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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report: March 24, 1997
Date of earliest
event reported: March 14, 1997
Dames & Moore, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-11075 95-4316617
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(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
911 Wilshire Blvd., Ste. 700, Los Angeles, California 90017
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(Address of principal executive offices) (Zip Code)
(213) 683-1560
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(Registrant's telephone number, including area code)
N/A
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(former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
On March 14, 1997 the Board of Directors of Dames & Moore, Inc. (the
"Company") declared a dividend of one preferred stock purchase right (the
"Rights") on each outstanding share of Company common stock, $0.01 par value per
share (the "Common Stock"), payable to stockholders of record on March 28, 1997.
Each Right will entitle the holder thereof after the Rights become exercisable
and until March 28, 2007 (or the earlier redemption, exchange or termination of
the Rights), to buy one two-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), at an exercise price of $65, subject to certain antidilution
adjustments (the "Purchase Price"). The Rights will be represented by the
Common Stock certificates and will not be exercisable or transferable apart from
the Common Stock until the earlier of (i) the tenth day after the public
announcement that a Person or group has become an Acquiring Person (a Person who
has acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the Common Stock), or (ii) the tenth day (or such later date as a
majority of disinterested directors shall approve prior to such time as any
Person becomes an Acquiring Person) after a Person or group commences, or
announces an intention to commence, a tender or exchange offer, the consummation
of which would result in the beneficial ownership by a Person or group of 15% or
more of the then outstanding Common Stock (the earlier of (i) and (ii) being
called herein the "Distribution Date"). As soon as practicable following the
Distribution Date, separate certificates representing the Rights will be mailed
to holders of the Common Stock as of the close of business on the Distribution
Date. The Rights will first become exercisable on the Distribution Date, unless
earlier redeemed or exchanged, and may then begin trading separately from the
Common Stock. The Rights will at no time have any voting rights.
In the event that a Person were to become an Acquiring Person (except
pursuant to certain cash offers for all outstanding Common Stock approved by the
Board of Directors of the Company) or if the Company were the surviving
corporation in a merger and its Common Stock were not changed or exchanged, each
holder of a Right, other than Rights that are or were acquired or beneficially
owned by the Acquiring Person (which Rights will thereafter be void), will
thereafter have the right to receive upon exercise that number of shares of
Common Stock having a market value of two times the then-current exercise price
of one Right. With certain exceptions, in the event that (i) the Company were
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation or its Common Stock is changed or
exchanged (other than a merger which follows certain cash offers for all
outstanding Common Stock approved by the Board) or (ii) more than 50% of the
Company's assets or earning power were sold, proper provision shall be made so
that each holder of a Right (except Rights which previously have been voided as
set forth above) shall thereafter have the right to receive, upon exercise
thereof, that number of shares of common stock of the acquiring company which at
the time of such transaction would have a market value of two times the
then-current exercise price of one Right.
At any time after a Person has become an Acquiring Person and prior to
the acquisition of 50% or more of the then-outstanding Common Stock by such
Acquiring Person,
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the Board of Directors may cause the Company to acquire the Rights (other than
Rights owned by an Acquiring Person which have become void), in whole or in
part, in exchange for that number of shares of Common Stock having an aggregate
value equal to the excess of the value of the Common Stock issuable upon
exercise of a Right after a Person becomes an Acquiring Person over the Purchase
Price.
The Rights are redeemable in whole, but not in part, at $0.01 per
Right, subject to certain antidilution adjustments, prior to the earlier of (i)
the close of business on the 10th day following the first date of public
announcement that a Person or group has become an Acquiring Person or (ii) the
final expiration date of the Rights. The Rights will expire on March 28, 2007
(unless earlier redeemed or exchanged). ChaseMellon Shareholder Services LLC is
the Rights Agent.
The Purchase Price payable, and the number of shares of Preferred
Shares or other securities or property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase the Preferred Shares or
convertible securities at less than the current market price of the Preferred
Shares, or (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness, cash, securities or assets (excluding regular
periodic cash dividends at a rate not in excess of 125% of the last regular
periodic cash dividend theretofore paid or, in case regular periodic dividends
have not theretofore been paid, at a rate not in excess of 50% of the average
net income per share of the Company for the four quarters ended immediately
prior to the payment of such dividend, or dividends payable in the Preferred
Shares) or of subscription rights or warrants (other than those referred to
above). No adjustments in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price.
