SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ALLWASTE, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 74-2427167
(State of Incorporation (IRS Employer
or Organization) Identification No.)
5151 San Felipe
Suite 1600
Houston, Texas 77056-3609
(Address of Principal
Executive Offices) (Zip Code)
Securities to be Registered Pursuant to Section 12(b) of the Act: None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Series One Junior Participating Preferred Stock
(Title of Class)
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Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On August 2, 1996, the Board of Directors of Allwaste, Inc. (the
"Company") declared a dividend distribution of one preferred stock purchase
right (a "Right") for each outstanding share of common stock, par value $0.01
per share ("Common Stock"), of the Company. The distribution was payable on
August 15, 1996 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder thereof to purchase from the Company
one one-thousandth of a share of Series One Junior Participating Preferred
Stock, par value $0.01 per share, of the Company (the "Preferred Stock") at a
price of $20.00, subject to adjustment. The following is a summary of the
Rights; the full description and terms of the Rights are set forth in a
Stockholder Rights Agreement (the "Rights Agreement") between the Company and
American Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent").
THE RIGHTS AGREEMENT
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 days following the
date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to the
time a person becomes an Acquiring Person) following the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer upon
consummation of which the offeror would, if successful, beneficially own 20% or
more of the outstanding Common Stock (the earlier of such dates being called the
"Distribution Date").
The term "Acquiring Person" means any person who or which, together with
all of its affiliates and associates, shall be the beneficial owner of 15% or
more of the outstanding Common Stock, but shall not include Heartland Advisors,
Inc. and its Affiliates and Associates (the "Heartland Group") unless and until
the Heartland Group shall become the beneficial owner of 18% or more of the
outstanding Common Stock.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, 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 Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the
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close of business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on August 5, 2006 (the "Expiration Date").
The Purchase Price payable, and the number of one one-thousandths of a
share of Preferred Stock 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 Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock
of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to in (ii) above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Shares Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right (the "Flip-Over Right").
In the event that a person becomes the beneficial owner of 15% (or 18%
in the case of the Heartland Group) or more of the outstanding shares of Common
Stock, proper provision shall be made so that each holder of a Right (other than
the Acquiring Person and its affiliates and associates) will thereafter have the
right to receive upon exercise that number of shares of Common Stock (or, under
certain circumstances, cash, other equity securities or property of the Company)
having a market value equal to two times the Purchase Price of the Rights (the
"Flip-In Right"). Upon the occurrence of the foregoing event giving rise to the
exercisability of the Rights, any Rights that are or were at any time owned by
an Acquiring Person shall become void.
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. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are
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integral multiples of one one-thousandth of a share of Preferred Stock; cash
will be paid in lieu of fractional shares of Preferred Stock that are not
integral multiples of one one-thousandth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Shares Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"); PROVIDED, that (i)
if the Board of Directors authorizes redemption on or after the time a person
becomes an Acquiring Person, then such authorization must be by Board Approval
(as hereinafter defined) and (ii) the period for redemption may, upon Board
Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company,
which approval includes the concurrence of a majority of the "continuing
directors," provided that at the time of such approval there are at least three
"continuing directors." Immediately upon any redemption of the Rights described
in this paragraph, 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 terms of the Rights may be amended by the Board of Directors without
the consent of the holders of the Rights at any time and from time to time
provided that such amendment does not adversely affect the interests of the
holders of the Rights. In addition, during any time that the Rights are subject
to redemption, the terms of the Rights may be amended by Board Approval,
including an amendment that adversely affects the interests of the holders of
the Rights, without the consent of the holders of Rights.
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 Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-thousandth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
Each Preferred Share Fraction will have a minimum preferential quarterly
dividend rate of $0.01 per Preferred Share Fraction but will, in any event, be
entitled to a dividend equal to the per share dividend declared on the Company
Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
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Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock. The holders of Preferred Share Fractions, voting as a
separate class, shall be entitled to elect two directors if dividends on the
Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Preferred Share Fraction will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Preferred Share Fraction that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of the Company's Common Stock.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being acquired.
The Rights should not interfere with any merger or other business combination
approved by the Board of Directors of the Company since the Board of Directors
(under certain circumstances, with the concurrence of the "continuing
directors") may, at its option, at any time prior to the earlier to occur of (i)
5:00 p.m., Houston, Texas time on the 10th day after the Shares Acquisition Date
or (ii) the expiration of the Rights, the Company may redeem the Rights in
whole, but not in part, at the Redemption Price; PROVIDED, that (i) if the Board
of Directors authorizes redemption on or after the time a person becomes an
Acquiring Person, then such authorization must be by Board Approval and (ii) the
period for redemption may, upon Board Approval, be extended by amending the
Rights Agreement.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B thereto the form
of Rights Certificate, is attached hereto as Exhibit 1 and is incorporated
herein by reference. The foregoing description of the Rights does not purport to
be complete and is qualified in its entirety by reference to such Exhibits.
Item 2. EXHIBITS
1 Rights Agreement, dated as of August 5, 1996,
between Allwaste, Inc. and American Stock Transfer &
Trust Company, as Rights Agent, including Form of
Rights Certificate (Exhibit B) and Summary of Rights
to Purchase Preferred Stock (Exhibit C).
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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 hereunto duly authorized.
Date: August 22, 1996 By:/s/ WILLIAM L. FIEDLER
Name: William L. Fiedler
Title: Vice President-General
Counsel
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ALLWASTE, INC.
AND
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
RIGHTS AGENT
STOCKHOLDER RIGHTS AGREEMENT
DATED AS OF AUGUST 5, 1996
<PAGE>
TABLE OF CONTENTS
SECTION 1. CERTAIN DEFINITIONS.................................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT.........................................5
SECTION 3. ISSUE OF RIGHTS CERTIFICATES........................................5
SECTION 4. FORM OF RIGHTS CERTIFICATES.........................................7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION...................................8
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES............8
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.......9
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES................11
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK......................11
SECTION 10 PREFERRED SHARES RECORD DATE.......................................12
SECTION 11 ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS.............................................................12
SECTION 12 CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.........20
SECTION 13 CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER..............................................................20
SECTION 14 FRACTIONAL RIGHTS AND FRACTIONAL SHARES............................21
SECTION 15 RIGHTS OF ACTION...................................................22
SECTION 16 AGREEMENT OF RIGHT HOLDERS.........................................23
SECTION 17 RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.................23
SECTION 18 CONCERNING THE RIGHTS AGENT........................................24
SECTION 19 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT..........24
SECTION 20 DUTIES OF RIGHTS AGENT.............................................25
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SECTION 21 CHANGE OF RIGHTS AGENT.............................................27
SECTION 22 ISSUANCE OF NEW RIGHTS CERTIFICATES................................28
SECTION 23 REDEMPTION.........................................................28
SECTION 24 NOTICE OF CERTAIN EVENTS...........................................29
SECTION 25 NOTICES............................................................29
SECTION 26 SUPPLEMENTS AND AMENDMENTS.........................................30
SECTION 27 SUCCESSORS.........................................................31
SECTION 28 BENEFITS OF THIS AGREEMENT.........................................31
SECTION 29 SEVERABILITY.......................................................31
SECTION 30 GOVERNING LAW......................................................31
SECTION 31 COUNTERPARTS.......................................................31
SECTION 32 DESCRIPTIVE HEADING................................................32
Exhibit A -- Form of Certificate of Designation of Series One Junior
Participating Preferred Stock of Allwaste, Inc.
