offer that would result in a person or group beneficially
owning fifteen percent (15%) or more of such outstanding shares of Common
Stock. The date the Rights separate is referred to as the "Distribution Date."
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 June
9, 1997 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 certificates. 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 the close of business on June 9, 2007, unless earlier redeemed 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 will represent the Rights. Except in connection with shares of
Common Stock issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon
<PAGE> 3
the exercise, conversion or exchange of securities hereafter issued by the
Company, or 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 (i) the Company is the surviving corporation in a
merger or other business combination with an Acquiring Person (or any associate
or affiliate thereof) and its Common Stock remains outstanding and unchanged,
(ii) any person acquires beneficial ownership of more than fifteen percent
(15%) of the outstanding shares of Common Stock (except pursuant to (A) certain
consolidations or mergers involving the Company or sales or transfers of the
combined assets, cash flow or earning power of the Company and its subsidiaries
or (B) an offer for all outstanding shares of Common Stock at a price and upon
terms and conditions which a majority of the Disinterested Directors (as
defined below) determines to be in the best interests of the Company and its
stockholders or (iii) there occurs a reclassification of securities, a
recapitalization of the Company or any of certain business combinations or
other transactions (other than certain consolidations and mergers involving the
Company and sales or transfers of the combined assets, cash flow or earning
power of the Company and its subsidiaries) involving the Company or any of its
subsidiaries which has the effect of increasing by more than one percent (1%)
the proportionate share of any class of the outstanding equity securities of
the Company or any of its subsidiaries beneficially owned by an Acquiring
Person (or any associate or affiliate thereof), each holder of a Right (other
than the Acquiring Person and certain related parties) 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 Purchase Price of the Right. However, Rights are not exercisable
following the occurrence of any of the events described above until such time
as the Rights are no longer redeemable by the Company as described below.
Notwithstanding any of the foregoing, following the occurrence of any of the
events described 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.
For example, at a Purchase Price of $125 per Right, each Right not
owned by an Acquiring Person (or by certain related parties or transferees
thereof) 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 market
price of $62.50 at such time, the holder of each valid Right would be entitled
to purchase four shares of Common Stock for $125.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company enters into a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a consolidation, merger or similar transaction
pursuant to which all or part of the outstanding shares of Common Stock are
changed into or exchanged for stock or other securities of any other person or
cash or any other property or
2
<PAGE> 4
(iii) more than fifty percent (50%) of the combined assets, cash flow or
earning power of the Company and its subsidiaries is sold or transferred (in
each case other than certain consolidations with, mergers with and into, or
sales of assets, cash flow or earning power by or to subsidiaries of the
Company as specified in the Rights Agreement), each holder of a Right (except
Rights which previously have been voided as set forth above) will thereafter
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the Purchase Price of the Right. The events
described in this paragraph and in the second preceding paragraph are referred
to as the "Triggering Events."
The Purchase Price payable, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights, options or warrants
to subscribe for Preferred Stock or securities convertible into Preferred Stock
at less than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness,
cash (excluding regular quarterly cash dividends), assets (other than dividends
payable in Preferred Stock) or subscription rights or warrants (other than
those referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of
the Purchase Price. No fractional shares of Preferred Stock are required to be
issued (other than fractions which are integral multiples of one one-thousandth
(1/1,000) of a share of Preferred Stock) and, in lieu thereof, the Company may
make an adjustment in cash based on the market price of the Preferred Stock on
the trading date immediately prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding shares of Common Stock, the Board of Directors of the
Company may, without payment of the Purchase Price by the holder, exchange the
Rights (other than Rights owned by such person or group, which will become
void), in whole or in part, for shares of Common Stock at an exchange ratio of
one-half (1/2) the number of shares of Common Stock (or in certain
circumstances Preferred Stock) for which a Right is exercisable immediately
prior to the time of the Company's decision to exchange the Rights (subject to
adjustment).
At any time until ten (10) business days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right (payable in cash, shares of Common Stock or
other consideration deemed appropriate by the Board of Directors). Immediately
upon the action of the Board of Directors ordering redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be
to receive the $0.001 redemption price.
3
<PAGE> 5
The term "Disinterested Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Disinterested
Directors, but does not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
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 an acquiring company as set forth above or in
the event that the Rights are redeemed.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date; provided,
that any amendments after the Stock Acquisition Date must be approved by a
majority of the Disinterested Directors. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, inconsistency or defect, to make changes which do not adversely
affect the interest of holders of Rights (excluding the interest of any
Acquiring Person) or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption can be made at such time as the Rights are not redeemable;
and, provided, that any amendments after the Stock Acquisition Date must be
approved by a majority of the Disinterested Directors.
A copy of the Rights Agreement specifying the terms of the Rights, the
form of Certificate of Designation, Preferences and Rights of Series A
Preferred Stock and the form of Rights Certificate are filed herewith as
Exhibits and are incorporated herein by reference. Copies of the Rights
Agreement are also available free of charge from the Rights Agent. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
ITEM 2. EXHIBITS
1 Rights Agreement, dated as of May 28, 1997, by and between AMRESCO,
INC. and The Bank of New York, as Rights Agent, including exhibits
thereto.
2 Form of Certificate of Designation, Preferences and Rights of Series A
Preferred Stock of AMRESCO, INC. (attached as Exhibit 1 to the Rights
Agreement filed as Exhibit 1 hereto).
4
<PAGE> 6
3 Form of Rights Certificate (attached as Exhibit 2 to the Rights
Agreement filed as Exhibit 1 hereto).
5
<PAGE> 7
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
AMRESCO, INC.
May 30, 1997 By /s/ L. Keith Blackwell
------------------------------------
L. Keith Blackwell
Vice President, General Counsel and
Secretary
6
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION
- -------- -----------
<S> <C>
1 Rights Agreement, dated as of May 28, 1997, by and between AMRESCO,
INC. and The Bank of New York, as Rights Agent, including exhibits
thereto.
2 Form of Certificate of Designation, Preferences and Rights of
Series A Preferred Stock of AMRESCO, INC. (attached as Exhibit 1
to the Rights Agreement filed as Exhibit 1 hereto).
3 Form of Rights Certificate (attached as Exhibit 2 to the Rights
Agreement filed as Exhibit 1 hereto).
</TABLE>
<PAGE> 1
Exhibit 1
AMRESCO, INC.
AND
THE BANK OF NEW YORK
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF MAY 28, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION PAGE
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3. Issuance of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Distribution Date; Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Common Stock Certificates; Summary of Rights. . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Form; Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Acquiring Person Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Registration and Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Issuance of New Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . . . . . . . . . . . . . . 11
(a) Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Rights Agent Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Partial Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Termination of Acquiring Person's Rights. . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Surrender of Rights Certificates; Identity of Beneficial Owner. . . . . . . . . . . . . . 14
Section 8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9. Reservation and Availability of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Reservation of Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Registration under the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Covenant Regarding Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Transfer Taxes and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights . . . . . . . . . . . . 16
(a) Certain Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Purchase Price Adjustment -- Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Purchase Price Adjustment -- Cash, Assets, etc. . . . . . . . . . . . . . . . . . . . . . 21
(d) Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Purchase Price Adjustment Threshold. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Equivalent Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(g) Post-Adjustment Rights Issuances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(h) Preferred Stock Anti-Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(i) Adjustment of Number of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(j) Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(k) Adjustment Below Par Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(l) Adjustment Effective as of Future Date; Exercise. . . . . . . . . . . . . . . . . . . . . 25
(m) Tax Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(n) Restriction on Certain Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(o) Restriction Against Diminishing Benefits of the Rights. . . . . . . . . . . . . . . . . . 26
(p) Common Stock Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . 27
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Flip-over Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Principal Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Supplemental Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Fractional Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Fractional Shares of Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Fractional Shares of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Waiver of Fractional Rights and Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 17. Rights Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . 34
(a) Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
(b) Prior Countersignatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Legal Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Certification by the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(c) Liability for Negligence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(d) Statements of Fact or Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(e) Agreement; Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(f) Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(g) Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(h) Dealing in Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(i) Agents; Reasonable Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(j) Expenses; Repayment Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(k) Exercise of Rights; Consultation with Company. . . . . . . . . . . . . . . . . . . . . . 36
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) Effect of Redemption; Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Right to Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Effect of Exchange; Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(c) Common Stock Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Insufficient Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(a) Preferred Stock Transactions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(b) Other Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 29. Determinations and Actions by the Board of Directors,
Disinterested Directors, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Exhibit 1 Certificate of Designation, Preferences and Rights of Series A
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Exhibit 2 Form of Rights Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Exhibit 3 Letter to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Exhibit 4 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
(iv)
<PAGE> 6
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 28, 1997, between AMRESCO, INC., a
Delaware corporation (the "Company"), and The Bank of New York (the "Rights
Agent").