As of March 17, 1997, there were 18,011,948 shares of Common Stock
outstanding, 2,274,692 shares reserved for distribution under the Company's 1991
Amended and Restated Long Term Incentive Plan and 50,000 shares reserved for
distribution under the Company's 1995 Stock Option Plan for Non-Employee
Directors. One Right will be distributed to stockholders of the Company for
each share of Common Stock owned of record by them on March 28, 1997. As long
as the Rights are attached to the Common Stock, the Company will issue one Right
with each new share of Common Stock so that all such shares will have attached
Rights. Approximately 135,000 Preferred Shares have been reserved for issuance
upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a Person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned 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 prior to the time that a Person or group has become an
Acquiring Person, as the Rights may be redeemed by the Company at $0.01 per
Right prior to such time.
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The Rights Agreement, dated as of March 28, 1997 between the Company
and ChaseMellon Shareholder Services LLC specifying the terms of the Rights,
the text of the press release announcing the declaration of the Rights and the
form of letter to the holders of the Company's Common Stock are attached hereto
as exhibits and are incorporated herein by reference. The foregoing description
of the Rights is qualified by reference to such exhibits. All capitalized
terms used herein without definition shall have the meanings assigned to them
in the Rights Agreement.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
4.1 Rights Agreement, dated as of March 28, 1997 between Dames & Moore,
Inc. and ChaseMellon Shareholder Services LLC, which includes the form
of Certificate of Designations of Series A Junior Participating
Preferred Stock of Dames & Moore, Inc. as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Share Purchase Rights
Plans as Exhibit C.
99.1 Text of Press Release, dated March 14, 1997.
99.2 Form of Letter to the holders of Dames & Moore, Inc. Common Stock.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DAMES & MOORE, INC.
Dated: March 24, 1997 By /S/ Mark Snell
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Name: Mark Snell
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
4.1 Rights Agreement, dated as of March 28, 1997 between Dames & Moore,
Inc. and ChaseMellon Shareholder Services LLC, which includes the form
of Certificate of Designations of Series A Junior Participating
Preferred Stock of Dames & Moore, Inc. as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Share Purchase Rights
Plans as Exhibit C.
99.1 Text of Press Release, dated March 14, 1997.
99.2 Form of Letter to the holders of Dames & Moore, Inc. Common Stock.
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EXHIBIT 4.1
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DAMES & MOORE, INC.
and
CHASEMELLON SHAREHOLDER SERVICES LLC
as Rights Agent
Rights Agreement
Dated as of March 28, 1997
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RIGHTS AGREEMENT
Agreement, dated as of March 28, 1997, between Dames & Moore, Inc., a
Delaware corporation (the "COMPANY"), and ChaseMellon Shareholder Services LLC,
a New Jersey limited liability company, as Rights Agent (the "RIGHTS AGENT").
RECITALS
The Board of Directors of the Company has authorized and declared a
dividend of one right (a "RIGHT") for each Common Share (as defined in Section
1.6 hereof) of the Company outstanding at the close of business on March 28,
1997 (the "RECORD DATE") and has authorized the issuance of one Right (subject
to adjustment as provided herein) with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
defined in Sections 3.1 and 7.1 hereof), each Right initially representing the
right to purchase one two-hundredth of a share of Series A Junior Participating
Preferred Stock (the "PREFERRED SHARES") of the Company having the rights,
powers and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit A, upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
1.1 "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 the Company, any
Subsidiary of the Company or 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. 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 more of the Common Shares of the Company then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial Owner of 15% or more of
the Common Shares of the Company then outstanding solely by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares of the Company, then
such Person shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this Section 1.1, has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this Section 1.1, then such Person shall
not be deemed to be an "Acquiring Person" at any time for any purposes of this
Agreement.
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1.2 "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 Rights Agreement, under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT").
1.3 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 (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately, or only after the
passage of time, compliance with regulatory requirements, fulfillment
of a condition or otherwise) pursuant to any agreement, arrangement or
understanding, whether or not in writing (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 or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (1) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (2) securities issuable upon
exercise of Rights at any time prior to the occurrence of a Trigger
Event, or (3) securities issuable upon exercise of Rights from and
after the occurrence of a Trigger Event which Rights were acquired by
such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3.1 or Section 22 hereof
(the "ORIGINAL RIGHTS") or pursuant to Section 11.9 hereof in
connection with an adjustment made with respect to any Original
Rights, or (4) securities which such Person or any of such Person's
Affiliates or Associates may acquire, does or do acquire or may be
deemed to have the right to acquire, pursuant to any merger or other
acquisition agreement between the Company and such Person (or one or
more of his Affiliates or Associates) if such agreement has been
approved by the Board of Directors of the Company prior to such
Person's becoming an Acquiring Person; or (B) the right to vote
pursuant to any agreement, arrangement or understanding (whether or
not in writing); PROVIDED, HOWEVER, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, any security under
this clause (B) if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then
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 (or any Affiliate or Associate
thereof) with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members
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with respect to a bona fide public offering of securities), whether or
not in writing, for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to Section
1.3(ii)(B) hereof) or disposing of any securities of the Company.