Exhibit B -- Form of Rights Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Stock
ii
STOCKHOLDER RIGHTS AGREEMENT
This Agreement, dated as of August 5, 1996 between Allwaste, Inc., a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company, a New York corporation, as Rights Agent (the "Rights Agent").
RECITALS:
WHEREAS, on August 2, 1996 (the "Rights Dividend Declaration Date") the
Board of Directors of the Company authorized and declared a dividend of one
preferred share purchase right (a "Right") for each Common Share (as defined
herein) of the Company outstanding at the close of business on August 15, 1996
(the "Record Date"), each Right representing the right to purchase one
one-thousandth of a share of Series One Junior Participating Preferred Stock,
par value $0.01 per share, of the Company, having the rights, powers and
preferences set forth in the form of Certificate of Designation attached hereto
as Exhibit A, upon the terms and subject to the conditions set forth herein, and
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and the earlier of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
defined herein);
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 15% or more of the Common Shares
of the Company then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company or any
Person or entity holding shares of capital stock of the Company for or pursuant
to the terms of any such plan, in its capacity as an agent or trustee for any
such plan, or (iv) Heartland Advisors, Inc. and its Affiliates and Associates
(collectively, the "Heartland Group"), provided that the Hartland Group shall
constitute an Acquiring Person at such time as the Heartland Group shall be the
Beneficial Owner of 18% or more of the Common Shares of the Company.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% (or 18% in the case of the Heartland
Group) or more of the Common Shares of the Company then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial Owner of 15% (or 18% in
the case of the Heartland Group) or more of the Common Shares of the Company
then outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial Owner of any
1
additional Common Shares of the Company, then such Person shall be deemed to be
an "Acquiring Person."
(b) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations, as in effect on the date of this Agreement, under the Exchange Act.
(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, except as
provided in Section 1(c)(ii)(A) hereof;
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any Agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants, 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 payment,
purchase or exchange; or (B) the right to vote pursuant to any
Agreement, arrangement or understanding; PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (2) is not also then 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 (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
2
(d) "BOARD APPROVAL" means the adoption or approval by the
Company's Board of Directors (including the affirmative vote or approval of a
majority of Continuing Directors) at a meeting duly called and held at which a
quorum was present and acting throughout, PROVIDED that at the time of such
adoption or approval there are not less than three Continuing Directors.
(e) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York or Texas
are authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00. p.m.,
New York time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 p.m., New York time, on the next succeeding
Business Day.
(g) "COMMON SHARES" when used with reference to the Company shall
mean the shares of common stock, par value $0.01 per share, of the Company and,
to the extent that at the time Rights are exercised there are not a sufficient
number of Company Common Shares authorized to permit the full exercise of the
Rights, shares of any other class or series of the Company designated for such
purpose containing terms substantially similar to the terms of the Company
Common Shares. "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first-mentioned
Person.
(h) "CONTINUING DIRECTOR" shall mean (i) any member of the Board
of Directors of the Company, while such Person is a member of the Board, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
a representative of any Acquiring Person or of any such Affiliate or Associate,
and who was a member of the Board prior to the date of this Agreement, or (ii)
any Person who subsequently becomes a member of the Board, while such Person is
a member of the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an Acquiring Person or
of any such Affiliate or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a majority of the Continuing
Directors.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, as in effect on the date of this Agreement.
(j) "PERSON" shall mean any individual, partnership, firm,
corporation or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(k) "PREFERRED SHARE" shall mean a share of Series One Junior
Participating Preferred Stock, par value $0.01 per share of the Company and, to
the extent that at the time the rights are exercised there are not a sufficient
number of Series One Junior Participating Preferred Stock authorized to permit
the full exercise of the Rights, shares of any other series of Preferred
3
Stock of the Company designated for such purpose containing terms substantially
similar to the terms of the Series One Junior Participating Preferred Stock.
(l) "PREFERRED SHARE FRACTION" shall mean one one-thousandth
of a Preferred Share.
(m) "RECORD DATE" shall have the meaning set forth in the
preamble hereto.
(n) "SECTION 13 EVENT" shall mean any event described in clauses
(i), (ii) or (iii) of Section 13(a) hereof.
(o) "SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which for purposes of this definition shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act, but
shall not include a report filed on Form 13F (or any successor form)) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(p) "SUBSIDIARY" of any Person shall mean any other Person of
which a majority of (i) the voting power of the voting securities or (ii) the
equity interest is owned, directly or indirectly, by such Person.
