File No. 1-7797
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PHH CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Maryland 52-0551284
(State or Other Jurisdiction of Incorporation) (IRS Employer Identification No.)
11333 McCormick Road, Hunt Valley, Maryland 21031
(Address of Principal Executive Offices) (Zip Code)
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Securities to be registered pursuant to Section 12(b) of the Act:
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Title of each class to be so registered Name of each exchange on which registered
Preferred Share Purchase Rights New York Stock Exchange
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Securities to be registered pursuant to Section 12(g) of the Act:
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Title of each class to be so registered Name of each exchange on which registered
None
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Registrant's Securities to be Registered:
The Board of Directors of PHH Corporation (the "Company") has
authorized a distribution of one preferred share purchase right (a "Right") for
each outstanding share of common stock, without par value (the "Common Shares"),
of the Company. The dividend is payable on April 10, 1996 to stockholders of
record on that date (the "Record Date"). The Record Date is the expiration date
of the outstanding rights under the Company's shareholder rights plan under the
Rights Agreement dated as of March 17, 1986, as amended on January 16, 1989 and
April 6, 1992 (the "1986 Rights Plan"). The terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and First
Chicago Trust Company of New York, as Rights Agent (the "Rights Agent"), dated
as of March 15, 1996, as amended from time to time, and are substantially the
same as the term of the rights outstanding until the Record Date under the 1986
Rights Plan.
Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of a Series A Junior Participating
Preferred Stock, without par value, of the Company (the "Preferred Shares") at a
price of $176.00 per one one-hundredth of a Preferred Share (the "Purchase
Price"), subject to adjustment.
Until the earlier to occur of (i) 20 business days following a
public announcement that an "Acquiring Person" acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding Common Shares
or (ii) 20 business days following the commencement or announcement of an
intention to make a tender offer or exchange offer the consummation of which
would result in the "Acquiring Person" becoming the beneficial owner of 20% or
more of such outstanding Common Shares (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record Date, by such Common
Share certificate with a summary description of the Rights attached thereto.
Acquiring Person is defined as any person or group of affiliated or associated
persons, other than employee benefit plans of the Company and its subsidiaries.
The Rights Agreement provides that, until the Distribution Date, the Rights will
be transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the
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Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a summary description of the Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon
as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on April 10, 2006, unless earlier redeemed by the Company as
described below.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above). The number
of outstanding Rights and the number of one one-hundredths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred or Common Shares will be
issued (other than fractions of Preferred Shares which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, a payment in
cash will be made based on the market price of the Preferred or Common Shares on
the last trading date prior to the date of exercise.
In the event that the Company were acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power were sold, proper provision will be made so that each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof at
the then
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current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the exercise price of the Right. In the event that the
Company were the surviving corporation in a merger and the Common Shares
were not changed or exchanged, or in the event that any person becomes the
beneficial owner of 20% or more of the Company's Common Shares and hence an
Acquiring Person (other than pursuant to a cash tender offer for all outstanding
shares which is determined by a majority of the members of the Board of
Directors who are not officers of the Company to be fair and in the best
interest of stockholders) or engages in one of a number of self-dealing
transactions specified in the Rights Agreement (a "Flip-In Event"), proper
provision will be made so that each holder of a Right, other than Rights that
are or were beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price of the Right
(or Preferred Shares if so elected by the Board of Directors). However, Rights
are not exercisable following the occurrence of any of the events set forth
above until such time as the Rights are no longer redeemable by the Corporation
as set forth below.
At any time until twenty days following the date a person
becomes an Acquiring Person, the Company, by a vote of the Board of Directors
that includes the concurrence of a majority of the Disinterested Directors, may
redeem the Rights in whole, but not in part, at a price of $.05 per Right (the
"Redemption Price"). The right of redemption also may be reinstated under
certain circumstances described in the Rights Agreement, including if a term,
provision, covenant or restriction of the Rights Agreement is held by a court or
other authority to be invalid, void or unenforceable. Under no circumstances
following the occurrence of a Flip-In Event may the Rights be exercised prior to
the expiration of the Company's twenty day right of redemption. Immediately upon
the action of the Board of Directors ordering redemption of the Rights, with,
where required, the concurrence of a majority of Disinterested Directors, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price. The term "Disinterested
Director" shall mean any member of the Board of Directors of the Company, while
such Person is a member of the Board, who is not (i) an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, or (ii) a Person, an
Affiliate, Associate, or representative of a Person, any of whom has stated an
intent to take, or to consider taking, any action which would result in such
Person becoming an Acquiring Person, or which would cause a Triggering Event.