RECITALS
On May 28, 1997 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the close of business on June 9, 1997 (the "Record Date"), and
has authorized the issuance of one Right (as such number may hereafter be
adjusted pursuant to the provisions of Section 11(p) (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights -- Common Stock
Adjustments)) for each share of Common Stock of the Company issued between the
Record Date (whether originally issued or delivered from the Company's
treasury) and the Distribution Date, each Right initially representing the
right to purchase one one-thousandth of a share of Series A Preferred Stock of
the Company having the rights, powers and preferences set forth in the form of
Certificate of Designation, Preferences and Rights attached hereto as Exhibit
1, upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
AGREEMENT
In consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
shares of Common Stock then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any
such plan, or (iv) any Person who becomes an Acquiring Person solely as a
result of a reduction in the number of shares of Common Stock outstanding due
to the repurchase of shares of Common Stock by the Company, unless and until
such Person shall purchase or otherwise become (as a result of actions taken by
such Person or its Affiliates or Associates) the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then outstanding shares
of Common Stock; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Stock of the Company
<PAGE> 7
then outstanding by reason of share repurchases by the Company and shall, after
such share repurchases by the Company, become the Beneficial Owner of any
additional Common Stock of the Company, then such Person shall be deemed to be
an "Acquiring Person," unless upon the consummation of the acquisition of such
additional shares of Common Stock such Person does not beneficially own 15% or
more of the shares of Common Stock then outstanding. Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an Acquiring Person, as defined pursuant
to the foregoing provisions of this paragraph, has become such inadvertently
(including, without limitation, because (i) such Person was unaware that it
beneficially owned a percentage of Common Stock that would otherwise cause such
Person to be an Acquiring Person, or (ii) such Person was aware of the extent
of its Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without any
intention of changing or influencing control of the Company, and such Person
divests as promptly as practicable a sufficient number of shares of Common
Stock so that such Person would no longer be an Acquiring Person as defined
pursuant to the foregoing provisions of this paragraph, then such Person shall
not be deemed to be or to have become an Acquiring Person for any purposes of
this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as
amended and in effect from time to time.
(c) "Adjustment Shares" shall have the meaning set forth
in Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights -- Certain Adjustments)
(d) "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.
(e) "Agreement" shall mean this Rights Agreement as
originally executed or as it may from time to time be supplemented or amended
pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of
such Person's Affiliates or Associates, directly or indirectly, has the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however, that a
Person shall not, for purposes of this paragraph (i), be deemed the "Beneficial
Owner" of or to "beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such
2
<PAGE> 8
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (B) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering
Event, which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates) or Section 22 (Issuance of New Rights Certificates) (the
"Original Rights") or pursuant to Section 11(i) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Adjustment of Number of
Rights) in connection with an adjustment made with respect to any Original
Rights;
(ii) which such Person or any of
such Person's Affiliates or Associates, directly or indirectly, has the right
to vote or dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act, and (B)
is not also then reportable by such Person on a Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are "beneficially
owned," directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or understanding (whether or not
in writing), for the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in the proviso to subparagraph (ii) of this
paragraph (f)) or disposing of any voting securities of the Company;
provided, however, that nothing in this paragraph (f) 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 (40) calendar days after the date of such acquisition.
(g) "Board" means the Board of Directors of the Company.
(h) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of Texas
are authorized or obligated by law or executive order to close.
3
<PAGE> 9
(i) "Close of Business" on any given date shall mean 5:00
P.M., Dallas, Texas time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Dallas, Texas time, on the next
succeeding Business Day.
(j) "Common Stock" shall mean the common stock, par value
$0.05 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock of
such Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(k) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(l) "Company" shall mean the Person named as the
"Company" in the first paragraph of this Agreement until a successor
corporation shall have become such, or until a Principal Party shall assume,
and thereafter be liable for, all obligations and duties of the Company
hereunder, pursuant to the applicable provisions of this Agreement, and
thereafter "Company" shall mean such successor corporation or Principal Party.
(m) "Current Market Price" shall have the meaning set
forth in Section 11(d) (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights -- Current Market Price).
(n) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(o) "Disinterested Director" shall mean (i) any member of
the Board, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the date of this Agreement,
or (ii) any Person who subsequently becomes a member of the Board, while such
Person is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative or nominee
of an Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by
a majority of the Disinterested Directors.
(p) "Distribution Date" shall have the meaning set forth
in Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
4
<PAGE> 10
(q) "Equivalent Preferred Stock" shall have the meaning
set forth in Section 11(b) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Purchase Price Adjustment -- Capital Stock).
(r) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement.
(s) "Exchange Number" shall mean one-half of the number
of shares of Common Stock, one-thousandths of a share of Preferred Stock, or
shares or other units of other property for which a Right is exercisable
immediately prior to the time of the action of the Board to exchange the
Rights.
(t) "Expiration Date" shall have the meaning set forth in
Section 7(a) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Exercise).
(u) "Final Expiration Date" shall mean the Close of
Business on June 9, 2007.
(v) "Flip-in Event" shall mean any event described in
Section 11(a)(ii) (A) or (B) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(w) "Flip-in Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(x) "Flip-over Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event).
(y) "Original Rights" shall have the meaning set forth in
Section 1(f)(i) (Certain Definitions).
(z) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(aa) "Preferred Stock" shall mean shares of Preferred
Stock, Series A, par value $1.00, of the Company, and, to the extent that there
is not a sufficient number of shares of Series A Preferred Stock authorized to
permit the full exercise of the Rights, any other series of Preferred Stock,
par value $1.00, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Preferred Stock.
(bb) "Principal Party" shall have the meaning set forth in
Section 13(b) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Principal Party).
5
<PAGE> 11
(cc) "Purchase Price" shall have the meaning set forth in
Section 4(a) (Form of Rights Certificates -- Form; Date).
(dd) "Record Date" shall have the meaning set forth in the
Recitals at the beginning of the Agreement.
(ee) "Redemption Date" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
(ff) "Redemption Price" shall have the meaning set forth
in Section 23(a) (Redemption and Termination -- Redemption).
(gg) "Rights" shall have the meaning set forth in the
Recitals at the beginning of the Agreement.
(hh) "Rights Agent" shall mean the Person named as the
"Rights Agent" in the first paragraph of this Agreement until a successor
Rights Agent shall have become such pursuant to the applicable provisions
hereof and thereafter "Rights Agent" shall mean such successor Rights Agent. If
at any time there is more than one Person appointed by the Company as Rights
Agent pursuant to the applicable provisions of this Agreement, "Rights Agent"
shall mean and include each such Person.
(ii) "Rights Certificates" shall have the meaning set
forth in Section 3(a) (Issuance of Rights Certificates -- Distribution Date;
Rights Certificates).
(jj) "Rights Dividend Declaration Date" shall have the
meaning set forth in the RECITALS clause at the beginning of the Agreement.
(kk) "Spread" shall have the meaning set forth in Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Certain Adjustments).
(ll) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
(mm) "Subsidiary" shall mean, with reference to any
Person, any corporation or other entity of which a majority of the voting power
of equity securities or majority of the equity interest is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such Person.
(nn) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
6
<PAGE> 12
(oo) "Trading Day" shall have the meaning set forth in
Section 11(d)(i) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Current Market Price).
(pp) "Triggering Event" shall mean any Flip-in Event or
any Flip-over Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Distribution Date; Rights Certificates. Until the
earlier of (i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date (or, if the tenth Business Day after the Stock Acquisition
Date occurs before the Record Date, the Close of Business on the Record Date),
or (ii) the Close of Business on the tenth Business Day (or such later date as
the Board shall determine prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if
upon consummation thereof such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding (the earlier of (i) and
(ii) being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also to
be certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company, except
pursuant to the provision of Section 23 (Redemption and Termination)). As soon
as practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit 2 hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to
Section 11(p) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Common Stock Adjustments) at the time of distribution of
the Rights Certificates, the Company shall make the necessary and appropriate
rounding
7
<PAGE> 13
adjustments (in accordance with Section 14(a) (Fractional Rights and Fractional
Shares -- Fractional Rights)) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) Common Stock Certificates; Summary of Rights. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights associated with the Common Stock
represented by such certificates will be evidenced by such certificates alone
and the registered holders of such Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the Distribution Date or
the Expiration Date, 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. On the
Record Date, or as soon as practicable thereafter, the Company will send a copy
of a Summary of Rights to Purchase Preferred Stock, in substantially the form
of Exhibit 3 hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of shares of Common Stock as of the close of
business of the Record Date, at the address of such holder shown on the records
of the Company.