(q) The following terms are defined herein in the Sections set
forth below:
TERM SECTION
"Adjustment Shares"............................. 11
"common stock equivalents"...................... 11
"current market price".......................... 11
"Current Value"................................. 11
"Distribution Date"............................. 3
"equivalent preferred shares"................... 11
"Final Expiration Date"......................... 7
"Purchase Price"................................ 4
"Redemption Date"............................... 7
"Redemption Price".............................. 23
"Rights Certificate"............................ 3
"Section 11(a)(ii) Trigger Date"................ 11
"Security"...................................... 11
"Spread"........................................ 11
"Substitution Period"........................... 11
"Summary of Rights"............................. 3
"Trading Day"................................... 11
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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. Contemporaneously with
such appointment, if any, the Company shall notify the Rights Agent thereof. In
the event the Company appoints one or more Co-Rights Agents, the respective
duties of the Rights Agent and any Co-Rights Agents shall be as the Company
shall determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the 10th
day after the Shares Acquisition Date and (ii) the close of business on the 10th
business day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding shares of
capital stock of the Company for or pursuant to the terms of any such plan, in
its capacity as an agent or trustee for any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) (or any successor rule) of the
General Rules and Regulations under the Exchange Act, the consummation of which
would result in any Person becoming the Beneficial Owner of Common Shares
aggregating 20% or more of the then outstanding Common Shares (including any
such date which is after the date of this Agreement and prior to the issuance of
the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (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 thereof (which certificates for
Common Shares shall also be deemed to be certificates for the Rights) and not by
separate certificates, and (y) the Rights and interests therein will be
transferable only in connection with the transfer of the associated Common
Shares. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, 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, one or more Rights
certificates, in substantially the form of Exhibit B hereto (a "Rights
Certificate"), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11(n) hereof, then at
the time of distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
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(b) As promptly as practicable following the Record Date, the
Company will send or cause to be sent a copy of a Summary of Rights to Purchase
Preferred Stock, in substantially the form attached hereto as Exhibit C (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 Record Date at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the close of business on the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates for Common Shares registered in the names of the holders thereof
(together with a copy of the Summary of Rights). Until the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date, the
transfer of any certificate for Common Shares outstanding at the close of
business on the Record Date with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
(c) Certificates issued for Common Shares (including, without
limitation, certificates issued upon transfer or exchange of Common Shares and
certificates for reacquired Common Shares referred to in the last sentence of
this subsection (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Stockholder Rights Agreement
between Allwaste, Inc. (the "Company") and American Stock
Transfer & Trust Company, dated as of August 5, 1996 (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 the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain
circumstances described in the Rights Agreement, Rights issued
to, or held by, any person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date and (ii) the Final Expiration Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone and registered holders of Common Shares
shall also be the registered holders of the associated Rights, and the transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the event that the
Company purchases or acquires any Common
6
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the form of election to purchase
shares and certification of status and form of assignment and certification of
status to be printed on the reverse thereof) shall be substantially the same as
Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the 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. The Rights Certificates shall be in machine printable form and in a
format reasonably satisfactory to the Rights Agent. Subject to the provisions of
Section 22 hereof, the Rights Certificates, whenever issued, shall be dated as
of the Record Date and shall show the date of countersignature by the Rights
Agent, and on their face shall entitle the holders thereof to purchase such
number of Preferred Share Fractions as shall be set forth therein at the price
set forth therein (such exercise price per Preferred Share Fraction being
hereinafter referred to as the "Purchase Price"), but the number of such
Preferred Share Fractions and the Purchase Price shall be subject to adjustment
as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights that the Company knows are beneficially
owned by: (i) an Acquiring Person or any 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 such
Acquiring Person has any continuing oral or written plan, agreement, arrangement
or understanding regarding the transferred Rights or (B) a transfer that the
Board of Directors of the Company has determined is part of an oral or written
plan, agreement, arrangement or understanding that has as a primary purpose or
effect avoidance of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and
7
void in the circumstances specified in Section 7(e) of the Rights
Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board of Directors, President or any Vice
President and by its Secretary or an Assistant Secretary, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof. The Rights Certificates shall be manually or by facsimile
signature countersigned by an authorized signatory of the Rights Agent, but it
shall not be necessary for the same signatory to countersign all of the Rights
Certificates hereunder. No Rights Certificate shall be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office in New York, New York, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date and certificate number of each of the Rights
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the earlier of the Redemption
Date or the Final Expiration Date, any Rights Certificate or Rights Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase
a like number of Preferred Share Fractions as the Rights Certificate or Rights
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment from the holders of
Rights Certificates of
8
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 such Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, 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 Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) The registered holder of any Rights 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 Rights
Certificate, with the form of election to purchase and certification of status
on the reverse side thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent in New York, New York, together with payment of the
Purchase Price for each Preferred Share Fraction as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on August 5,
2006 (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 Preferred Share Fraction issuable
pursuant to the exercise of a Right shall initially be $20.00, 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 Rights Certificate representing exercisable
Rights, with the form of election to purchase and certification of status duly
executed, accompanied by payment of the Purchase Price for such Preferred Share
Fraction or Preferred Share Fractions (or other shares, securities or property,
as the case may be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Rights Certificate in
accordance with Section 9 hereof by certified or cashier's check or money order
payable to the order of the Company, the Rights Agent shall, subject to Section
20(k) hereof, thereupon (i)(A) promptly requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is the transfer
agent) certificates for the number of Preferred Share Fractions to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the total
number of Preferred Share Fractions issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of Preferred Share Fractions as are
to be purchased (in which case certificates for the Preferred Share Fractions
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to
9
comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) 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 Rights 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 Rights Certificate. In the event that the Company
is obligated to issue other securities (including Common Shares) 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 property are available for distribution by the Rights Agent, if and when
appropriate.
(d) If the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the date that a Person shall become an Acquiring Person, 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 oral or written plan,
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
an oral or written plan, agreement, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless the certification of status
contained following the appropriate form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such exercise shall
have been completed and signed by the registered holder thereof and the Company
shall have been provided with such additional
10
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights 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 Rights Certificate
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) 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 authorized and issued Preferred Shares held in its treasury (and,
following the occurrence of a Distribution Date, out of its authorized and
unissued Common Shares and/or other securities or out of its authorized and
issued shares held in its treasury) the number of Preferred Shares (and,
following the occurrence of a Distribution Date, Common Shares and/or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) If hereafter the Preferred Shares issuable upon the exercise
of Rights are listed on any national securities exchange or included in the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") National Market, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable (but only to the
extent that it is reasonably likely that the Rights will be exercised), all
shares reserved for such issuance to be so listed on such exchange or included
in the NASDAQ National Market upon official notice of issuance upon such
exercise, as the case may be.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Share Fractions (and,
following the occurrence of a Distribution Date, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully-paid and nonassessable shares.
(d) The Company further covenants and agrees that it will pay,
when due and payable, any and all Federal and state original issue and transfer
taxes and charges which may be payable in respect of the issuance or delivery of
the Rights Certificates or of any Preferred Shares
11
(or Common Shares and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for the Preferred Shares (or Common Shares and/or other
securities, as the case may be) in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
to issue or deliver any certificates or depositary receipts for Preferred Shares
or Common 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 Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE.
Each person in whose name any certificate for a number of Preferred
Share Fractions (or Common Shares and/or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Share Fractions (or Common Shares
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and 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 (or
Common Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate, as such, shall not be entitled to any rights of
a stockholder of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.
The Purchase Price, the kind and number of shares or other securities
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a
smaller number of shares or (D) issue any shares of its capital stock in
a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving
12
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
Preferred Shares or other shares of capital stock, as the case may be,
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive, upon payment of the adjusted Purchase Price, the aggregate
number and kind of Preferred Shares or other shares of capital stock, as
the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED, HOWEVER, that in
no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event that any Person (other than (i) the
Company, (ii) any Subsidiary of the Company or (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company or any
Person or entity holding shares of capital stock of the Company for or
pursuant to the terms of any such plan, in its capacity as an agent or
trustee for any such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration
Date, become an Acquiring Person, then, promptly following the
occurrence of such event, proper provision shall be made so that each
holder of a Right (except as provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement
and in lieu of Preferred Share Fractions, such number of Common Shares
of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of Preferred Share
Fractions for which a Right is then exercisable and (y) dividing that
product (which shall thereafter be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by 50% of the
then current market price (determined pursuant to Section 11(d) hereof)
per Common Share on the fifth day after the date on which a Person has
become an Acquiring Person, or the fifth day after the Shares
Acquisition Date, whichever market price shall be less (such number of
shares being hereinafter referred to as the "Adjustment Shares"). In the
event that any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action that
would eliminate or diminish the benefits intended to be afforded by the
Rights.