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At any time after any person becomes an Acquiring Person, the
Board of Directors of the Company may, at its option, exchange all or part of
the then outstanding and exercisable Rights (excluding Rights of an Acquiring
Person that have become void) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof. Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Acquiring Person, together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Common Shares then outstanding. In lieu of Common Shares, the Board of
Directors may elect to substitute Preferred Shares for any such exchange.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company as set forth above.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred share will be entitled to a minimum
preferential quarterly dividend payment of $5.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Other than an amendment to those provisions relating to the
principal economic terms of the Rights or to shorten the final expiration date
of the Rights Agreement, any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the Distribution Date,
including, without limitation, any amendment deemed to be necessary or
appropriate in light of any judicial or other legal developments, whether or not
binding precedent in respect of the Rights Agreement. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board (in
certain circumstances, with the concurrence of a majority of the
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Disinterested Directors) in order to cure any ambiguity, to make changes
which do not adversely affect the interest of holders of Rights (excluding
the interests of any Acquiring Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time
as the Rights are not redeemable. Without limiting any of the foregoing, at
any time prior to a Person (other than certain employee benefit plans of the
Company) becoming an Acquiring Person, the Board may amend the Rights
Agreement to lower the threshold for exercisability of the Rights (and the
determination of the existence of an Acquiring Person) from 20% to any
percentage greater than the greater of (i) the largest percentage of
outstanding Common Shares then known to the Company to be beneficially owned by
any Person or group of affiliated or associated persons (other than employee
benefit plans of the Company and its subsidiaries) and (ii) 10%.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to the Company's Registration
Statement on Form 8-A dated March 25, 1996. A copy of the Rights Agreement is
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, as amended from time to time, which is hereby
incorporated herein by reference.
Item 2. Exhibits:
1. Rights Agreement between the Company and First Chicago Trust
Company of New York, as Rights Agent, dated as of March 15,
1996 which includes as Exhibit A the Form of Right
Certificate. Pursuant to the Rights Agreement, Right
Certificates will not be mailed until as soon as practicable
after the earlier of the twentieth business day following
announcement that a person or group has acquired beneficial
ownership of 20% or more of the Common Shares or the
twentieth business day after a person commences or announces
its intention to commence an offer the consummation of which
would result in a person beneficially owning 20% or more of the
Common Shares.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized.
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PHH CORPORATION
By: /s/ Roy A. Meierhenry
Roy A. Meierhenry
Senior Vice President
Date: March 25, 1996
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EXHIBIT INDEX
Exhibit Description Page No.
1. Rights Agreement between the Company and First 8
Chicago Trust Company of New York, as Rights
Agent, dated as of March 15, 1996 which includes
as Exhibit A the Form of Right Certificate.
Pursuant to the Rights Agreement, Right Certificates
will not be mailed until as soon as practicable after
the earlier of the twentieth business day following
announcement that a person or group has acquired
beneficial ownership of 20% or more of the Common
Shares or the twentieth business day after a person
commences or announces its intention to commence
an offer the consummation of which would result in
a person beneficially owning 20% or more of the
Common Shares.
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EXHIBIT 1
EXHIBIT 1
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================================================================================
PHH CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
Rights Agreement
Dated as of March 15, 1996
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TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions...................................................................1
Section 2. Appointment of Rights Agent...........................................................5
Section 3. Issue of Right Certificates...........................................................5
Section 4. Form of Right Certificates............................................................7
Section 5. Countersignature and Registration.....................................................8
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates..........................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights;
Nullification of Rights.........................................................10
Section 8. Cancellation and Destruction of Right Certificates...................................13
Section 9. Reservation and Availability of Preferred Shares.....................................13
Section 10. Preferred Shares Record Date.........................................................14
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights...................15
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...........................28
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................28
Section 14. Fractional Rights and Fractional Shares..............................................31
Section 15. Rights of Action.....................................................................33
Section 16. Agreement of Right Holders...........................................................33
Section 17. Right Certificate Holder Not Deemed a Stockholder....................................34
Section 18. Concerning the Rights Agent..........................................................34
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................35
Section 20. Duties of Rights Agent...............................................................36
Section 21. Change of Rights Agent...............................................................39
Section 22. Issuance of New Right Certificates...................................................40
Section 23. Redemption...........................................................................40
Section 24. Notice of Certain Events.............................................................42
Section 25. Notices..............................................................................43
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Section 26. Supplements and Amendments...........................................................43
Section 27. Exchange.............................................................................44
Section 28. Determinations and Actions by the Board of Directors, Etc............................47
Section 29. Successors...........................................................................48
Section 30. Benefits of this Agreement...........................................................48
Section 31. Severability.........................................................................48
Section 32. Governing Law........................................................................49
Section 33. Counterparts.........................................................................49
Section 34. Descriptive Headings.................................................................49
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RIGHTS AGREEMENT
Agreement, dated as of March 15, 1996, to be immediately effective
as of the Effective Date (as hereinafter defined), between PHH Corporation, a
Maryland corporation (the "Company"), and First Chicago Trust Company of New
York (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding on the Effective Date, each
Right representing the right to purchase one one-hundredth of a share of Series
A Junior Participating Preferred Stock, without par value, of the Company having
the rights and preferences set forth in the Articles Supplementary filed with
the State Department of Assessments and Taxation of the State of Maryland on
March 24, 1986, upon the terms and subject to the conditions herein set forth,
and has further authorized the issuance of one Right with respect to each Common
Share that shall become outstanding between the Effective Date and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are defined in Sections 3 and 7 hereof).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the
meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 20% or more of the Common Shares
then outstanding, but shall not include the Company, any wholly owned
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Subsidiary of the Company or any employee benefit plan of the Company or of any