1.4 "BUSINESS DAY" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
1.5 "CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., New
York City time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next succeeding
Business Day.
1.6 "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.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, 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, and which has issued and outstanding such capital stock, equity
securities or equity interest.
1.7 "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 an
employee, director, representative, nominee or designee of any Acquiring Person
or of any such Affiliate or Associate, and was a member of the Board prior to
the time that any Person becomes an Acquiring Person or (ii) any Person (during
such period in which such Person is a member of the Board) who, after the time
that any Person becomes an Acquiring Person, becomes a member of the Board and
who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or an employee, director, representative, nominee or designee 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.
1.8 "PERSON" shall mean any individual, partnership, joint venture,
limited liability company, firm, corporation, unassociated association, trust or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
1.9 "SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, the filing of a report pursuant to Section 13(d) of the Exchange Act
or pursuant to a comparable successor statute) by the Company or an Acquiring
Person that an Acquiring Person has become such or that discloses information
which reveals the existence of an Acquiring Person.
1.10 "SUBSIDIARY" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, of record or beneficially, directly or indirectly,
by such Person.
1.11 A "TRIGGER EVENT" shall be deemed to have occurred upon any
Person becoming an Acquiring Person. Notwithstanding the foregoing, a Trigger
Event shall not be deemed to have
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occurred if the event causing the 15% ownership threshold to be crossed is an
acquisition of Common Shares made pursuant to a cash tender offer made pursuant
to the rules and regulations under the Exchange Act and filed with the
Securities and Exchange Commission on Schedule 14D-1 (or any successor form) for
all outstanding Common Shares not beneficially owned by the Person making such
offer (or by its Affiliates or Associates) so long as the Board of Directors of
the Company determines, after receiving advice from one or more investment
banking firms, that such offer is (i) at a price and on terms which are fair to
stockholders (taking into account all factors which such members of the Board
deem relevant, including without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (ii) otherwise in the best interests of the Company
and its stockholders; PROVIDED, HOWEVER, that there must be Continuing Directors
then in office and any such determination shall require the concurrence of a
majority of such Continuing Directors.
1.12 The following terms shall have the meanings defined for such
terms in the Sections set forth below:
Term Section
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Act 9
Adjustment Shares 11.1.2
Certification 20.13
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4.1
Current Value 11.1.3
Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.2
Exchange Consideration 27.1
Final Expiration Date 7.1
Nasdaq 9
Original Rights 1.3
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Section 11.1.3 Trigger Date 11.1.3
Security 11.4.1
Preferred Shares Recitals
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4.1
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights
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Agent hereby accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable. In the
event the Company appoints one or more co-Rights Agents, the respective duties
of the Rights Agent and any co-Rights Agent shall be as the Company shall
determine. Contemporaneously with such appointment, if any, the Company shall
notify the Rights Agent thereof.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
3.1 RIGHTS EVIDENCED BY SHARE CERTIFICATES. Until the earlier of (i)
the 10th day after the Shares Acquisition Date or (ii) the 10th day (or such
later date as may be determined by action of at least a majority of Continuing
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement of, or first public announcement of the intent of
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) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares of the Company (the earlier of (i)
and (ii) being herein referred to as the "DISTRIBUTION DATE," whether or not
either such date occurs prior to the Record Date), (x) the Rights (unless
earlier expired, redeemed, exchanged or terminated) will be evidenced (subject
to the provisions of Section 3.2) 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 Right Certificates) and not by separate
certificates, and (y) the Rights (and the right to receive certificates
therefor) will be transferable only in connection with the transfer of the
underlying Common Shares. The Company shall give the Rights Agent prompt
written notice of the Distribution Date. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class, 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 certificates for Rights, in substantially the form of
Exhibit B hereto (a "RIGHT CERTIFICATE"), evidencing one Right (subject to
adjustment as provided herein) for each Common Share so held. In the event that
an adjustment in the number of Rights associated with each Common Share has been
made pursuant to Section 11.15 hereof, at the time of distribution of the Right
Certificates the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14.1 hereof) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
3.2 SUMMARY OF RIGHTS. On the Record Date or as soon as practicable
thereafter, the Company will send or cause to be sent a copy of a Summary of
Rights to Purchase Preferred Shares, 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 (or the earlier
Redemption Date or Final Expiration Date), the Rights will be evidenced by such