(iii) In the event that the number of Common Shares which
are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (ii) of this
Section 11(a),
13
the Company shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value"), over (2) the Purchase Price (such excess, the "Spread") and (B)
with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) other equity
securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Company's Board of
Directors in office at the time has determined upon Board Approval have
the same value as the Common Shares (such shares or units of shares of
preferred stock, the "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 Board Approval of the
Company's Board of Directors in office at the time based upon the advice
of a nationally recognized investment banking firm selected by the Board
of Directors of the Company; PROVIDED, HOWEVER, that if the Company
shall not have made adequate provision to deliver value pursuant to
clause (B) above within 30 days following the later of (x) the first
occurrence of the date on which a Person has become an Acquiring Person
or the Shares Acquisition Date and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the later of (x)
and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Company's Board of Directors shall determine by
Board Approval that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent
necessary, but not more than 90 days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of
the Common Shares shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of the Common Shares on the
Section 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Shares
on such date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar
14
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 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); PROVIDED, HOWEVER, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent, and shall be binding on the Company, the Rights
Agent and the holders of the Rights. 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 adjustments shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular periodic cash dividend at a rate not in excess
of 125% of the rate of the last regular periodic cash dividend theretofore paid
or a dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price of one Preferred Share
Fraction (as determined pursuant to Section 11(d) hereof) 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 Fraction and the denominator of which shall be
such current market price of one Preferred Share Fraction; 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
15
exercise of one Right. Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the
30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; PROVIDED, HOWEVER, that in the event
that the current market price per share of the Security is determined
during any period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares or
(B) any subdivision, combination or reclassification of such Security,
and prior to the expiration of the requisite 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
take into account ex-dividend trading. The closing price for each
Trading Day shall be the last sale price, regular way, or, in case no
such sale takes place on such 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
Security is 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 Security is listed or admitted
to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NASDAQ or such other system
then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. If on any such date
no market maker is making a market in the Security, the fair value of
such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current market price" per Preferred Share shall be determined in
accordance with the method set forth above for the Securities in clause
(i) of this Section 11(d). If the current market price per Preferred
Share cannot be determined in the manner provided above or if the
Preferred Shares are not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "current market
price" per Preferred Share shall be conclusively deemed to be an amount
16
equal to the current market price per share of the Common Shares
(appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to the Common Shares occurring after
the date of this Agreement), multiplied by 100. If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or
traded, "current market price" per share shall mean the fair value per
share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed
with the Rights Agent. For all purposes of this Agreement, the "current
market price" of a Preferred Share Fraction shall be equal to the
"current market price" of one Preferred Share divided by 100.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share in
the case of Common Shares or other shares or one-millionth of a share in the
case of Preferred Shares, as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in this Section 11 and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Preferred Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Share
Fractions purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Preferred Share Fractions (calculated to the nearest one-millionth of a
Preferred Share) obtained by (i) multiplying (x) the number of Preferred Share
Fractions 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.
17
(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 Share Fractions issuable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercised for the number of Preferred Share Fractions 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 ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be at least
ten days later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Share Fractions issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of Preferred Share
Fractions which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights or below the
then par value, if any, of the Common Shares if then 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 or, if applicable,
Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities
18
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) 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 the 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, stock dividends
or issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Preferred Shares
shall not be taxable to such stockholders.
(n) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time prior to the Distribution Date
(i) declare or pay any dividend on the outstanding 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 (A) the number of Preferred Share Fractions purchasable after such
event upon proper exercise of each Right shall be determined by multiplying the
number of Preferred Share Fractions so purchasable immediately prior to such
event by a fraction, of which the numerator shall be the total number of Common
Shares outstanding immediately prior to the occurrence of the event and of which
the denominator shall be the total number of Common Shares outstanding
immediately following the occurrence of such event, (B) the Purchase Price to be
in effect after such event shall be determined by multiplying the Purchase Price
in effect immediately prior to such event by a fraction, the numerator of which
shall be the number of Common Shares outstanding immediately prior to such event
and the denominator of which is the number of Common Shares outstanding
immediately after such event, and (C) 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. If an event occurs which
would require an adjustment under Section 11(a)(ii) and this Section 11(n), the
adjustment provided for in this Section 11(n) shall be in addition to and prior
to any adjustment required pursuant to Section 11(a)(ii).
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 signed by officers
authorized to execute a Rights Certificate in Section 5 setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred
19
Shares and the Common Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be deemed
to have knowledge of any such adjustment unless and until it shall have received
such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following the Shares Acquisition Date,
directly or indirectly, (i) the Company shall consolidate with, or merge with
and into, any other Person and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) 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 the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons other than the Company or one or
more of its wholly-owned Subsidiaries, then, and in each such case proper
provision shall be made so that:
(A) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then-current Purchase
Price multiplied by the number of Preferred Share Fractions for
which a Right is then exercisable, in accordance with the terms
of this Agreement and in lieu of Preferred Share Fractions, such
number of Common Shares of such other Person (including the
Company as successor thereto or as the surviving corporation)
free and clear of all liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then-current Purchase Price by
the number of Preferred Share Fractions for which a Right is then
exercisable and (2) dividing that product by 50% of the
then-current per share market price of the Common Shares of such
other Person (determined pursuant to Section 11(d) hereof) on the
date of consummation of such consolidation, merger, sale or
transfer;
(B) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this
Agreement;
(C) the term "Company" shall thereafter be deemed to
refer to such issuer, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such issuer
following the first occurrence of a Section 13 Event; and
20
(D) 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.
(b) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent a supplemental agreement so
providing. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For 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, whose determination shall be described in a statement filed with
the Rights Agent.
(b) The Company shall not be required to issue fractions of
shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of
21
the Rights or to distribute certificates which evidence fractional shares (other
than fractions which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth 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 shares that are not integral multiples of one one-thousandth of a
Preferred Share, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one Preferred
Share or one Common Share as the case may be. For purposes of this Section
14(b), the current market value of a Common Share or a Preferred Share shall be
the current market price of a Common Share (as determined pursuant to Section
11(d)(i) hereof) or a Preferred Share (as determined pursuant to Section
11(d)(ii) hereof), as the case may be, for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, except the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights 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 Rights Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce this
Agreement, and may institute and maintain any suit, action or proceeding against
the Company to enforce this Agreement, or otherwise enforce or act in respect of
his right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person (including, without
limitation, the Company) 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:
22
(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 Rights 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 with the appropriate forms and certificates
fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name the Rights
Certificate (or prior to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Share certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or a beneficial interest in a Right or other Person as a result of
its inability to perform any of its obligations under this Agreement by reason
of any preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority prohibiting
or otherwise restraining performance of such obligation; PROVIDED, HOWEVER, the
Company must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred
Shares, the Common 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 Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
23
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder in accordance with a fee
schedule to be mutually agreed upon 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 the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for 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, instruction, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any 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 Rights 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
Rights Certificate so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
24
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter 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 of
Directors, the President or any Vice President of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except as to 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 Rights 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 Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e) hereof) or any
adjustment required under the provisions of Sections 11 or 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
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
25
to the authorization or reservation of any Preferred Shares or Common Shares to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any Preferred Shares or Common Shares will, when so issued, be validly
authorized and issued, fully-paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board of Directors, the President or any Vice
President of the Company, and to apply to such officers for advice or
instructions in connection with its duties under this Rights Agreement, 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 stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, PROVIDED reasonable care was exercised in the selection
and continued employment thereof.