Subsidiary, or an entity holding Common Shares for or pursuant to the terms
of any such plan.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the Effective Date.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2)
is not also then
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reportable on 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 with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting (except to the extent permitted by
subparagraph (ii)(B) of this paragraph (c)) or disposing of
any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership
to the contrary, (A) the phrase "then outstanding," when used with reference to
a Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder and (B) a Person engaged in
business as an underwriter of securities shall not be considered 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) days after the date of such acquisition.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Maryland are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
Baltimore time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Baltimore time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company shall
mean shares of Common Stock, without par value of the Company. "Common Shares"
when used with reference to any Person other than the Company shall mean the
capital stock (or equity interest)
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with the greatest voting power of such Person or, if such Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(g) "Disinterested Director" shall mean any member of the Board of
Directors of the Company, while such Person is a member of the Board, who is not
(i) an Acquiring Person, or an Affiliate or Associate of an Acquirin g Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, or (ii) a Person, an Affiliate, Associate, or representative of a
Person, any of whom has stated an intent to take, or to consider taking, any
action which would result in such Person becoming an Acquiring Person, or which
would cause a Triggering Event.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Effective Date" shall mean the date that is the earliest of
the Redemption Date and the Final Expiration Date under, and as such terms are
defined in, the Rights Agreement dated as of March 17, 1986 between the Company
and Maryland National Bank, as amended on January 16, 1989 and April 6, 1992,
under which First Chicago Trust Company of New York is successor Rights Agent.
(j) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(l) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, without par value, of the Company.
(m) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(n) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
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(o) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
(p) "Triggering Event" shall mean any action which would cause the
occurrence of any event described in Section 11(a)(ii) or Section 13 hereof.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for
the Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Common
Shares) in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the twentieth business day after the
Shares Acquisition Date and (ii) the twentieth business day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement of,
or first public announcement of the intention of any Person to commence, a
tender or exchange offer the consummation of which would result in beneficial
ownership by a Person (other than the Company, any wholly owned Subsidiary of
the Company or any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or pursuant to the terms of
any such plan) of 20% or more of the Outstanding Common Shares (including any
such date that is after the date of this Agreement and prior to the issuance of
the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for Common
Shares registered in the names of the holders
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thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of
Common Shares. 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 Common Shares as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form of Exhibit A hereto,
evidencing one Right for each Common Share so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Effective Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Effective Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Effective Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof (together with a copy of the Summary of Rights). Until the
Distribution Date (or the earlier Redemption Date or Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Effective Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
(c) Certificates for Common Shares issued after the Effective Date
but prior to the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
PHH Corporation and First Chicago Trust Company of New York,
dated
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as of March 15, 1996 as amended from time to time (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of PHH Corporation.
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. PHH Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge
promptly following receipt of a written request therefor.
Under certain circumstances, Rights beneficially owned by
Acquiring Persons (as defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
Section 4. Form of Right Certificates.
The Right Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
be substantially the same as Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 22
hereof, the Right Certificates, whenever issued, which are issued in respect of
Common Shares which were issued and outstanding as of the Effective Date, shall
be dated as of the Effective Date, and all Right Certificates which are issued
in respect of other Common Shares shall be dated as of the respective dates of
issuance of such Common Shares, and in either case on their face shall entitle
the holders thereof to purchase such number of Preferred Shares as shall be set
forth therein at the price per one one-hundredth of a Preferred Share set
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forth therein (the "Purchase Price"), but the number of such Preferred Shares
and the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary, or an Assistant
Secretary, of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal offices, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date and
certificate number of each of the Right Certificates.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.
Subject to the provisions of Section 14 hereof, at any time after
the close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date and the Final Expiration Date,
any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 7(g) or Section
11(a)(ii) hereof or that have been exchanged pursuant to Section 27 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
Preferred Shares as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split-up, combination or exchange of
Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights;
Nullification of Rights.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein)
in whole or in part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal office of
the Rights Agent in Jersey City, New Jersey, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share as to which
the Rights are exercised, at or prior to the earlier of (i) the close of
business on the tenth (10th) anniversary of the Effective Date (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date").
(b) The Purchase Price for each one one-hundredth of a Preferred
Share pursuant to the exercise of a Right shall initially be $176.00, shall be
subject to adjustment from time to time as provided in Sections 11 and 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts
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shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs the depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional interests in shares in accordance with Section
14 hereof, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 or the transfer of any surrendered
Rights Certificates under Section 6, unless and until such registered holder
shall have (i) completed and signed (A) in the case of a Section 7 exercise, a
form of election or (B) in the case of a Section 6 transfer, a form of
assignment, as set forth on the reverse side of the Rights Certificate, and (ii)
provided such additional evidence of the identity of the Beneficial
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Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
(g) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of an event described in Section 11(a)(ii),
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 (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 the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(g), 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 insure that the provisions of this Section
7(g) are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
(or any Associate,
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Affiliate or nominee thereof) whose Rights would be void pursuant to the
preceding sentence shall be canceled.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company, or shall, at
the written request of the Company, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Preferred Shares.