(c) Legend. Rights shall be issued in respect of all
certificates for shares of Common Stock which are issued (whether originally
issued or from the Company's treasury) after the Record Date but prior to the
earliest of the (i) Distribution Date, (ii) the Expiration Date, or (iii) the
Redemption Date, or, in certain circumstances provided in Section 22 (Issuance
of New Rights Certificates) after the Distribution Date. Certificates
representing such shares of Common Stock shall also be deemed to be
certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement dated
as of May 28, 1997, by and between AMRESCO, INC. (the
"Company") and The Bank of New York, as Rights Agent (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement,
Rights issued to, or
8
<PAGE> 14
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), whether currently held by or
on behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of (i) the Distribution Date, (ii) the Expiration Date, and (iii) the
Redemption Date, (x) the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, (y) the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights, and (z) the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with such shares of
Common Stock. In the event that the Company purchases, or acquires any shares
of Common Stock after the Record Date but prior to the Distribution Date, any
rights associated with such shares of Common Stock shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) Form; Date. The Rights Certificates (and the forms
of election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit 2 hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed or any securities association on whose
interdealer quotation system the Rights may be from time to time authorized for
quotation, or to conform to usage. Subject to the provisions of Section 11
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights)
and Section 22 (Issuance of New Rights Certificates), the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as shall be set forth therein at
the price set forth therein (such exercise price per one one-thousandth of a
share is referred to herein as the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Acquiring Person Legend. Any Rights Certificate
issued pursuant to Section 3(a) (Issuance of Rights Certificates --
Distribution Date; Rights Certificates) or Section 22 (Issuance of New Rights
Certificates) that represents Rights beneficially owned by (i) an Acquiring
Person or any Associate or Affiliate of
9
<PAGE> 15
an 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
Disinterested Directors have determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section
7(e) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights) and any Rights Certificate issued
pursuant to Section 6 (Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates),
Section 11 (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights) or Section 22 (Issuance of New Rights Certificates) upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
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 dated as of May 28, 1997, by and
between AMRESCO, INC. and The Bank of New York, as Rights Agent).
Accordingly, this Rights Certificate and the Rights represented hereby
may become null and void in the circumstances specified in Section
7(e) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights) of such Agreement.
Section 5. Countersignature and Registration.
(a) Signatures. The Rights 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 shall
have affixed thereto the Company's seal or a facsimile thereof which shall be
attested to by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and issued
and delivered by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be such officer of
the Company; and any Rights Certificates may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Rights
Certificate, shall
10
<PAGE> 16
be a proper officer of the Company to sign such Rights Certificate, although at
the date of the execution of this Rights Agreement any such person was not such
an officer.
(b) Registration and Transfer. Following the
Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the appropriate place for surrender
of Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Rights Certificates,
the number of Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Procedure. Subject to the provisions of Section 4(b)
(Form of Rights Certificates -- Acquiring Person Legend), Section 7(e)
(Exercise of Rights; Purchase Price; Expiration Date of Rights -- Termination
of Acquiring Person's Rights) and Section 14 (Fractional Rights and Fractional
Shares), at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-thousandths of a share of Preferred Stock
(or, following a Triggering Event, Common Stock, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) 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 Rights Certificate or
Rights 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 Rights Certificates.
(b) Issuance of New Rights Certificates. Upon receipt by
the Company and the Rights Agent of evidence reasonably satisfactory to them of
the
11
<PAGE> 17
loss, theft, destruction or mutilation of a Rights Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Exercise. Subject to Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights), the registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein, including,
without limitation, the restrictions on exercisability set forth in Section
9(c) (Reservation and Availability of Capital Stock -- Registration under the
Act), Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments), Section 23(a) (Redemption
and Termination -- Redemption), and Section 24(b) (Exchange -- Effect of
Exchange; Procedure)) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of one one-thousandths of a share of Preferred
Stock (or other securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercisable and an amount equal to any
applicable transfer tax, at or prior to the earliest of (i) the Final
Expiration Date, (ii) the Redemption Date, or (iii) the expiration of the
Rights pursuant to Section 13(d) (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power -- Exceptions) (the earliest of (i), (ii) and (iii)
being herein referred to as the "Expiration Date"). The payment of the
Purchase Price and the applicable transfer tax, if any (as such amount may be
reduced pursuant to Section 11(a)(iii) (Adjustment of Purchase Price; Number
and Kind of Shares or Number of Rights -- Certain Adjustments)), may be made
(x) in cash, (y) by certified check, cashier's check or money order payable to
the order of the Company, or (z) by delivery of a certificate or certificates
(with appropriate stock powers executed in blank attached thereto) evidencing a
number of shares of Common Stock equal to the then Purchase Price divided by
the closing price (as determined pursuant to Section 11(d) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Current Market
Price) per share of Common Stock on the Trading Day immediately preceding the
date of such exercise. 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) 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
12
<PAGE> 18
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.
(b) Purchase Price. The Purchase Price for each one
one-thousandth of a share of Preferred Stock pursuant to the exercise of a
Right shall initially be $125.00, and shall be subject to adjustment from time
to time as provided in Section 11 (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights) and Section 13(a) (Consolidation, Merger or
Sale or Transfer of Assets or Earning Power -- Flip-over Event) and shall be
payable in accordance with paragraph (a) of this Section 7.
(c) Rights Agent Actions. Upon receipt of a Rights
Certificate representing exercisable Rights and the compliance by the holder of
such Rights Certificate with paragraph (a) of this Section 7, the Rights Agent
shall, subject to Section 20(k) (Duties of Rights Agent -- Exercise of Rights;
Consultation with Company), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock 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-thousandths 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) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 (Fractional Rights and Fractional Shares), (iii)
after receipt thereof, deliver such certificates or depositary receipts to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate.
(d) Partial Exercise. In case the registered holder of
any Rights Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14 (Fractional Rights and Fractional Shares).
(e) Termination of Acquiring Person's Rights.
Notwithstanding anything in this Agreement to the contrary, from and after the
first occurrence of a Flip-in Event, any Rights beneficially owned by (i) an
Acquiring Person, or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person
13
<PAGE> 19
(or of any such Associate or Affiliate) who becomes a transferee after such
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 the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Disinterested Directors have determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) (Form of Rights Certificates
- -- Acquiring Person Legend) are complied with, but shall have no liability to
any holder of Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or any of its
respective Affiliates, Associates or transferees hereunder.
(f) Surrender of Rights Certificates; Identity of
Beneficial Owner. Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise, and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) Reservation of Capital Stock. The Company will cause
to be reserved and kept available out of its authorized and unissued shares of
Preferred
14
<PAGE> 20
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 of Common Stock held in its treasury), the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that, as provided in
this Agreement, including the rights of the Company under Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) to otherwise fulfill its obligations, will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) Listing. So long as the shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any national securities exchange or authorized for quotation on any
interdealer quotation system of any securities association, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange or quoted on such system upon official notice of issuance upon such
exercise.
(c) Registration under the Act. The Company will use its
best efforts to (i) file, as soon as practicable following the earliest date
after the first occurrence of a Flip-in Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Certain Adjustments), or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Act with respect to the
securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) calendar days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the
15
<PAGE> 21
exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
(d) Covenant Regarding Capital Stock. The Company will
take all such action as may be necessary to ensure that all one one-thousandths
of a share 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.
(e) Transfer Taxes and Charges. The Company will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) in respect
of a name other than, that of the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for a number of one one- thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established
to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such fractional shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated as of, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
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 (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights 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
16
<PAGE> 22
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
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) Certain Adjustments.
(i) 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 or split 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 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) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's
Rights), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, split,
combination or reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon
payment of the aggregate adjusted Purchase Price then in effect
necessary to exercise a Right in full, the aggregate number and kind
of shares of Preferred Stock or capital stock, as the case may be,
which, if such Right had been exercised immediately prior to such date
and at a time when the Preferred Stock (or other capital stock, as the
case may be) transfer books of the Company were open, such holder
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, split, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) the
adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) In the event:
(A) (1) any Acquiring
Person or any Associate or Affiliate of any Acquiring Person,
at any time after the date of this Agreement, directly or
indirectly, shall merge into the Company or otherwise combine
with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and the
Common Stock of the Company shall remain outstanding and
unchanged, or (2) subject to Section 23 (Redemption and
Termination),
17
<PAGE> 23
any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan), alone or together with its Affiliates
and Associates, 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
Flip-over Event, 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 a majority of the Disinterested Directors after
receiving advice from one or more investment banking firms
selected by the Disinterested Directors, to be (a) at a price
which is fair to the stockholders of the Company (taking into
account all factors which the Disinterested Directors 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, other than such Acquiring Person, its Affiliates
and its Associates; or
(B) during such time as there is an
Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions involving the
Company or any of its Subsidiaries, other than a transaction
or transactions to which the provisions of Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or
Earning Power -- Flip-over Event) apply (whether or not with
or into or otherwise involving an Acquiring Person) which has
the effect, directly or indirectly, of increasing by more than
1% the proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its
subsidiaries which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of
any Acquiring Person,
then, promptly following the occurrence of any such Flip-in Event
(whether described in Section 11(a)(ii)(A) or (B)), proper provision
shall be made so that each holder of a Right (except as provided below
and in Section 7(e) (Exercise of Rights; Purchase Price; Expiration
Date of Rights -- Termination of Acquiring Person's Rights)) 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 the number of one one-thousandths of a share of
Preferred Stock, such number of shares of Common Stock of the Company
as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to
the
18
<PAGE> 24
first occurrence of a Flip-in 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 per share of Common
Stock on the date of such first occurrence (such number of shares
being referred to as the "Adjustment Shares").