(j) At any time and from time to time after the Distribution
Date, upon the request of the Company, the Rights Agent shall promptly deliver
to the Company a list, as of the most recent practicable date (or as of such
earlier date as may be specified by the Company), of the holders of record of
Rights.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate of status attached to the
form of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1 or 2
thereof, the Rights Agent shall not take any further action with respect to the
requested exercise or transfer without first consulting with the Company.
26
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 Preferred Shares or
Common Shares by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon 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 Preferred Shares or Common Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
resigning, removed, or incapacitated Rights Agent shall remit to the Company, or
to any successor Rights Agent designated by the Company, all books, records,
funds, certificates or other documents or instruments of any kind then in its
possession which were acquired by such resigning, removed or incapacitated
Rights Agent in connection with its services as Rights Agent hereunder, and
shall thereafter be discharged from all duties and obligations hereunder.
Following notice of such removal, resignation or incapacity, the Company shall
appoint a successor to such 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 Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be either (a) a corporation organized and doing business under the laws of
the United States or of the State of New York or Texas (or of any other state of
the United States so long as such corporation is authorized to do business as a
banking institution in the State of New York or Texas), in good standing, having
an office or an affiliate with an office in the State of New York which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by Federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million or (b) an affiliate of a corporation described
in clause (a) of this sentence which is a corporation organized and doing
business under the laws of the United States or of the State of New York or
Texas (or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of New York or
Texas), in good standing, having a principal office in the State of New York,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect
27
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option, at
any time prior to 5:00 p.m., Houston time on the earlier of (i) the 10th day
after the Shares Acquisition Date and (ii) the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.01
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); PROVIDED, HOWEVER, that if
the Board of Directors of the Company authorizes redemption of the Rights at or
after the time a Person becomes an Acquiring Person, such approval shall be by
Board Approval. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable following the time that a Person
becomes an Acquiring Person 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.
28
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) 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 periodic cash dividend at a rate not in excess of 125% of the rate of
the last regular periodic cash dividend theretofore paid), or (ii) 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 (iii) to effect any reclassification of
its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), or (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person, or (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Rights 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, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to the
Rights Agent and to each holder of a Rights Certificate, in accordance with
Section 25 hereof, a notice of the occurrence of such event, which shall
describe such event and the consequences of same 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 Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail,
postage-prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
29
Allwaste, Inc.
515 San Felipe
Suite 1600
Houston, TX 77056
Attention: Corporate 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 Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage-prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Rights Offerings
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate 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 Rights. 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 in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); PROVIDED, HOWEVER, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) subject to Section 29 hereof, 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, based upon a determination by the
Company's Board of Directors upon Board Approval, for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the delivery of a certificate from an appropriate officer of the
Company or, so long as any Person is an Acquiring Person hereunder, from the
majority of the Continuing Directors which states that the proposed supplement
or amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or amendment. Notwithstanding anything
contained in this
30
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, the Purchase Price, the Final Expiration Date or
the number of Preferred Share Fractions for which a Right is exercisable without
Board Approval. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares.
SECTION 27. 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 28. 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 Rights 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 Rights Certificates (and, prior
to the Distribution Date, the Common Shares).
SECTION 29. 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.
SECTION 30. GOVERNING LAW.
This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
SECTION 31. 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.
31
SECTION 32. DESCRIPTIVE HEADING.
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereto affixed and
attested, all as of the day and year first above written.
Attest: ALLWASTE, INC.
By: By:
------------------------------- ----------------------------
AMERICAN STOCK TRANSFER &
Attest: TRUST COMPANY
By:-------------------------------- By:-----------------------------
Name: Name:
Title: Title:
32
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF
SERIES ONE JUNIOR PARTICIPATING PREFERRED STOCK
of
ALLWASTE, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
ALLWASTE, INC., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), DOES HEREBY CERTIFY that, at a meeting of
the Company's Board of Directors duly called and held on August 2, 1996 at which
a quorum was present and acting throughout, the following resolutions were
adopted pursuant to Section 151 of the Delaware General Corporation Law (the
"Delaware Act"):
WHEREAS, Article FOURTH of the Company's Amended and Restated
Certificate of Incorporation (the "Charter"), authorizes a total of 100,500,000
shares of capital stock, consisting of 500,000 shares of preferred stock, par
value $0.01 per share (the "Preferred Stock"), issuable from time to time in one
or more series, and 100,000,000 shares of common stock, par value $0.01 per
share (the "Common Stock"), issuable from time to time; and
WHEREAS, in accordance with Section 151 of the Delaware Act and pursuant
to Article FOURTH of the Charter, the Company's Board of Directors is authorized
to fix the designations, powers, preferences and relative, participating,
optional or other special rights, if any, and qualifications, limitations or
restrictions thereof, of any wholly unissued series of Preferred Stock, and to
fix the number of shares constituting such series, and to increase or decrease
the number of shares of any such series (but not below the number of shares
thereof then outstanding); and
WHEREAS, it is the desire of the Board of Directors of this Corporation,
in accordance with the authority conferred upon it as described above, to issue
a series of Preferred Stock and to fix the rights, preferences, restrictions and
other matters relating thereto;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
establish a series of Preferred Stock of this Company and does hereby fix and
determine the rights, preferences, restrictions and other matters relating to
said series of Preferred Stock, as follows:
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SECTION 1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as "Series One Junior
Participating Preferred Stock" ("Series One Preferred Stock") and the number of
shares constituting such series shall be 100,000. Such number of shares may be
adjusted by appropriate action of the Board of Directors.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(a) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series One Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 1000 times the aggregate per share amount of all cash
dividends contemporaneously declared on the Common Stock, and (ii) a
preferential cash dividend ("Preferential Dividends"), if any, on the tenth day
of March, June, September and December of each year (each a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series One Preferred
Stock, in an amount equal to $10.00 per share of Series One Preferred Stock less
the per share amount of all cash dividends declared on the Series One Preferred
Stock pursuant to clause (i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series One Preferred Stock. In the event the Company shall, at any time after
the issuance of any share or fraction of a share of Series One Preferred Stock,
make any distribution on the shares of Common Stock, whether by way of a
dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Company or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence and
other than a distribution of shares of Common Stock or other capital stock of
the Company and other than a distribution of rights or warrants to acquire any
such share, including any debt security convertible into or exchangeable for any
such share, at a price less than the Current Market Price (as hereinafter
defined) of such share), then and in each such event the Company shall
simultaneously pay on each then outstanding share of Series One Preferred Stock
a distribution, in like kind, of 1000 times (subject to the provisions for
adjustment hereinafter set forth) such distribution paid on a share of Common
Stock. The dividends and distributions on the Series One Preferred Stock to
which holders thereof are entitled pursuant to clause (i) of the first sentence
of this paragraph and pursuant to the second sentence of this paragraph are
hereinafter referred to as "Participating Dividends" and the multiple of such
cash and non-cash dividends on the Common Stock applicable to the determination
of the Participating Dividends, which shall be 1000 initially but shall be
adjusted from time to time as hereinafter provided, is hereinafter referred to
as the "Dividend Multiple." In the event the Company shall at any time after
August 15, 1996 declare or pay any dividend or make any distribution on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Dividend Multiple thereafter applicable to the determination of
the amount of Participating Dividends which holders of shares of Series One
A-2
Preferred Stock shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied by a fraction, of which
the numerator is the number of shares of Common Stock outstanding immediately
after such event and of which the denominator is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) The Company shall declare each Participating Dividend at the
same time it declares any cash or non-cash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be paid shall be paid
or set aside for payment on the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid, or set aside for payment, on the Series One Preferred
Stock.