The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred Shares that will
be sufficient to permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares issuable upon the exercise of
Rights may be listed on any national securities exchange, 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
upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon exercise
of Rights shall, at the time of delivery
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of the certificates for such Preferred Shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
Section 10. Preferred Shares Record Date.
Each person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding business day on which the Preferred Shares transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive
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<PAGE>
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights.
The Purchase Price, the number of Preferred 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) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation,
merger or statutory share exchange in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a), the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. If an event occurs which
would require an adjustment under both 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).
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(ii) In the event:
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date
of this Agreement, directly or indirectly, (1) shall merge
into the Company or otherwise combine with the Company and
the Company shall be the continuing or surviving corporation
of such merger or combination and the Common Shares of the
Company shall remain outstanding and not changed into or
exchanged for stock or other securities of any other Person
or the Company or cash or any other property, (2) shall, in
one or more transactions, other than in connection with the
exercise of Rights or the exercise or conversion of
securities exercisable or convertible into capital stock of
the Company or any of its Subsidiaries, transfer any assets
to the Company or any of its Subsidiaries in exchange (in
whole or in part) for shares of any class of capital stock of
the Company or any of its Subsidiaries or for securities
exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries or
otherwise obtain from the Company or any of its Subsidiaries,
with or without consideration, any additional shares of any
class of capital stock of the Company or any of its
Subsidiaries or securities exercisable for or convertible
into shares of any class of capital stock of the Company or
any of its Subsidiaries (other than as part of a pro rata
distribution to all holders of Common Shares), (3) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer
or otherwise dispose (in one or more transactions), to, from,
with or of, as the case may be, the Company or any of its
Subsidiaries, assets, including securities, on terms and
conditions less favorable to the Company than the Company
would be able to obtain in arm's-length negotiation with an
unaffiliated third party, (4) shall receive any compensation
from the Company or any of the Company's Subsidiaries other
than compensation for full-time employment as a
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<PAGE>
regular employee at rates in accordance with the Company's
(or its Subsidiaries') past practices, or (5) shall
receive the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any
tax credits or other tax advantage provided by the Company or
any of its Subsidiaries,
(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, statutory share exchange or
consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions involving the
Company or any Subsidiary of the Company (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 or of securities exercisable
for or convertible into securities of the Company or any of
its Subsidiaries that is directly or indirectly owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person, or
(C) any Person (other than the Company, any
wholly-owned Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any
such plan), alone or together with its Affiliates and
Associates, shall, at any time, become the Beneficial Owner
of 20% or more of the Common Shares then outstanding, unless
the event causing the 20% threshold to be crossed is a
transaction set forth in Section 13 hereof, or is an
acquisition of Common Shares pursuant to a tender offer or an
exchange offer for all outstanding Common Shares at a price
and on terms determined by at least a majority of the members
of
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the Board of Directors who are not officers of the Company
and who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person, after receiving advice
from one or more investment banking firms, to be (a) at a
price which is fair to stockholders (taking into account all
factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders,
then, and in each such case, proper provision
shall be made so that each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of
Preferred Shares, such number of Common Shares as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right is then exercisable
and dividing that product by (y) 50% of the current per share market price of
the Common Shares (determined pursuant to Section 11(d)) on the fifth day
after the date of the occurrence of any one of the events listed above in
this subparagraph (ii); provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii). At its discretion, the Board of Directors of the Company may, by
resolution duly adopted, provide that holders of Rights, upon exercise
thereof, shall receive, in lieu of Common Shares, such number of one-hundredths
of a share of Preferred Shares as shall equal the result obtained by (X)
multiplying the then current Purchase Price by the number of one one-hundredths
of a share of Preferred Shares for which a Right is then exercisable and
dividing the product by (Y) 50% of the then current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
fifth day after the date of the occurrence of any of the events listed
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above in this subparagraph (ii). Notwithstanding the foregoing, upon the
occurrence of any of the events listed above in this subparagraph (ii), any
Rights that are or were beneficially owned on or after the earlier of the
Distribution Date or the Shares Acquisition Date by an Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall become void in
accordance with the provisions of Section 7(g) of this Agreement and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement.
(iii) The Company covenants and agrees not to enter into any
transaction of the kind listed in this subparagraph (ii) if at the time of such
transaction (x) there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights, or (y) it has
insufficient authorized and unissued shares of Common Stocks to provide for the
adjustment required by subparagraph (ii).
(iv) Any Right Certificate issued pursuant to Section 3 hereof
that represents Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate thereof and any Right Certificate issued at any time upon
the transfer of any Rights to an Acquiring Person or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate, and
any Right Certificate issued pursuant to Section 6 hereof or this Section 11
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following legend
The Rights represented by this Right Certificate were issued
to a Person who was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person. This Right Certificate and
the Rights represented hereby may become void in the
circumstances specified in Section 11(a)(ii) of the Rights
Agreement.