certificates for Common Shares registered in the names of the holders thereof
and the registered holders of the Common Shares shall also be registered holders
of the associated Rights. Until the Distribution Date (or the earlier
Redemption Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding at the close of business on the Record
Date, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
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3.3 NEW CERTIFICATES AFTER RECORD DATE. Certificates for Common
Shares which become outstanding (whether upon issuance out of authorized but
unissued Common Shares, issuance out of treasury or transfer or exchange of
outstanding Common Shares) after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date, shall
be deemed also to be certificates for Rights, and shall have impressed, printed,
stamped, written or otherwise affixed onto them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Dames &
Moore, Inc. and ChaseMellon Shareholder Services LLC, dated as of
March 28, 1997, as the same may be amended from time to time (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive
offices of Dames & Moore, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. Dames & Moore, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. AS DESCRIBED IN THE RIGHTS
AGREEMENT, RIGHTS WHICH ARE HELD BY OR HAVE BEEN HELD BY ACQUIRING
PERSONS OR ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED IN THE RIGHTS
AGREEMENT) SHALL BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier Redemption Date or Final Expiration Date), the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates and the surrender for transfer of any such
certificates 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 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 RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase Preferred Shares, certification and assignment
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 Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange or trading system on which the Rights may from time to time be
listed or quoted, or to conform to usage. Subject to the terms and conditions
hereof, the Right 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 one
two-hundredths of a Preferred Share as shall be set forth therein at the price
per one two-hundredth of a Preferred Share set forth therein (the "PURCHASE
PRICE"), but the number of such one two-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board of
Directors, the Chief Executive Officer,
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President or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent, but it shall not
be necessary for the same signatory to countersign all of the Right Certificates
hereunder. No Right Certificate shall be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office in New York, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates, the
certificate number of each of the Right Certificates and the date of each of the
Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Section 11.1.2 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
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11.1.2 hereof or
that have been exchanged pursuant to Section 27 hereof) may be transferred,
split up or combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
two-hundredths of a Preferred Share (or, following a Trigger Event, Common
Shares, other securities, cash or other assets, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up or combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender, together with any required form of
assignment and certificate duly completed, the Right Certificate or Right
Certificates to be transferred, split up or combined or exchanged at the office
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate or Right Certificates until
the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Right Certificate or Right
Certificates and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment from the holders of Right Certificates of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up or combination or exchange of such Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or
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destruction, of indemnity or security reasonably satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
7.1 EXERCISE OF RIGHTS. Subject to Section 11.1.3 hereof and except
as otherwise provided herein, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each one
two-hundredth of a Preferred Share as to which the Rights are exercised, at or
prior to the earliest of (i) the close of business on March 28, 2007 (the "FINAL
EXPIRATION DATE"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "REDEMPTION DATE"), (iii) the closing of any merger or
other acquisition transaction involving the Company pursuant to an agreement of
the type described in Section 1.3(ii)(A)(4) hereof, at which time the Rights are
deemed terminated, or (iv) the time at which the Rights are exchanged as
provided in Section 27 hereof.
7.2 PURCHASE PRICE. The Purchase Price for each one two-hundredth of
a Preferred Share pursuant to the exercise of a Right shall initially be $65.00,
shall be subject to adjustment from time to time as provided in Sections 11, 13
and 26 hereof and shall be payable in lawful money of the United States of
America in accordance with Section 7.3 hereof.
7.3 PAYMENT PROCEDURES. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and
certification duly executed, accompanied by payment of the Purchase Price for
the shares to be purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in accordance with
Section 9 hereof, by certified or cashier's check or money order payable to the
order of the Company, the Rights Agent shall thereupon promptly (i)(A)
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 Shares 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 Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
two-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the 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 Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other securities of the Company,
pay cash and/or distribute other property pursuant to Section 11.1.3 hereof, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate.