(iii) In the event that the number
of shares of Common Stock that are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess, the "Spread"), and
(B) with respect to each Right, subject to Section 7(e)(Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of
Acquiring Person's Rights), make adequate provision to substitute for
the Adjustment Shares, upon 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 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) calendar
days following the later of (x) the first occurrence of a Flip-in
Event and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) (Redemption and Termination-- Redemption)
expires (the later of (x) and (y) being referred to herein as the
"Flip-in Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, 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. If the Board
shall determine 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) calendar day
period set forth above may be extended to the extent necessary, but
not more than ninety (90) calendar days after the Flip-in Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, the
"Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second
sentences of this
19
<PAGE> 25
Section 11(a)(iii), the Company (x) shall provide, subject to Section
7(e), that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the Current Market Price per share of the Common
Stock on the Flip-in Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Common Stock
on such date.
(iv) If the rules of the national
securities exchange, registered as such pursuant to Section 6 of the
Exchange Act, or of the national securities association, registered as
such pursuant to Section 15A of the Exchange Act, on which the Common
Stock is principally traded or quoted would prohibit such exchange or
association from listing or continuing to list, or from authorizing
for or continuing quotation and/or transaction reporting through an
inter-dealer quotation system, the Common Stock or other equity
securities of the Company if the Rights were to be exercised for
shares of Common Stock in accordance with subparagraph (ii) of this
Section 11(a) because such issuance would nullify, restrict or
disparately reduce the per share voting rights of holders of Common
Stock, the Company shall: (A) determine the Spread, and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) equity securities of
the Company, including, without limitation, Common Stock Equivalents,
other than securities which would have the effect of nullifying,
restricting or disparately reducing the per share voting rights of
holders of Common Stock, (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such aggregate value has been
determined by the Board based upon the advice of a recognized
investment banking firm selected by the Board; provided, however, if
the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) calendar days
following the Flip-in Trigger Date, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, cash having an
aggregate value equal to the Spread. To the extent that the Company
determines that some action need be taken pursuant to the first
sentence of this Section 11(a)(iv), the Company (x) shall provide,
subject to Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights-- Termination of Acquiring Person's Rights),
that such action shall apply uniformly to all outstanding Rights and
(y) may suspend the exercisability of the Rights, but not longer than
ninety (90)
20
<PAGE> 26
calendar days after the Flip-in Trigger Date, in order 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)(iv), the value
of the Common Stock shall be the Current Market Price per share of the
Common Stock on the Flip-in Trigger Date and the value of any Common
Stock Equivalent shall be deemed to have the same value as the Common
Stock on such date.
(b) Purchase Price Adjustment -- Capital Stock. 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 to subscribe for or
purchase (for a period expiring within forty-five (45) calendar days after such
record date) 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 per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of 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 the denominator of which 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 so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board, 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) Purchase Price Adjustment -- Cash, Assets, etc. In
case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger
21
<PAGE> 27
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 subscription rights or warrants (excluding those
referred to in Section 11(b) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights Purchase Price Adjustment -- Capital Stock)), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board, 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 a share of Preferred Stock and the denominator
of which 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 be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.
(d) Current Market Price.
(i) For the purpose of any
computation hereunder, other than computations made pursuant to Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Certain Adjustments) 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 thirty (30) consecutive Trading Days
immediately prior to such date, and for purposes of 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 ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common 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 properly adjusted to take into account
ex-dividend trading. The closing price for each Trading Day shall be the last
sale price, regular way, or, in case no such sale takes place on such Trading
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
22
<PAGE> 28
York Stock Exchange or, if the shares of Common 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
Common Stock are listed or admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System or
such other system then in use, or, if on any such date the shares of Common
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 Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common 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, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(ii) 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 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 1,000 (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 one one-thousandth of a share of Preferred Stock shall
be equal to the Current Market Price of one share of Preferred Stock divided by
1,000.
(e) Purchase Price Adjustment Threshold. 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 one percent (1%) in the Purchase Price; provided however, that any
adjustments which by reason
23
<PAGE> 29
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 (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights) shall be made to the nearest cent or to the nearest 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
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) Equivalent Adjustments. If as a result of an
adjustment made pursuant to Section 11(a)(ii) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Certain Adjustments) or
Section 13(a) (Consolidation Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event) the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise
of any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the 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 Preferred Stock shall apply on like
terms to any such other shares.
(g) Post-Adjustment Rights Issuances. All Rights
originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-thousandths of a share of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Preferred Stock Anti-Dilution. Unless the Company
shall have exercised its election as provided in Section 11(i) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Adjustment of
Number of Rights), upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) (Adjustment of Purchase Price; Number
and Kind of Shares or Number of Rights -- Purchase Price Adjustment -- Capital
Stock) and Section 11(c) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Purchase Price Adjustment -- Cash, Assets, etc.),
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-thousandths of a share of Preferred Stock (calculated to the
nearest one-millionth) obtained by (i) multiplying (x) the number of one one-
thousandths of a share covered by a Right immediately prior to this adjustment,
by (y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
24
<PAGE> 30
(i) Adjustment of Number of Rights. The Company may
elect on or after the date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of
a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) calendar days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed
to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 (Fractional Rights and
Fractional Shares) the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Rights Certificates. Irrespective of any adjustment
or change in the Purchase Price or the number of one one-thousandths of a share
of Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-thousandth of a share and the number of one
one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Adjustment Below Par Value. Before taking any action
that would cause an adjustment reducing the Purchase Price below the then par
or stated value, if any, of the number of one one-thousandths of a share of
Preferred Stock issuable upon exercise of the Rights, the Company shall take
any corporate action which is or may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable such number of one one-thousandths of a share of Preferred
Stock at such adjusted Purchase Price.
25
<PAGE> 31
(l) Adjustment Effective as of Future Date; Exercise. In
any case in which this Section 11 (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights) shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of one one-
thousandths of a share of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the number
of one one-thousandths of a share 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) Tax Adjustments. Anything in this Section 11
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights)
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 its good faith
judgment the Board 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 in this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders.
(n) Restriction on Certain Transactions. The Company
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) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Restriction Against Diminishing Benefits of the
Rights)), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)), (iii) enter
into a statutory share exchange or similar transaction with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), or (iv) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets,
cash flow or earning power aggregating 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 (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger, statutory share
exchange or similar transaction, 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,
26
<PAGE> 32
simultaneously with or immediately after such consolidation, merger, statutory
share exchange or similar transaction, or sale, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event) shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) Restriction Against Diminishing Benefits of the
Rights. The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 (Redemption and Termination) or
Section 27 (Supplements and Amendments) 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) Common Stock Adjustments. 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 or split 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 numerator of 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
outstanding immediately following the occurrence of such event. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such subdivision, combination
or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 (Adjustment
of Purchase Price; Number and Kind of Shares or Number of Rights) and Section
13 (Consolidation, Merger or Sale or Transfer of Assets or Earning Power) the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred
Stock and the Common Stock, a copy of such certificate, and (c) mail or cause
the Rights Agent to mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26
(Notices). The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
27
<PAGE> 33
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) Flip-over Event. In the event that, following the
Stock Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, or enter into a statutory stock
exchange or similar transaction with, any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)(Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
Against Diminishing Benefits of the Rights)), and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction, (y) any Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)) shall
consolidate with, or merge with or into, or enter into a statutory stock
exchange or similar transaction with, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction and, in connection with such
consolidation, merger or statutory share exchange or similar transaction, 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 (z) 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, cash flow or earning power
aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o)), then, and in each such case (except
as may be contemplated by Section 13(d) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Exceptions)), (i) proper provision
shall be made so that: each holder of a Right, except as provided in Section
7(e) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights) 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, nonassessable and freely tradeable shares of Common
Stock of the Principal Party, not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained
by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Flip-over Event (or, if a
Flip-in Event has occurred prior to the first occurrence of a Flip-over Event,
multiplying the number of such one one- thousandths of a share for which a
Right was exercisable immediately prior to the first occurrence of a Flip-in
Event by the Purchase Price in effect immediately prior to such first
occurrence), and (B) dividing that product (which, following the first
occurrence of a Flip-over Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by 50% of the Current
Market Price per share of the Common Stock of such Principal Party on the date
of consummation of such Flip-over Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Flip-over Event,
all the
28
<PAGE> 34
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 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) shall apply only
to such Principal Party following the first occurrence of a Flip-over Event;
(iv) such 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 the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments) hereof shall be of no effect following the first
occurrence of any Flip-over Event.