(c) Preferential Dividends shall begin to accrue on outstanding
shares of Series One Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issuance of any shares of Series One Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series One Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
SECTION 3. VOTING RIGHTS.
The holders of shares of Series One Preferred Stock shall have the
following voting rights:
(a) Subject to the provisions for adjustment hereinafter set
forth, each share of Series One Preferred Stock shall entitle the holder thereof
to 1000 votes on all matters submitted to a vote of the stockholders of the
Company. The number of votes which a holder of Series One Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple." In the event the
Company shall at any time after August 15, 1996 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or split
or a combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock, then in
each such case the Vote Multiple thereafter applicable to the determination of
the number of votes per share to which holders of shares of Series One Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied by a fraction, of which the numerator is the
number of shares of Common Stock outstanding immediately after such event and of
which the denominator is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of
shares of Series One Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
A-3
(c) In the event that the Preferential Dividends accrued on the
Series One Preferred Stock for six or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or set apart for
payment, the holders of record of preferred stock of the Company of all series
(including the Series One Preferred Stock), other than any series in respect of
which the right is expressly withheld by the Charter or the authorizing
resolutions included in the Certificate of Designation therefor, shall have the
right, at the next meeting of stockholders called for the election of directors,
to elect two members to the Board of Directors, which directors shall be in
addition to the number required by the Company's bylaws as in effect prior to
such event, to serve until the next annual meeting of the stockholders and until
their successors are elected and qualified or their earlier resignation, removal
or incapacity or until such earlier time as all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series One Preferred Stock shall have
been paid (or set aside for payment) in full. The holders of shares of Series
One Preferred Stock shall continue to have the right to elect directors as
provided by the immediately preceding sentence until all accrued and unpaid
Preferential Dividends upon the outstanding shares of Series One Preferred Stock
shall have been paid (or set aside for payment) in full. Such directors may be
removed and replaced by such stockholders, and vacancies in such directorships
may be filled only by such stockholders (or by the remaining director elected by
such stockholders, if there be one) in the manner permitted by law; PROVIDED,
HOWEVER, that any such action by stockholders shall be taken at a meeting of
stockholders and shall not be taken by written consent thereof.
(d) Except as otherwise required by law or set forth herein,
holders of Series One Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
(a) Whenever Preferential Dividends or Participating Dividends
are in arrears or the Company shall be in default of payment thereof, thereafter
and until all accrued and unpaid Preferential Dividends and Participating
Dividends, whether or not declared, on shares of Series One Preferred Stock
outstanding shall have been paid or set aside for payment in full, and in
addition to any and all other rights which any holder of shares of Series One
Preferred Stock may have in such circumstances, the Company shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to, the Series One
Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to dividends
with the Series One Preferred Stock, unless dividends are paid ratably
on the Series One Preferred Stock and all such parity stock
A-4
on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) except as permitted by sub-clause (iv) of this
Section 4(a), redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up), with the Series One Preferred
Stock, provided that the Company may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares
of any stock of the Company ranking junior (both as to dividends and
upon liquidation, dissolution or winding up) to the Series One Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series One Preferred Stock, or any shares of stock ranking on
a parity with the Series One Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance with
a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.
(b) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, in accordance with Section 4(a), purchase or
otherwise acquire such shares at such time and in such manner.
(c) The Company shall not issue any shares of Series One
Preferred Stock except upon exercise of rights issued pursuant to that certain
Rights Agreement dated as of August 5, 1996, between the Company and American
Stock Transfer & Trust Company, a copy of which is on file with the Secretary of
the Company at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed to
the Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof shall prohibit or restrict the Company from issuing for any
purpose any series of preferred stock with rights and privileges similar to,
different from, or greater than, those of the Series One Preferred Stock.
SECTION 5. REACQUIRED SHARES.
Any shares of Series One Preferred Stock purchased or otherwise acquired
by the Company in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. The Company shall cause all such shares upon
their retirement and cancellation to become authorized but unissued shares of
Preferred Stock, without designation as to series, and such shares may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors.
A-5
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any voluntary or involuntary liquidation, dissolution or winding up
of the Company, no distribution shall be made (i) to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series One Preferred Stock unless the holders of shares of
Series One Preferred Stock shall have received, subject to adjustment as
hereinafter provided, (A) $10.00 per share PLUS an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, or (B) if greater than the amount specified in clause (i)(A) of
this sentence, the amount equal to 1000 times the aggregate amount to be
distributed per share to holders of Common Stock, or (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with the
Series One Preferred Stock, unless simultaneously therewith distributions are
made ratably on the Series One Preferred Stock and all other shares of such
parity stock in proportion to the total amounts to which the holders of shares
of Series One Preferred Stock are entitled under clause (i)(A) of this sentence
and to which the holders of such parity shares are entitled, in each case upon
such liquidation, dissolution or winding up. The amount to which holders of
Series One Preferred Stock may be entitled upon liquidation, dissolution or
winding up of the Company pursuant to clause (i)(B) of the immediately preceding
sentence is hereinafter referred to as the "Participating Liquidation Amount"
and the multiple of the amount to be distributed to holders of shares of Common
Stock upon the liquidation, dissolution or winding up of the Company applicable
pursuant to such clause to the determination of the Participating Liquidation
Amount, as such multiple may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Liquidation Multiple." In the event
the Company shall at any time after August 15, 1996 declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding shares
of Common Stock into a greater or lesser number of shares of Common Stock, then
in each such case the Liquidation Multiple thereafter applicable to the
determination of the Participating Liquidation Amount to which holders of Series
One Preferred Stock shall be entitled after such event shall be the Liquidation
Multiple applicable immediately prior to such event multiplied by a fraction, of
which the numerator is the number of shares of Common Stock outstanding
immediately after such event and of which the denominator is the number of
shares of Common Stock that were outstanding immediately prior to such event.