(v) In the event that despite the covenant in subparagraph
(iii) an event specified in subparagraph (ii) occurs and there shall not be
sufficient treasury shares or authorized
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but unissued Common Shares to permit the exercise in full of the Rights in
accordance with subparagraph (ii), the Company covenants to us its best
efforts to carry out all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the Rights, and, if
such action is not completed within forty-five (45) days from the date the
adjustment was required, the Company shall: (A) determine the excess of (1) the
value of the Common Shares (the "Exercise Shares") issuable upon the
exercise of a Right (the "Current Value") over (2) the then current Purchase
Price (such excess, the "Spread"), and (B) with respect to each Right, make
adequate provision to substitute for the Exercise 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 of
Directors of the Company has deemed to have the same value as shares of Common
Stock (such shares of preferred stock, "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, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within ninety (90) days following the first occurrence of a
Section 11(a)(ii) event, 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, securities and/or assets which in the aggregate are equal to
the Spread. To the extent that the Company determines that some action need be
taken pursuant to this subparagraph (v), the Company (x) shall provide, subject
to the last sentence of subparagraph (ii) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights for such time as may be reasonably necessary in order to seek any
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<PAGE>
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant hereto and to determine the value thereof.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current per share
market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that
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<PAGE>
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b)), 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 per share market price of the Preferred Shares (as defined in Section
11(d)) on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the denominator of
which shall be such current per share market price of the Preferred Shares;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of the Common Shares on any date shall be deemed to be
the average of the daily closing prices per share of such Common Shares for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event
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<PAGE>
that the current per share market price of the Common Shares is determined
during a period following the announcement by the issuer of such Common
Shares of (1) a dividend or distribution on such Common Shares payable in
such Common Shares or securities convertible into such Common Shares, or (2)
any subdivision, combination or reclassification of such Common Shares,
and prior to the expiration of 30 Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current market
price shall be appropriately adjusted to reflect the current market price per
Common Share equivalent. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Shares 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 Common Shares are listed or admitted
to trading or, if the Common Shares 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 Quotations System ("NASDAQ") or such other system then in use, or,
if on any such date the Common Shares 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 Shares selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Common Shares are
listed or admitted to trading is open for the transaction of business or, if the
Common Shares are not listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on
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which banking institutions in the State of New York are not authorized or
obligated by law or executive order to close.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
the same manner as set forth above for Common Shares in clause (i) of this
Section 11(d). If the current per share market price of the Preferred Shares
cannot be determined in the manner provided above, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the current
per share market price of the Common Shares (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least l% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
Common Share or other share or one-millionth of a Preferred Share as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction that requires such adjustment or (ii) the
date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable
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upon exercise of any Right shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a) through (c), inclusive,
and the provisions of Sections 7, 9, 10 and 13 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth
of a Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths 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.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of 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
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immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of Preferred Shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-hundredth of a share and the number of shares which
were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
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(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any of Preferred Shares at less than the current market
price, issuance wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in subsection (b) of this Section 11, hereafter
made by the Company to holders of its Preferred Shares shall not be taxable to
such shareholders.
(n) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one-hundredths of a Preferred Share purchasable after such event upon
proper exercise of each
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Right shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding
immediately before such event and the denominator of which is the number of
Common Shares outstanding immediately after such event, and (ii) each Common
Share outstanding immediately after such event shall have issued with respect
to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13
hereof, 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
Common Shares or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
In the event, directly or indirectly, (a) the Company shall
consolidate with, or merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, (c) the Company shall engage in any statutory share exchange
whereby the Company's Common Shares are converted into stock, securities, cash
or any other property of any other Person or (d) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall
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<PAGE>
sell or otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person other than the
Company or one or more of its wholly owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (i) each holder of a Right
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 Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall be equal
to the result obtained by (x) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right is
then exercisable and dividing that product by (y) 50% of the current per
share market price of the Common Shares of such other Person (determined
pursuant to Section 11(d)) on the date of consummation of such
consolidation, merger, statutory share exchange, sale or transfer; (ii) the
issuer of such Common Shares shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such issuer; and (iv) such issuer shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise of the
Rights. The Company shall not consummate any such consolidation, merger,
statutory share exchange, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing. The Company covenants and agrees not to enter into any
transaction of the kind listed in this Section 13 if at the time of such
transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the
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<PAGE>
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
If, for any reason, the Rights cannot be exercised for Common
Shares of the Company or such other Person, then a holder of Rights will have
the right to exchange his Rights, without payment of the applicable exercise
price, for cash from the Company or such other Person in an amount equal to the
number of Common Shares he would otherwise be entitled to purchase times 50% of
the then current market price, as determined pursuant to Section 11(d)(i)
hereof, of such Common Shares of the Company or such other Person. If, for any
reason, including, without limitation, if such other Person is an individual,
private partnership or private company, the foregoing cannot be applied to
determine the cash amount into which the Rights are exchangeable, then the Board
of Directors of the Company, based upon the advice from one or more investment
banking firms, shall determine such amount reasonably and with utmost good faith
to the holders of the Rights. Any such determination shall be binding and final.
Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparts (a), (b) and
(c) of this Section 13 if (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a cash tender offer for all
outstanding Common Shares which complies with the provisions of Section
11(a)(ii)(C) hereof (or a wholly-owned subsidiary of such Person or Persons),
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such cash tender offer and (iii) the form of consideration
being offered to the remaining holders of Common Shares pursuant to such
transaction is the same as the form of consideration paid pursuant to such cash
tender offer. Upon consummation of any such transaction contemplated by this
paragraph, all Rights hereunder shall expire.
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the- counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to issue
certificates which evidence fractions of Preferred Shares (other than fractions
that are integral multiples of one one-hundredth of a Preferred Share).
Fractions of
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Preferred Shares in integral multiples of one one-hundredth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For
purposes of this Section 14(b) hereof, the current market value of a Preferred
Share shall be the closing price of a Preferred Share (as determined pursuant to
the second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares. In
lieu of fractional Common Shares, 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) Common Share. For purposes of this Section 14(c), the current market value
of one Common Share shall be the closing price of one Common Share (as
determined pursuant to Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
(except as provided above) upon exercise of a Right.
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Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the
rights of action given to the Rights Agent under Section 18 hereof, are vested
in the respective registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
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<PAGE>
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a 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 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of
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<PAGE>
the Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares 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 its counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation 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 that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the
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name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been counter- signed, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the Company and
delivered to the
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Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(g) or Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections 3, 11, 13 or 23, or
the ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.
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(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
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Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares and Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a (A) corporation organized and doing business under the
laws of the United States or of the States of Maryland or New York (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the States of Maryland or New York), in
good standing, that is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million, 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
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any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares and Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, by a
vote which includes the concurrence, by affirmative vote, of a majority of the
Disinterested Directors, at any time prior to the earlier of (i) the close of
business on the twentieth day following the Share Acquisition Date, (or, if the
Share Acquisition Date shall have occurred prior to the Effective Date, the
close of business on the twentieth day following the Effective Date), or (ii)
the Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.05 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 if,
following the
40
<PAGE>
occurrence of a Share Acquisition Date and following the expiration of
the right of redemption hereunder but prior to a Triggering Event, (i) a Person
who is an Acquiring Person shall have transferred or otherwise disposed of
a number of shares of Common Shares 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 10% or less of the
outstanding shares of Common Shares, 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, and a Triggering Event shall not be deemed to have occurred, after
the first occurrence of an event described in Section 11(a)(ii) hereof until
such time as the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors 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. Within 10 days after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23, and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
41
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Section 24. Notice of Certain Events.
In case the Company shall propose (a) to pay any dividend payable
in stock of any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend) or (b) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation, merger, or statutory share exchange
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right Certificate, in accordance with
Section 25 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, or distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution, or winding
up is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (a) or (b)
above at least 20 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, in accordance
with Section 25 hereof, a notice of the occurrence of such
42
<PAGE>
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Section 25. Notices.
Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any Right Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
PHH Corporation
11333 McCormick Road
Hunt Valley, Maryland 21031
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
Mail Suite 4660
525 Washington Blvd.
Jersey City, New Jersey 07310
Attention: T&E Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate 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 26. Supplements and Amendments.
Prior to the Distribution Date and subject to the penultimate
sentence of this Section 26, 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
43
<PAGE>
of Common Stock, including, without limitation, any supplement or amendment
deemed necessary or appropriate by the Company in light of any judicial or other
legal developments, whether or not controlling precedent in respect of this
Agreement. From and after the Distribution Date and subject to the
penultimate sentence of this Section 26, 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 (which lengthening or
shortening, shall be effective only if there are Disinterested Directors
and shall require the concurrence, by affirmative vote, of a majority of such
Disinterested Directors), 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 a Acquiring Person or an Affiliate or Associate of any
Acquiring 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. Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to lower the thresholds set forth in
Section 1(a) and 3(a) hereof from 20% to any percentage greater than the greater
of (i) the largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than the Company, any
wholly-owned Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary, or any entity holding Common Shares for or pursuant to the
terms of any such plan), and (ii) 10%.
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
44
<PAGE>
26, the Rights Agent shall execute such supplement or amendment and shall be
fully protected by Section 18 in so doing. Nothing herein shall require the
Rights Agent to execute any supplement or amendment which adversely affects the
rights and protections afforded to the Rights Agent under Sections 18, 19
and 20 hereof. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Purchase Price or the number of one one-hundredths of a share of
Preferred Stock for which a Right is exercisable or which changes the Final
Expiration Date to a date earlier than April 10, 2006. Prior to the
Distribution Date, the interest of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 27. Exchange.