(b) Principal Party. "Principal Party" shall mean
(i) in the case of any
transaction described in clause (x) or (y) of the first sentence of
Section 13(a) (Consolidation, Merger or Sale or Transfer of Assets or
Earning Power -- Flip- over Event), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such consolidation, merger or statutory share exchange or
similar transaction, and if no securities are so issued, the Person
that is the other party to such consolidation, merger or statutory
share exchange or similar transaction, and
(ii) in the case of any
transaction described in clause (z) of the first sentence of Section
13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event), the Person that is the party receiving the
greatest portion of the assets, cash flow or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, "Principal Party" shall refer to
such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the total outstanding Common Stock having the
greatest aggregate market value.
(c) Supplemental Agreement. The Company shall not
consummate a Flip-over Event unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power) and unless
29
<PAGE> 35
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of such Flip-over Event, the
Principal Party 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 (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration Date;
and
(ii) 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.
The provisions of this Section 13 (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power) shall similarly apply to successive consolidation,
mergers or statutory share exchanges or similar transactions or sales or other
transfers. In the event that a Flip-over Event shall occur at any time after
the occurrence of a Flip-in Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in
Section 13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event).
(d) Exceptions. Notwithstanding anything in this
Agreement to the contrary, Section 13 (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power) shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) (Consolidation, Merger
or Sale or Transfer of Assets or Earning Power -- Flip-over Event) 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 outstanding
shares of Common Stock which complies with the provisions of Section
11(a)(ii)(B) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments) (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 or exchange offer and (iii) the form of consideration being offered
in such transaction is the same as the form of consideration paid to all
holders of shares of Common Stock whose shares were purchased 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.
30
<PAGE> 36
(a) Fractional Rights. The Company shall not be required
to issue fractions of Rights, except prior to the Distribution Date as provided
in Section 11(p) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Common Stock Adjustments), or to distribute Rights
Certificates which evidence 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 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 of the Rights for any Trading Day
shall be the last sale price, regular way, or, in case no such sale takes place
on such Trading Day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System 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. 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 shall be used.
(b) Fractional Shares of Preferred Stock. The Company
shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock which may at the option of the Company, be evidenced by
depositary receipts) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock).
Interests in fractions of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
however, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred 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 one-
31
<PAGE> 37
thousandth of a share of Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-thousandth of a share of Preferred Stock
shall be one one-thousandth of the closing price of a share of Preferred Stock
(as determined pursuant to Section 11(d)(ii) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Current Market Price) for the
Trading Day immediately prior to the date of such exercise.
(c) Fractional Shares of Common Stock. 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)(i) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Current Market Price) for the Trading Day immediately prior to the
date of such exercise.
(d) Waiver of Fractional Rights and Shares. The holder
of a Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares upon exercise of a
Right, except as permitted by this Section 14 (Fractional Rights and Fractional
Shares).
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in his or her own behalf and
for his or her 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 or her right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
32
<PAGE> 38
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) (Transfer, Split Up,
Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates -- Procedure) and Section 7(f) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Surrender of Rights Certificates;
Identity of Beneficial Owner), the Company and the Rights Agent may deem and
treat the person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Rights Certificates or the
associated Common 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) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring Person's
Rights), shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share 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 Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25 (Notice of Certain Events)), or to receive dividends
or
33
<PAGE> 39
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) Compensation. The Company shall pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent, for anything
done or omitted to be done by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against or investigating any claim of liability in the
premises.
(b) Reliance. The Rights Agent shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted to be taken by it in connection with its administration of this
Agreement in reliance upon any Rights 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, or otherwise upon the advice of
counsel as set forth in Section 20 (Duties of Rights Agent).
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Successor. Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 (Change of Rights Agent). In case at
the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or
in the name of the successor
34
<PAGE> 40
Rights Agent; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
(b) Prior Countersignatures. In case at any time the
name of the Rights Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its changed
name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) Legal Counsel. 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 to be taken by it in good faith
and in accordance with such opinion.
(b) Certification by the Company. Whenever in the
performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of Current Market
Price) be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer 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) Liability for Negligence, etc. The Rights Agent
shall be liable hereunder only for its own negligence, bad faith or willful
misconduct.
(d) Statements of Fact or Recitals. The Rights Agent
shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates or be
required to verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be deemed to
have been made by the Company only.
35
<PAGE> 41
(e) Agreement; Adjustments. The Rights Agent shall not
be under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights) or Section 13 (Consolidation, Merger or
Sale or Transfer of Assets or Earning Power) or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after 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 Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) Further Assurances. The Company will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
(g) Instructions. The Rights Agent is hereby authorized
and directed to accept instructions with respect to the performance of its
duties hereunder from the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company
and to apply to such persons for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with the instructions of any such person.
(h) Dealing in Rights. The Rights Agent and any
stockholder, director, officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) Agents; Reasonable Care. 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
36
<PAGE> 42
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) Expenses; Repayment Assurances. 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) Exercise of Rights; Consultation with Company. 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
of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) calendar days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) calendar days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights 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 thirty
(30) calendar days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of any State of the United States, in good standing, which is
authorized under such laws to exercise stock transfer or corporate trust
powers, is subject to supervision or examination by federal or state authority
and 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 corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent
37
<PAGE> 43
any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and the Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21 (Change of Rights Agent), or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of 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, or upon
the exercise, conversion or exchange of securities hereafter issued by the
Company, in either case outstanding as of the Distribution Date, and (b) may,
in any other case, if deemed necessary or appropriate by the Board, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material, adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall
be issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) Redemption. The Company may, at its option, at any
time prior to the earlier of (i) the Close of Business on the tenth Business
Day following the 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, redeem (the date of such redemption being referred to herein as the
"Redemption Date") all but not less than all of the then outstanding Rights at
a redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided, however, that any redemption
after the Stock Acquisition Date must be authorized by a majority of the
Disinterested Directors; provided further, however, that if, following the
occurrence of a Stock Acquisition Date and following the expiration of the
right of redemption hereunder
38
<PAGE> 44
but prior to any Triggering Event, (i) a Person who is an Acquiring Person
shall have transferred or otherwise disposed of a number of shares of Common
Stock in one transaction or series of transactions, not directly or indirectly
involving the Company or any of its Subsidiaries, which did not result in the
occurrence of a Triggering Event such that such Person is thereafter a
Beneficial Owner of 15% or less of the outstanding shares of Common Stock, and
(ii) there are not other Persons, immediately following the occurrence of the
event described in clause (i), who are Acquiring Persons, then the right of
redemption shall be reinstated and thereafter be subject to the provisions of
this Section 23. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Flip-in Event until such time as the Company's right of redemption hereunder
has expired. The redemption of the Rights by the Company may be made effective
at such time, on such basis and with such conditions as the Board in its sole
discretion or the Disinterested Directors in their sole discretion, as
applicable, may establish. The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the Current Market Price of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by Board or the Disinterested Directors, as applicable.
(b) Effect of Redemption; Procedure. Immediately upon
the action of the Company ordering the redemption of the Rights and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after the
Redemption Date, the Company shall (i) give notice of such redemption to the
Rights Agent, (ii) give public notice of such redemption; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such redemption, and (iii) mail notice of such redemption to the
holders of the then outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common 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. Amounts
payable shall be rounded down to the nearest $0.01.
Section 24. Exchange.
(a) Right to Exchange. The Company may, at its option,
at any time and from time to time after the first occurrence of a Flip-in
Event, exchange all or part of the then outstanding and exercisable Rights
(other than Rights which have become void as provided in Section 7(e) (Exercise
of Rights; Purchase Price; Expiration Date of Rights -- Termination of
Acquiring Person's Rights)) for the Exchange Number of shares of Common Stock,
shares or units of Preferred Stock which the Board has determined to be a
Common Stock Equivalent, units of other property or any combination thereof as
determined by the Board. Notwithstanding the foregoing, the Company shall not
be empowered to effect such exchange at any
39
<PAGE> 45
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 shares of Common Stock for or pursuant to any such plan), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner of
50% or more of the shares of Common Stock then outstanding. The exchange of
the Rights by the Company may be made effective at such time, on such basis and
with such conditions as the Board in its sole discretion may establish.