SECTION 7. CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(a) In the event that holders of shares of Common Stock of the
Company receive after August 15, 1996 in respect of their shares of Common Stock
any share of capital stock of the Company (other than any share of Common
Stock), whether by way of reclassification, recapitalization, reorganization,
dividend or other distribution or otherwise ("Transaction"), then and in each
such event the dividend rights, voting rights and rights upon the liquidation,
dissolution or winding up of the Company of the shares of Series One Preferred
Stock shall be adjusted so that after such event the holders of Series One
Preferred Stock shall be entitled, in respect of each share of Series One
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the
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Dividend Multiple in effect immediately prior to such Transaction multiplied by
the additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the transaction of such capital
stock, (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such Transaction multiplied by the additional voting rights
which the holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the transaction of such capital stock and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately prior to such
transaction multiplied by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company by virtue of the receipt in the Transaction of such
capital stock, as the case may be, all as provided by the terms of such capital
stock.
(b) In the event that holders of shares of Common Stock of the
Company receive after August 15, 1996 in respect of their shares of Common Stock
any right or warrant to purchase Common Stock (including as such a right, for
all purposes of this paragraph, any security convertible into or exchangeable
for Common Stock) at a purchase price per share less than the Current Market
Price of a share of Common Stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights, voting rights and
rights upon the liquidation, dissolution or winding up of the Company of the
shares of Series One Preferred Stock shall each be adjusted so that after such
event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Current Market Price of the
Common Stock at the time of such issuance, by the maximum aggregate
consideration payable upon exercise in full of all such rights or warrants.
(c) In the event that holders of shares of Common Stock of the
Company receive after August 15, 1996 in respect of their shares of Common Stock
any right or warrant to purchase capital stock of the Company (other than shares
of Common Stock), including as such a right, for all purposes of this paragraph,
any security convertible into or exchangeable for capital stock of the Company
(other than Common Stock), at a purchase price per share less than the Current
Market Price of such shares of capital stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights, voting rights
and rights upon liquidation, dissolution or winding up of the Company of the
shares of Series One Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series One Preferred Stock shall be entitled, in
respect of each share of Series One Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior to
such event, to receive (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such event multiplied, first, by the
additional dividends to which the holder of a share of Common Stock shall be
entitled upon exercise of such
A-7
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction (as hereinafter
defined) and (ii) such additional voting rights as equal the Vote Multiple in
effect immediately prior to such event multiplied, first, by the additional
voting rights to which the holder of a share of Common Stock shall be entitled
upon exercise of such right or warrant by virtue of the capital stock which
could be acquired upon such exercise and multiplied again by the Discount
Fraction and (iii) such additional distributions upon liquidation, dissolution
or winding up of the Company as equal the Liquidation Multiple in effect
immediately prior to such event multiplied, first, by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company upon exercise of such
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction, of which the
numerator shall be the difference between the Current Market Price of a share of
the capital stock subject to a right or warrant distributed to holders of shares
of Common Stock as contemplated by this paragraph immediately after the
distribution thereof and the purchase price per share for such share of capital
stock pursuant to such right or warrant and of which the denominator shall be
the Current Market Price of a share of such capital stock immediately after the
distribution of such right or warrant.
(d) For purposes of this Section 7, the "Current Market Price" of
a share of capital stock of the Company (including a share of Common Stock) on
any date shall be deemed to be the average of the daily closing prices per share
thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
that such Current Market Price of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after the
ex-dividend date for (i) a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the Current Market
Price shall be appropriately adjusted by the Board of Directors of the Company
to reflect the Current Market Price of such stock to take into account
ex-dividend trading. 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 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
shares are listed or admitted to trading or, if the 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 Quotation System ("NASDAQ") or such other system then in
use, or if on any such date the 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 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 shares are listed or admitted to
trading is open for the transaction of business or, if the shares are not
A-8
listed or admitted to trading on any national securities exchange, a day on
which the New York Stock Exchange or such other national securities exchange as
may be selected by the Board of Directors of the Company is open. If the shares
are not publicly held or not so listed or traded on any day within the period of
30 Trading Days applicable to the determination of Current Market Price thereof
as aforesaid, "Current Market Price" shall mean the fair market value thereof
per share as determined in good faith by the Board of Directors of the Company.
In either case referred to in the foregoing sentence, the determination of
Current Market Price shall be described in a statement filed with the Secretary
of the Company.
SECTION 8. CONSOLIDATION, MERGER, ETC.
In case the Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each outstanding share of Series One Preferred
Stock shall at the same time be similarly exchanged for or changed into the
aggregate amount of stock, securities, cash and/or other property (payable in
like kind), as the case may be, for which or into which each share of Common
Stock is changed or exchanged multiplied by the highest of the Vote Multiple,
the Dividend Multiple or the Liquidation Multiple in effect immediately prior to
such event.
SECTION 9. EFFECTIVE TIME OF ADJUSTMENTS.
(a) Adjustments to the Series One Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event required
such adjustments occurs.
(b) The Company shall give prompt written notice to each holder
of a share of Series One Preferred Stock of the effect of any adjustment to the
voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
SECTION 10. NO REDEMPTION.
The shares of Series One Preferred Stock shall not be redeemable at the
option of the Company or any holder thereof. Notwithstanding the foregoing
sentence of this Section, the Company may acquire shares of Series One Preferred
Stock in any other manner permitted by law, the provisions hereof and the
Charter.
SECTION 11. RANKING.
Unless otherwise provided in the Charter or a Certificate of Designation
relating to a subsequent series of Preferred Stock, the Series One Preferred
Stock shall rank junior to all other
A-9
series of the Preferred Stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and senior to
the Common Stock.
SECTION 12. AMENDMENT.
The provisions hereof and of the Charter shall not be amended in any
manner which would materially affect the rights, privileges or powers of the
Series One Preferred Stock without, in addition to any other vote of
stockholders required by law, the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Series One Preferred Stock, voting together
as a single class.
A-10
IN WITNESS WHEREOF, we have executed and subscribed this Certificate of
Designation and do affirm the foregoing as true under the penalties of perjury
this ___ day of August, 1996.
--------------------------------------
Robert M. Chiste
President and Chief Executive Officer
--------------------------------------
William L. Fiedler
Vice President and Corporate Secretary
A-11
[Form of Rights Certificate]
Certificate No. ____________ Rights
NOT EXERCISABLE AFTER THE EARLIER OF AUGUST 5, 2006 OR THE
EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO
BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT),
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR A NOMINEE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]1
Rights Certificate
ALLWASTE, INC.