(a) Subject to any limitations of applicable law, the Board of
Directors of the Company may, at its option, at any time after any person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(g) or Section 11(a)(ii) hereof) for
Common Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any wholly-owned Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary, or any entity holding
Common Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 27 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only rights
45
<PAGE>
thereafter of a holder of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(g) or Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company, at
its option, may substitute Preferred Shares (or equivalent preferred shares, as
such term is defined in Section 11(b) hereof) for Common Shares exchangeable for
Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant to the
terms thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares
or Preferred Shares issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
27, the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of the
Rights.
46
<PAGE>
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holder of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
subsection (e), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately after the public
announcement by the Company that an exchange is to be effected pursuant to this
Section 27.
Section 28. Determinations and Actions by the Board of Directors, Etc.
For all purposes of this Agreement, any calculation of the number
of shares of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Shares of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act in effect on the date hereof. The Board
of Directors of the Company (with, where specifically provided for herein, the
concurrence of a majority 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 of a majority 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 of a majority of the
47
<PAGE>
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 29. 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 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person
or corporation other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates.
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the twentieth day following the
date of such determination by the Board of Directors.
48
<PAGE>
Section 32. Governing Law.
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Maryland and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
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.
49
<PAGE>
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.
PHH CORPORATION
Attest:
By:_______________________________ By:______________________________________
Title: Assistant Secretary Senior Vice President
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Attest:
By:_______________________________ By:______________________________________
Title:
50
<PAGE>
Exhibit A
[Form of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER April 10, 2006 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.05 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT,
AS AMENDED. RIGHTS OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS EACH ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BE OR BECOME NULL AND VOID.
Right Certificate
PHH CORPORATION
This certifies that _____________________________________________,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of March 15, 1996,
as it may be amended from time to time (the "Rights Agreement"), between PHH
Corporation, a Maryland corporation (the "Company"), and First Chicago Trust
Company of New York (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. Baltimore time on April 10, 2006 at the
principal office of the Rights Agent in Jersey City, New Jersey, or at the
office of its successors as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock,
without par value (the "Preferred Shares"), of the Company, at a purchase price
of $____ per one one-hundredth of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced by this
1
<PAGE>
Right Certificate (and the number of Preferred 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 , 199_, based on the Preferred
Shares as constituted at such date.
Upon the occurrence of an event described in Section 7(g) or
Section 11(a)(ii) of the Rights Agreement, all Rights evidenced by this Rights
Certificate which are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, shall become null and void and no such holder hereof shall
have any right with respect to such Rights from and after the occurrence of such
event.
As provided in the Rights Agreement, the Purchase Price and the
number of Preferred Shares or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
2
<PAGE>
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may, but are not required to, be (i) redeemed by
the Company at a redemption price of $.05 per Right, or (ii) exchanged in whole
or in part for Preferred Shares or shares of the Company's Common Stock, without
par value.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractional shares which are
integral multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stock-holders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or
3
<PAGE>
otherwise, until the Right or Rights evidenced by this Right Certificate
shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of , 199_.
ATTEST: PHH CORPORATION
_________________________________ By:__________________________________
Secretary Chairman of the Board
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:_______________________________
Authorized Signature
4
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto
- ------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ___________________, 19__
-----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- --------------------------------------------------------------------------------
5
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
- --------------------------------------------------------------------------------
CERTIFICATION FOR TRANSFER
(To be executed in connection with any transfer of the Right
Certificate.)
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate |_| is |_| is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it |_| did |_| did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: __________, 19____
Signature
---------------------------------------------------------------------
6
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: PHH CORPORATION
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
7
<PAGE>
Dated _________________, 19__
-----------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
Signature Guaranteed
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
- --------------------------------------------------------------------------------
8
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
- --------------------------------------------------------------------------------
CERTIFICATION FOR TRANSFER
(To be executed in connection with any transfer of the Right
Certificate.)
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate |_| is |_| is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it |_| did |_| did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: __________, 19____ ___________________________________
Signature
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE
The signatures in the foregoing Forms of Assignment and Election
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and, in the case of an Assignment, will affix a legend to that effect on any
Right Certificates issued in exchange for this Rights Certificate.
9
<PAGE>
Exhibit B
PHH CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of PHH Corporation (the "Company") has
authorized a distribution of one preferred share purchase right (a "Right") for
each outstanding share of common stock, without par value (the "Common Shares"),
of the Company. The dividend is payable on April 10, 1996 to stockholders of
record on that date (the "Record Date"). The Record Date is the expiration date
of the outstanding rights under the Company's shareholder rights plan under the
Rights Agreement dated as of March 17, 1986, as amended on January 16, 1989 and
April 6, 1992 (the "1986 Rights Plan"). The terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and First
Chicago Trust Company of New York, as Rights Agent (the "Rights Agent"), dated
as of March 15, 1996, as amended from time to time, and are substantially the
same as the term of the rights outstanding until the Record Date under the 1986
Rights Plan.
Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of a Series A Junior Participating
Preferred Stock, without par value, of the Company (the "Preferred Shares") at a
price of $176.00 per one one-hundredth of a Preferred Share (the "Purchase
Price"), subject to adjustment.