(b) Effect of Exchange; Procedure. Immediately upon the
action of the Company ordering the exchange of any Rights pursuant to paragraph
(a) of this Section 24, evidence of which shall have been filed with the Rights
Agent and without any further action and without any notice, the right to
exercise such Rights will terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock,
Common Stock Equivalents or units of other property equal to the number of such
Rights held by such holder multiplied by the Exchange Number. Promptly after
the action of the Company ordering the exchange of the Rights, the Company
shall (i) file evidence of such action with the Rights Agent, (ii) give public
notice of such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange, and
(iii) mail notice of such exchange to 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 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 as provided in Section 7(e) (Exercise
of Rights; Purchase Price; Expiration Date of Rights -- Termination of
Acquiring Person's Rights)) held by each holder of Rights.
(c) Common Stock Equivalents. In any exchange pursuant
to this Section 24, the Company, at its option, may substitute Common Stock
Equivalents for Common Stock exchangeable for Rights, at the initial rate of
one share of Common Stock Equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in the voting rights of the
Common Stock pursuant to the Company's Certificate of Incorporation, so that
the share of Common Stock Equivalent delivered in lieu of each share of Common
Stock shall have the same voting rights as one share of Common Stock.
(d) Insufficient Common Stock. In the event that the
number of shares of Common Stock which are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit any
exchange of Rights in accordance with this Section 24, the Company may, at its
option, take all such action as may be necessary to authorize additional shares
of Common Stock for issuance upon such exchange.
40
<PAGE> 46
(e) Fractional Shares. Upon the action of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section
24, the Company shall not be required to issue fractions of shares or to
distribute certificates which evidence fractional shares. In lieu of such
fractional shares, the Company may pay to the registered holders of the Rights
Certificates with regard to which such fractional shares would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of one share of Common Stock. For purposes of this Section 24, 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)(i)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Current Market Price)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24, and the value of any Common Stock
Equivalent shall be deemed to have the same current market value as the Common
Stock on such date.
Section 25. Notice of Certain Events.
(a) Preferred Stock Transactions, etc. In case the
Company shall propose, at any time after the Distribution Date, (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 quarterly cash dividend out of earnings or retained earnings of the
Company); (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; (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock); (iv) to effect any consolidation with, merger into or with,
or statutory share exchange or similar transaction with, any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Restriction against Diminishing Benefits of the Rights)),
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 transaction 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 (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)); (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the shares of Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the shares of
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each holder
of a Rights Certificate, to the extent feasible and in accordance with Section
26 (Notices), 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,
statutory share exchange or similar transaction, sale, transfer, liquidation,
dissolution, or winding up is to take place and
41
<PAGE> 47
the date of participation therein by the holders of the shares 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 (20)
calendar days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) calendar days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
shares of Preferred Stock, whichever shall be the earlier.
(b) Other Transactions. In case any of the events set
forth in Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments) 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 (Notices), 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), 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
Rights Certificate to or on the Company shall be sufficiently given or made if
sent by telecopier (with receipt confirmed) or by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
AMRESCO, INC.
700 North Pearl
Suite 2400
Dallas, Texas 75201-7424
Attention: General Counsel
Telecopier: (214) 953-7757
Subject to the provisions of Section 21 (Change of Rights Agent), any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by telecopier (with receipt confirmed) or by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Jim Dimino
Telecopier: (212) 815-3201
42
<PAGE> 48
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
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 Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this Section 27,
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; provided, however, that any
supplement or amendment of this Agreement after the Stock Acquisition Date must
be approved by a majority of the Disinterested Directors. From and after the
Distribution Date and subject to the penultimate sentence of this Section 27,
the Company and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the approval of any holders of Rights
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 hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of any such Person); provided,
however, 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; provided further, that any supplement or amendment of this
Agreement after the Stock Acquisition Date must be approved by a majority of
the Disinterested Directors. 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. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the Purchase
Price, or the number of one one-thousandths of a share of Preferred Stock for
which a right is exercisable; provided, however, that at any time prior to (i)
the existence of an Acquiring Person or (ii) the date that a tender or exchange
offer by any person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
the Board may amend this Agreement to increase the Purchase Price or extend the
Final Expiration Date. Prior
43
<PAGE> 49
to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
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 by the Board of Directors,
Disinterested Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular
percentage of such outstanding shares of 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) of the General Rules and Regulations under the Exchange
Act. The Board (with, where specifically provided for herein, the concurrence
or approval of the Disinterested Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for
herein, the concurrence or approval of the Disinterested Directors) 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 (with, where specifically provided for
herein, the concurrence or approval of the Disinterested Directors) 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 the Disinterested Directors to any liability to the holders of the
Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common 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 Rights 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
44
<PAGE> 50
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board 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
(Redemption and Termination) 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. Without limiting the foregoing, if any provision
requiring a majority of the Board to be Disinterested Directors to act is held
by any court of competent jurisdiction or other authority to be invalid, void
or unenforceable, such determination shall then be made by the Board in
accordance with applicable law and the Company's Certificate of Incorporation
and By-Laws.
Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
* * * * *
45
<PAGE> 51
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: AMRESCO, INC.
By: /s/ Mike McCoy By: /s/ L. Keith Blackwell
------------------------------ -----------------------------------
Mike McCoy L. Keith Blackwell
Assistant Secretary Vice-President, General Counsel
and Secretary
THE BANK OF NEW YORK
By: /s/ KEVIN BRENNAN By: /s/ JIM DIMINO
------------------------------ ----------------------------------
Name: Kevin Brennan Name: Jim Dimino
---------------------- --------------------------
Title: Vice President Title: Assistant Vice President
---------------------- --------------------------
46
<PAGE> 52
Exhibit 1
CERTIFICATE OF
DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
OF
AMRESCO, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
We, L. Keith Blackwell, Vice-President, General Counsel and Secretary
and Mike McCoy, Assistant Secretary of AMRESCO, INC. (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware (the "GCL"), in accordance with the provisions of Section 103
of the GCL, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
(the "Board") by the Restated Certificate of Incorporation of the Corporation,
as amended, the said Board on May 28, 1997, adopted the following resolutions
creating a series of one-hundred thousand shares of Preferred Stock, par value
$1.00 per share, designated as Series A Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board in
accordance with the provisions of its Restated Certificate of Incorporation, as
amended, the Board does hereby create, authorize and provide for the issuance
upon the exercise of the Corporation's Preferred Stock Purchase Rights, of a
series of Preferred Stock of the Corporation, and does hereby fix and state
that the designations, amounts, powers, preferences and relative and other
special rights and the qualifications, limitations or restrictions thereof are
as follows:
Series A Preferred Stock
Section 1. Designation and Amount. The shares of such series
shall be designated as Series A Preferred Stock and the number of shares
constituting such series shall be 100,000.
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 A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board
47
<PAGE> 53
of Directors out of funds legally available for that purpose, quarterly
dividends payable in cash on the 1st day of July, October, January, April, in
each year commencing July 1, 1997 (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 A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $0.01 or (b) subject to the provision for
adjustment hereinafter set forth, one thousand (1,000) times the aggregate per
share amount of all cash dividends, and one thousand (1,000) 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 the common stock of
the Corporation, par value $0.05 per share ("the Common Stock"), or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately preceding
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 A Preferred Stock. In the event the Corporation shall at any
time after May 28, 1997 (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 A 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 A 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 Quarterly Dividend Payment Date, a dividend of $0.01 per share
on the Series A 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 A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
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 A
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.
48
<PAGE> 54
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A 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 A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than thirty (30) days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the holder
thereof to one thousand (1,000) 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 A 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 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 A 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. Except as otherwise provided herein
or by law, the holders of the shares of Series A Preferred Stock shall not be
entitled to vote as a separate class on any matters submitted to a vote of the
stockholders.
(C) (i) If at any time dividends on any Series A
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the holders of the Series A Preferred Stock, voting as a
separate series from all other series of Preferred Stock and classes of capital
stock, shall be entitled to elect two members of the Board of Directors in
addition to any directors elected by any other series, class or classes of
securities, and the authorized number of directors will automatically be
increased by two. Promptly thereafter, the Board of Directors of this
Corporation shall, as soon as may be practicable, call a special meeting of
holders of Series A Preferred Stock for the purpose of electing such members of
the Board of Directors. Said special meeting shall in any event be held within
45 days of the occurrence of such arrearage.
49
<PAGE> 55
(ii) During any period when the holders of Series
A Preferred Stock, voting as a separate series, shall be entitled and shall
have exercised their right to elect two directors, then and during such time as
such right continues (a) the then authorized number of directors shall be
increased by two, and the holders of Series A Preferred Stock, voting as a
separate series, shall be entitled to elect the additional directors so
provided for, and (b) each such additional director shall not be a member of
any existing class of the Board of Directors, but shall serve until the next
annual meeting of stockholders for the election of directors, or until his
successor shall be elected and shall qualify, or until his right to hold such
office terminates pursuant to the provisions of this Section 3(C).