This certifies that ________________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Stockholder Rights Agreement dated as of August 5, 1996 (the "Rights
Agreement"; terms defined therein are used herein with the same meaning unless
otherwise defined herein) between Allwaste, Inc., a Delaware corporation (the
"Company"), and American
- --------
1 The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
Stock Transfer & Trust Company, a New York corporation, as Rights Agent (which
term shall include any successor Rights Agent under the Rights Agreement), to
purchase from the Company at any time after the Distribution Date and prior to
the earlier of the Expiration Date or the Final Expiration Date at the principal
office of the Rights Agent, one one-thousandth of a fully paid and
non-assessable share of Series One Junior Participating Preferred Stock, par
value $0.01 per share (the "Preferred Stock"), of the Company at the Purchase
Price initially of $20.00 per one one-thousandth share of Preferred Stock (each
such one-thousandth of a share being a "Preferred Share Fraction"), upon
presentation and surrender of this Rights Certificate with the Election to
Purchase and related certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of Preferred Share Fractions which
may be purchased upon exercise thereof) set forth above, and the Purchase Price
per Preferred Share Fraction set forth above shall be subject to adjustment in
certain events as provided in the Rights Agreement.
In the event that a Person shall become an Acquiring Person, if the
Rights evidenced by this Rights Certificate are beneficially owned by an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person or,
under certain circumstances described in the Rights Agreement, a transferee of
any such Acquiring Person, Associate or Affiliate, such Rights shall become null
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such event.
In certain circumstances described in the Rights Agreement, the rights
evidenced hereby may entitle the registered holder thereof to purchase capital
stock of an entity other than the Company or receive cash or other assets, all
as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions of
the Rights Agreement, which terms and conditions are hereby incorporated herein
by reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates. Copies of the Rights Agreement and
the Certificate of Designation for the Preferred Stock are on file at the
principal office of the Company and are available from the Company upon written
request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of $0.01 per Right, subject to adjustment in
certain events as provided in the Rights Agreement.
B-2
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of Preferred Share Fractions), but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
to receive dividends or to exercise any preemptive rights or be deemed for any
purpose the holder of Preferred Stock or of any other securities 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 stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or to exercise any preemptive rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of August 12, 1996.
Countersigned:
ATTEST: ALLWASTE, INC.
By: _______________________ By: ________________________
Name: Name:
Title: Title:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:__________________________
Name:
Title:
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____, 199__
Signature
Signature Guaranteed:
B-4
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
did [ ] did not [ ] acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ____________, 19___
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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, savings association, credit union or trust company
having an office or correspondent in the United States or other eligible
guarantor institution which is a participant in a signature guarantee medallion
program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
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 Rights Certificates issued in exchange for this
Rights Certificate.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate)
To: ALLWASTE, INC.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the units of Junior Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such units be issued
in the name of and delivered to:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Please insert social security
or other identifying number:___________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Please insert social security
or other identifying number:___________________________________________________
Dated: _______, 19___
___________________________________________
Signature
B-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [_____] are [_____]
are not beneficially owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[_____] did [_____] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: __________, 19___
Signature
_____________________________________________________________________________
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
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.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
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 Rights Certificates issued in exchange for this
Rights Certificate.
B-7
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On August 2, 1996, the Board of Directors of Allwaste, Inc. (the
"Company") declared a dividend distribution of one preferred stock purchase
right (a "Right") for each outstanding share of common stock, par value $0.01
per share ("Common Stock"), of the Company. The distribution is payable on
August 15, 1996 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder thereof to purchase from the Company
one one-thousandth of a share of Series One Junior Participating Preferred
Stock, par value $0.01 per share, of the Company (the "Preferred Stock") at a
price of $20.00, subject to adjustment. The following is a summary of the
Rights; the full description and terms of the Rights are set forth in a
Stockholder Rights Agreement (the "Rights Agreement") between the Company and
American Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation, including the definitions therein of certain
terms, which Rights Agreement and Certificate of Designation are incorporated
herein by reference.
THE RIGHTS AGREEMENT
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 days following the
date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to the
time a person becomes an Acquiring Person) following the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer upon
consummation of which the offeror would, if successful, beneficially own 20% or
more of the outstanding Common Stock (the earlier of such dates being called the
"Distribution Date").
The term "Acquiring Person" means any person who or which, together with
all of its affiliates and associates, shall be the beneficial owner of 15% or
more of the outstanding Common Stock, but shall not include Heartland Advisors,
Inc. and its Affiliates and Associates (the "Heartland Group") unless and until
the Heartland Group shall become the beneficial owner of 18% or more of the
outstanding Common Stock.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier
C-1
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date, upon transfer or new issuance of Common Stock, 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 Stock, outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on August 5, 2006 (the "Expiration Date").
The Purchase Price payable, and the number of one one-thousandths of a
share of Preferred Stock 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 Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock
of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to in (ii) above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Shares Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right (the "Flip-Over Right").
In the event that a person becomes the beneficial owner of 15% (or 18%
in the case of the Heartland Group) or more of the outstanding shares of Common
Stock, proper provision shall be made so that each holder of a Right (other than
the Acquiring Person and its affiliates and associates) will thereafter have the
right to receive upon exercise that number of shares of Common Stock (or,
C-2
under certain circumstances, cash, other equity securities or property of the
Company) having a market value equal to two times the Purchase Price of the
Rights (the "Flip-In Right"). Upon the occurrence of the foregoing event giving
rise to the exercisability of the Rights, any Rights that are or were at any
time owned by an Acquiring Person shall become void.
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. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are integral multiples
of one one-thousandth of a share of Preferred Stock; cash will be paid in lieu
of fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Shares Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"); PROVIDED, that (i)
if the Board of Directors authorizes redemption on or after the time a person
becomes an Acquiring Person, then such authorization must be by Board Approval
(as hereinafter defined) and (ii) the period for redemption may, upon Board
Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company,
which approval includes the concurrence of a majority of the "continuing
directors," provided that at the time of such approval there are at least three
"continuing directors." Immediately upon any redemption of the Rights described
in this paragraph, 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 terms of the Rights may be amended by the Board of Directors without
the consent of the holders of the Rights at any time and from time to time
provided that such amendment does not adversely affect the interests of the
holders of the Rights. In addition, during any time that the Rights are subject
to redemption, the terms of the Rights may be amended by Board Approval,
including an amendment that adversely affects the interests of the holders of
the Rights, without the consent of the holders of Rights.
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 Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-thousandth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
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Each Preferred Share Fraction will have a minimum preferential quarterly
dividend rate of $0.01 per Preferred Share Fraction but will, in any event, be
entitled to a dividend equal to the per share dividend declared on the Company
Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock. The holders of Preferred Share Fractions, voting as a
separate class, shall be entitled to elect two directors if dividends on the
Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Preferred Share Fraction will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Preferred Share Fraction that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of the Company's Common Stock.
C-4