Until the earlier to occur of (i) 20 business days following a
public announcement that an "Acquiring Person" acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding Common Shares
or (ii) 20 business days following the commencement or announcement of an
intention to make a tender offer or exchange offer the consummation of which
would result in the "Acquiring Person" becoming the beneficial owner of 20% or
more of such outstanding Common Shares (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record Date, by such Common
Share certificate with a copy of this Summary attached thereto. Acquiring Person
is defined as any person or group of affiliated or associated persons, other
than employee benefit plans of the Company and its subsidiaries. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of the
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such
<PAGE>
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on April 10, 2006, unless earlier redeemed by the Company as
described below.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above). The number
of outstanding Rights and the number of one one-hundredths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
In the event that the Company were acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power were sold, proper provision will be made so that each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction would have
a market value of two times the exercise price of the Right. In the event that
the Company were the surviving corporation in a merger and the Common Shares
were not changed or exchanged, or in the event that any person becomes the
beneficial owner of 20% or more of the Company's Common Shares and hence an
Acquiring Person (other than pursuant to a cash tender offer for all outstanding
shares which is determined by a majority of the members of the Board of
Directors who are not officers of the Company to be fair and in the best
interest of stockholders) or engages in one of a number of self-dealing
transactions specified in the Rights Agreement (a "Flip-In Event"), proper
provision will be made so that each holder of a Right, other than Rights that
are or were beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price of the Right
(or Preferred Shares if so elected by the Board of Directors). However, Rights
are not exercisable following the occurrence of any of the events set forth
above until such time as the Rights are no longer redeemable by the Corporation
as set forth below.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No
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<PAGE>
fractional Preferred or Common Shares will be issued (other than fractions of
Preferred Shares which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, a payment in cash will be made based
on the market price of the Preferred or Common Shares on the last trading date
prior to the date of exercise.
At any time until twenty days following the date a person
becomes an Acquiring Person, the Company, by a vote of the Board of Directors
that includes the concurrence of a majority of the Disinterested Directors, may
redeem the Rights in whole, but not in part, at a price of $.05 per Right (the
"Redemption Price"). The right of redemption also may be reinstated under
certain circumstances described in the Rights Agreement, including if a term,
provision, covenant or restriction of the Rights Agreement is held by a court or
other authority to be invalid, void or unenforceable. Under no circumstances
following the occurrence of a Flip-In Event may the Rights be exercised prior to
the expiration of the Company's twenty day right of redemption. Immediately upon
the action of the Board of Directors ordering redemption of the Rights, with,
where required, the concurrence of a majority of Disinterested Directors, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price. The term "Disinterested
Director" shall mean any member of the Board of Directors of the Company, while
such Person is a member of the Board, who is not (i) an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, or (ii) a Person, an
Affiliate, Associate or representative of a Person, any of whom has stated an
intent to take, or to consider taking, any action which would result in such
Person becoming an Acquiring Person, or which would cause a Triggering Event.
At any time after any person becomes an Acquiring Person, the
Board of Directors of the Company may, at its option, exchange all or part of
the then outstanding and exercisable Rights (excluding Rights of an Acquiring
Person that have become void) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof. Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Acquiring Person, together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Common Shares then outstanding. In lieu of Common Shares, the Board of
Directors may elect to substitute Preferred Shares for any such exchange.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company as set forth above.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred share will be entitled to a minimum
preferential quarterly dividend payment of
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<PAGE>
$5.00 per share but will be entitled to an aggregate dividend of 100 times the
dividend declared per Common Share. In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $100 per share but will be entitled to an aggregate payment of 100
times the payment made per Common Share. Each Preferred Share will have 100
votes, voting together with the Common Shares. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share. These rights are protected by customary
antidilution provisions.
Other than an amendment to those provisions relating to the
principal economic terms of the Rights or to shorten the final expiration date
of the Rights Agreement, any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the Distribution Date,
including, without limitation, any amendment deemed to be necessary or
appropriate in light of any judicial or other legal developments, whether or not
binding precedent in respect of the Rights Agreement. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board (in
certain circumstances, with the concurrence of a majority of the Disinterested
Directors) in order to cure any ambiguity, to make changes which do not
adversely affect the interest of holders of Rights (excluding the interests of
any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable. Without limiting any of the foregoing, at any time prior to a Person
(other than certain employee benefit plans of the Company) becoming an Acquiring
Person, the Board may amend the Rights Agreement to lower the threshold for
exercisability of the Rights (and the determination of the existence of an
Acquiring Person) from 20% to any percentage greater than the greater of (i) the
largest percentage of outstanding Common Shares then known to the Company to be
beneficially owned by any Person or group of affiliated or associated persons
(other than employee benefit plans of the Company and its subsidiaries) and (ii)
10%.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to the Company's Registration
Statement on Form 8-A dated March 25, 1996. A copy of the Rights Agreement is
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, as amended from time to time, which is hereby
incorporated herein by reference.
Dated: April 10, 1996
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