(iii) A director elected pursuant to the terms
hereof may be removed with or without cause by the holders of Series A
Preferred Stock entitled to vote in an election of such Director.
(iv) If during any interval between annual
meetings of stockholders for the election of directors and while the holders of
Series A Preferred Stock shall be entitled to elect two directors, there is no
such director in office by reason of resignation, death or removal, then,
promptly thereafter, the Board of Directors shall call a special meeting of the
holders of Series A Preferred Stock for the purpose of filling such vacancy and
such vacancy shall be filled at such special meeting. Such special meeting
shall in any event be held within 90 days of the occurrence of such vacancy,
unless an annual meeting of stockholders is scheduled during such 90-day
period.
(v) At such time as the arrearage is fully cured,
and all dividends accumulated and unpaid on any shares of Series A Preferred
Stock outstanding are paid, and, in addition thereto, at least one regular
dividend has been paid subsequent to curing such arrearage, the term of office
of any directors elected pursuant to this Section 3(C), or his successor, shall
automatically terminate, and the authorized number of directors shall
automatically decrease by two, the rights of the holders of the shares of the
Series A Preferred Stock to vote as provided in this Section 3(C) shall cease,
subject to renewal from time to time upon the same terms and conditions, and
the holders of shares of the Series A Preferred Stock shall have only the
limited voting rights elsewhere herein set forth.
(D) Except as set forth herein, holders of Series A
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 A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or
50
<PAGE> 56
not declared, on shares of Series A 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 dividends or upon liquidation,
dissolution or winding up) to, the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any
other distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such junior 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 A 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 A Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A 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 A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
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.
51
<PAGE> 57
(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 A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $250 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Notwithstanding any provision of the
Restated Certificate of Incorporation, as amended, to the contrary, following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
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 A Liquidation Preference by (ii)
one thousand (1,000) (as appropriately adjusted as set forth in paragraph (C)
of this Section to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii)
immediately above being referred to as the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A Preferred
Stock and Common Stock, respectively, holders of Series A 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 one (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 A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series A 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.
(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, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares
52
<PAGE> 58
of Common Stock are exchanged for or changed into other stock, securities, cash
or any other property, then in any such case the shares of Series A 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
one thousand (1,000) 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, or (ii) combine 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 A
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. Redemption. The outstanding shares of Series A
Preferred Stock may be redeemed at the option of the Board of Directors as a
whole, but not in part, at any time, or from to time to time, at a cash price
per share equal to one hundred five percent (105%) of (i) the product of the
Adjustment Number times the Average Market Value (as such term is hereinafter
defined) of the Common Stock, plus (ii) all dividends which on the redemption
date have accrued on the shares to be redeemed and have not been paid, or
declared and a sum sufficient for the payment thereof set apart, without
interest. The "Average Market Value" is the average of the closing sale prices
of the Common Stock during the thirty (30) day period immediately preceding the
date before the redemption date on the Composite Tape for New York Stock
Exchange Listed Stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934, as amended, on which such stock is listed,
or, if such stock is not listed on any such exchange, the average of the
closing sale prices with respect to a share of Common Stock during such thirty
(30) day period, as quoted on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use, or if no such
quotations are available, the fair market value of the Common Stock as
determined by the Board of Directors in good faith.
Section 9. Ranking. The Series A 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. Except as otherwise provided in the
Restated Certificate of Incorporation, as amended, or by law, the Restated
Certificate of Incorporation of the Corporation, as amended, shall not be
further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the
53
<PAGE> 59
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. At the Corporation's sole
discretion, Series A 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
A Preferred Stock.
* * * * *
54
<PAGE> 60
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true as of May 28, 1997.
---------------------------------------------
L. Keith Blackwell
Vice President, General Counsel and Secretary
Attest:
- --------------------------------
Mike McCoy
Assistant Secretary
55
<PAGE> 61
Exhibit 2
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R____ ______ Rights
NOT EXERCISABLE AFTER THE EARLIER OF JUNE 9, 2007, OR SUCH DATE AS THE RIGHTS
REPRESENTED HEREBY ARE REDEEMED BY AMRESCO, INC. (THE "CORPORATION"). THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE CORPORATION, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT DATED AS OF MAY 28, 1997, BY AND BETWEEN THE CORPORATION AND
THE BANK OF NEW YORK, AS RIGHTS AGENT (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) (EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS -- TERMINATION OF ACQUIRING PERSON'S RIGHTS) OF SUCH AGREEMENT.](1)
RIGHTS CERTIFICATE
AMRESCO, INC.
This certifies that
_______________________________________________________, or its, his or her
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 May 28, 1997
(the "Rights Agreement"), between AMRESCO, INC., a Delaware corporation (the
"Corporation"), and The Bank of New York (the "Rights Agent"), to purchase from
the Corporation at any time prior to 5:00 P.M. (Dallas, Texas time) on June 9,
2007 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one one-thousandth (1/1,000) of a fully
paid, nonassessable share of Series A Preferred Stock (the "Preferred Stock")
of the Corporation, at a purchase price of $____ per one one-thousandth
(1/1,000) of a share (the "Purchase Price"),
________________________
(1)The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
56
<PAGE> 62
upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of _____________, ______,
based on the Preferred Stock as constituted at such date. The Corporation
reserves the right to require prior to the occurrence of a Triggering Event (as
such term is defined in the Rights Agreement) that upon any exercise of Rights,
a number of Rights be exercised so that only whole shares of Preferred Stock
would be issued.
Upon the occurrence of a Flip-in 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 Associate or Affiliate or
any such Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee after such Acquiring Person or its Associate or Affiliate becomes
such, or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such,
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 Flip-in
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
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain
events, including Triggering Events (as such term is defined in the Rights
Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one one-thousandths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part,
57
<PAGE> 63
the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights for which
this Rights Certificate is not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Corporation at its
option at a redemption price of $0.001 per Right at any time prior to the
earlier of (a) the Close of Business (as such term is defined in the Rights
Agreement) on the tenth (10th) Business Day (as such term is defined in the
Rights Agreement) following the Stock Acquisition Date (as such term is defined
in the Rights Agreement) (as such time period may be extended pursuant to the
Rights Agreement) or (b) the Final Expiration Date (as such term is defined in
the Rights Agreement) and (ii) may be exchanged in whole or in part for
Preferred Stock, shares of the Corporation's Common Stock, par value $0.01 per
share, other property or any combination thereof.
In addition, the Rights may be exchanged, in whole or in part, for
shares of the Common Stock, or shares of common stock equivalents of the
Corporation having essentially the same value or economic rights as such
shares. Immediately upon the action of the Board of Directors of the
Corporation 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 will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth (1/1,000) of a share of Preferred
Stock, which may, at the election of the Corporation, be evidenced by
depositary receipts), but a cash payment will be made in lieu thereof, as
provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Corporation 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 Corporation or any right to
vote for the election of directors or upon any matter submitted to stockholders
of the Corporation 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 of the Corporation (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
58
<PAGE> 64
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
Dated as of _________________
ATTEST: AMRESCO, INC.
By:
- ------------------------------- ------------------------------
Secretary Title:
-----------------------
Countersigned:
RIGHTS AGENT
By:
--------------------------
Authorized Signature
59
<PAGE> 65
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, ___________________________________________________________
hereby sells, assigns and transfers unto ______________________________________
_______________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Corporation, with full power of substitution.
Dated:
----------------------------- ------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights 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); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:
------------------------------ -------------------------------------
Signature
Signature Guaranteed:
60
<PAGE> 66
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: AMRESCO, INC.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Corporation 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
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or
other identifying number
- --------------------------------------------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
- --------------------------------------------------------------------------------
Dated:
----------------------------- -------------------------------------
Signature
Signature Guaranteed:
61
<PAGE> 67
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being acquired or 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); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
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 Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
62
<PAGE> 68
Exhibit 3
[Letter to Stockholders]
June 9, 1997
Dear AMRESCO Stockholder:
On May 28, 1997, your Board of Directors adopted a Stockholder Rights Plan
designed to prevent a potential acquiror from gaining control of the Company
without fairly compensating all of the Company's stockholders.
The Rights will initially trade with shares of the Company's Common Stock
and will have no impact on the way in which the Company's shares are traded.
There are no separate certificates or market for the Rights.
The Rights will not become exercisable and trade separately from the
Common Stock until the earlier of (1) ten business days after a public
announcement that a person has acquired 15% or more of the Common Stock of the
Company or (2) ten business days (or any later date determined by the Company's
Board of Directors) after a person makes a tender or exchange offer for 15% or
more of the Company's Common Stock.
Many other public companies have adopted similar plans, indicating
widespread agreement that such plans can help Directors deflect coercive and
inadequate offers.
A summary of the terms of the Rights is included with this letter.
Sincerely,
---------------------------------------------
---------------------------------------------
63
<PAGE> 69
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 28, 1997, the Board of Directors of AMRESCO, INC. (the "Company")
declared a dividend distribution of one Right for each outstanding share of the
Company's common stock, $0.05 par value (the "Common Stock"), to stockholders
of record at the close of business on June 9, 1997. Each Right entitles the
registered holder to purchase from the Company one one-thousandth (1/1,000) of
a share of Series A Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), at a Purchase Price of $125.00 per one one-thousandth (1/1,000) of a
share, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and
The Bank of New York, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock upon the
earlier of (i) ten (10) business days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of fifteen
percent (15%) or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) ten (10) business days (or such later date as the
Board of Directors shall determine) following the commencement of a tender or
exchange offer that would result in a person or group beneficially owning
fifteen percent (15%) or more of such outstanding shares of Common Stock. The
date the Rights separate is referred to as the "Distribution Date."
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 June
9, 1997 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 certificates. 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 the close of business on June 9, 2007, unless earlier redeemed 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 will represent the Rights. Except in connection with shares of
Common Stock issued or sold pursuant
64
<PAGE> 70
to the exercise of stock options under any employee plan or arrangements, or
upon the exercise, conversion or exchange of securities hereafter issued by the
Company, or 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 (i) the Company is the surviving corporation in a merger
or other business combination with an Acquiring Person (or any associate or
affiliate thereof) and its Common Stock remains outstanding and unchanged, (ii)
any person shall acquire beneficial ownership of more than fifteen percent
(15%) of the outstanding shares of Common Stock (except pursuant to (A) certain
consolidations or mergers involving the Company or sales or transfers of the
combined assets, cash flow or earning power of the Company and its subsidiaries
or (B) an offer for all outstanding shares of Common Stock at a price and upon
terms and conditions which a majority of the Disinterested Directors (as
defined below) determines to be in the best interests of the Company and its
stockholders), or (iii) there occurs a reclassification of securities, a
recapitalization of the Company or any of certain business combinations or
other transactions (other than certain consolidations and mergers involving the
Company and sales or transfers of the combined assets, cash flow or earning
power of the Company and its subsidiaries) involving the Company or any of its
subsidiaries which has the effect of increasing by more than one percent (1%)
the proportionate share of any class of the outstanding equity securities of
the Company or any of its subsidiaries beneficially owned by an Acquiring
Person (or any associate or affiliate thereof), each holder of a Right (other
than the Acquiring Person and certain related parties) 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 Purchase Price of the Right. However, Rights are not exercisable
following the occurrence of either of the events described above until such
time as the Rights are no longer redeemable by the Company as described below.
Notwithstanding any of the foregoing, following the occurrence of any of the
events described 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.
For example, at a Purchase Price of $125 per Right, each Right not owned
by an Acquiring Person (or by certain related parties or transferees) 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 market price of $50
at such time, the holder of each valid Right would be entitled to purchase five
shares of Common Stock for $125.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company shall enter into a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a consolidation, merger or similar transaction
pursuant to which all or part of the outstanding shares of Common Stock are
changed into or exchanged for stock or other securities of any other person or
cash or any other
65
<PAGE> 71
property or (iii) more than 50% of the combined assets, cash flow or earning
power of the Company and its subsidiaries is sold or transferred (in each case
other than certain consolidations with, mergers with and into, or sales of
assets, cash flow or earning power by or to subsidiaries of the Company as
specified in the Rights Agreement), each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, common stock of the acquiring company having a value
equal to two times the Purchase Price of the Right. The events described in
this paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, the number and kind of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights, options or warrants
to subscribe for Preferred Stock or securities convertible into Preferred Stock
at less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness,
cash (excluding regular quarterly cash dividends), assets (other than dividends
payable in Preferred Stock) or subscription rights or warrants (other than
those referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of
the Purchase Price. No fractional shares of Preferred Stock are required to be
issued (other than fractions which are integral multiples of one one-thousandth
(1/1,000) of a share of Preferred Stock) and, in lieu thereof, the Company may
make an adjustment in cash based on the market price of the Preferred Stock on
the trading date immediately prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding shares of Common Stock, the Board of Directors of the
Company may, without payment of the Purchase Price by the holder, exchange the
Rights (other than Rights owned by such person or group, which will become
void), in whole or in part, for shares of Common Stock at an exchange ratio of
one-half (1/2) the number of shares of Common Stock (or in certain
circumstances Preferred Stock) for which a Right is exercisable immediately
prior to the time of the Company's decision to exchange the Rights (subject to
adjustment).
At any time until ten (10) business days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price
of $0.001 per Right (payable in cash, shares of Common Stock or other
consideration deemed appropriate by the Board of Directors). Immediately upon
the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $0.001 redemption price.
66
<PAGE> 72
The term "Disinterested Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Disinterested
Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
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 an acquiring company as set forth above or in
the event that the Rights are redeemed.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date; provided,
that any amendments after the Stock Acquisition Date must be approved by a
majority of the Disinterested Directors. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, inconsistency or defect, to make changes which do not adversely
affect the interest of holders of Rights (excluding the interest of any
Acquiring Person) or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable; and, provided, that any amendments after the Stock Acquisition Date
must be approved by a majority of the Disinterested Directors.
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 filed
on May 30, 1997. A copy of the Rights Agreement is available free of charge
from the Rights Agent. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
67
<PAGE> 73
Exhibit 4
[News Release]
Barry Edwards
IMMEDIATE RELEASE Contacts: Tom Andrus
(214) 953-7700
AMRESCO, INC. ADOPTS STOCKHOLDER RIGHTS PLAN
DALLAS, TEXAS -- May 28, 1997 -- AMRESCO, INC. [Nasdaq: AMMB] (the "Company")
today announced that its Board of Directors has adopted a Stockholder Rights
Plan (the "Plan").
The Plan is designed to protect the Company from unfair or coercive takeover
attempts and to prevent a potential acquirer from gaining control of the
Company without fairly compensating all of the Company's stockholders.
The Plan creates a dividend of one right for each outstanding share of the
Company's Common Stock. The rights are represented by and traded with the
Company's Common Stock. There are no separate certificates or market for the
rights.
The rights do not become exercisable or trade separately from the Common Stock
unless one or both of the following conditions are met: a public announcement
that a person has acquired 15% or more of the Common Stock of the Company, or a
tender or exchange offer is made for 15% or more of the Common Stock of the
Company.
Should either of the aforementioned conditions be met and the rights become
exercisable, each right will entitle the holder thereof to buy 1/1,000th of a
share of the Company's Series A Preferred Stock at an exercise price of
$125.00. Each share of the Series A Preferred Stock will essentially be the
economic equivalent of one share of Common Stock.
Under certain circumstances the rights entitle the holders to buy the Company's
stock at a 50% discount. In the event that (1) the Company is the surviving
corporation in a merger or other business combination with an entity that owns
15% or more of the Company's outstanding stock; (2) any person shall acquire
beneficial ownership of 15% of the Company's outstanding stock; or (3) there is
any type of recapitalization of the Company that results in an increase by more
than 1% of the proportionate share of equity securities of the Company owned by
a person who owns 15% or more of the Company's outstanding stock, each right
holder will have the option to buy for the purchase price Common Stock of the
Company having a value equal to two times the purchase price of the right.
Under certain circumstances the rights entitle the holders to buy shares of the
acquirer's Common Stock at a 50% discount. In the event that, at any time
after a person has acquired 15% or more of the Company's Common Stock, (1) the
Company enters into a merger or other business combination transaction in which
the Company is not the surviving corporation; (2) the Company is the surviving
corporation in a transaction in which all or part of the Common Stock is
exchanged for cash, property or securities of any other person; or (3) more
than 50% of the assets, cash flow or earning power of the Company is sold, each
right holder will have the option to buy for the purchase price stock of the
acquiring company have a value equal to two times the purchase price of the
right.
700 North Pearl Street - Suite 2400 - LB 342 - Dallas, Texas 75201-7424
214-953-7700 - Fax 214-953-7828
68
<PAGE> 74
The rights may be redeemed by the Company for $0.001 per right at any time
until 10 business days following the first public announcement of the
acquisition of beneficial ownership of 15% of the Company's Common Stock.
The distribution of the rights will be made to stockholders of record as of
June 9, 1997. Stockholders of record will; receive a separate mailing
describing the Plan and a copy of the Plan containing all the provisions of the
new rights will be filed with the Securities and Exchange Commission by. The
Company's Plan is similar to those adopted by many other companies.
AMRESCO, INC. is a diversified financial services company providing financing
and value-added services to commercial and consumer borrowers and institutional
investors. The Company is headquartered in Dallas, Texas, and has offices
nationwide, as well as internationally in Canada and the United Kingdom.
69