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7.4 PARTIAL EXERCISE. In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
7.5 FULL INFORMATION CONCERNING OWNERSHIP. Notwithstanding anything
in this Rights Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported exercise as set forth in
this Section 7 unless the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise shall have been duly completed and signed by the registered holder
thereof and the Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. The
Company covenants and agrees that, from and after the Distribution Date, it will
cause to be reserved and kept available out of its authorized and unissued
Preferred Shares (and, following the occurrence of a Trigger Event, out of its
authorized and unissued Common Shares or other securities or out of its shares
held in its treasury) the number of Preferred Shares (and, following the
occurrence of a Trigger Event, Common Shares and/or other securities) that will
be sufficient to permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares (and, following the occurrence of a
Trigger Event, Common Shares and/or other securities) issuable upon the exercise
of Rights may be listed on any national securities exchange or traded in the
over-the-counter market and quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
or so traded in such over-the-counter market, upon official notice of issuance
upon such exercise.
The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of an event
described in Section 11.1.2(A) or (B) hereof on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11.1.3 hereof, or as soon as is required by law
following the Distribution Date, as the case may be, a registration statement
under the Securities Act of 1933, as amended (the "ACT"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such
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registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the date
of the expiration of the Rights. The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states or other applicable law in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this paragraph, the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement and shall give simultaneous written notice to the Rights Agent
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Rights Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained. Unless the Company
notifies it to the contrary, the Rights Agent may assume that any Right
exercised is permitted to be exercised under applicable law and shall have no
liability for acting in reliance upon such assumption.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (and, following the
occurrence of a Trigger Event, 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.
The Company further covenants and agrees that it will pay when due and
payable any and all Federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares (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 Right Certificates to a person other than, or the issuance or delivery of
certificates 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
Right Certificate evidencing Rights surrendered for exercise or to issue or
deliver any certificates for Preferred Shares (or Common Shares and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose name
any certificate for Preferred Shares (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 Shares (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 Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Shares (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 Right 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
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be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF RIGHTS. The Purchase Price, the number of shares covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
11.1 POST EXECUTION EVENTS.
11.1.1 CORPORATE DIVIDENDS, RECLASSIFICATIONS, ETC. In the event the
Company shall at any time after the date of this Rights 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 corporation), except as otherwise provided in this Section 11.1,
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both Section 11.1.1 and
Section 11.1.2 hereof, the adjustment provided for in this Section 11.1.1 shall
be in addition to, and shall be made prior to, the adjustment required pursuant
to, Section 11.1.2 hereof.
11.1.2 ACQUIRING PERSON EVENTS; TRIGGER EVENTS. Subject to Sections
23.1 and 27 of this Rights Agreement, in the event that
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Rights Agreement,
directly or indirectly, shall merge into the Company or otherwise combine
with the Company and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Shares of the
Company shall remain outstanding and not be changed into or exchanged for
stock or other securities of any other Person or the Company or cash or any
other property, or
(B) a Trigger Event occurs,
then, from and after the first occurrence of such event, each holder of a Right,
except as provided below, shall thereafter have a right to receive, upon
exercise thereof at a price per Right equal to the then current Purchase Price
multiplied by the number of one two-hundredths of a Preferred Share for which a
Right is then exercisable (without giving effect to this Section 11.1.2), in
accordance with the terms of this Rights Agreement, such number of Common Shares
as shall equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of one two-hundredths of a Preferred Share for which a
Right is then exercisable (without giving effect to this Section 11.1.2) and (y)
dividing that product by 50% of the current per share market price of the Common
Shares (determined pursuant to Section 11.4 hereof) on the first of the date of
the occurrence of, or the date of the first public announcement of, one
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of the events listed above in this Section 11.1.2 (the "ADJUSTMENT SHARES");
PROVIDED, HOWEVER, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 shall apply and no adjustment shall be
made pursuant to this Section 11.1.2; PROVIDED, FURTHER, that the Purchase Price
and the number of Adjustment Shares shall thereafter be subject to further
adjustment pursuant to Section 11.1.1 hereof. Notwithstanding the foregoing,
upon the occurrence of either of the events listed above in this Section 11.1.2,
any Rights that are or were acquired or beneficially owned by (1) an Acquiring
Person or any Associate or Affiliate thereof, (2) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (3) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of this Section 11.1.2, shall become void, and any holder (whether or not such
holder is an Acquiring Person or an Associate or Affiliate of an Acquiring
Person) of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Rights Agreement or otherwise. The Company shall
not enter into any transaction of the type described in this Section 11.1.2 if
at the time of such transaction there are any rights, warrants, instruments or
securities outstanding or any arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. Any Right Certificate issued
pursuant to Section 3 or Section 22 hereof that represents Rights beneficially
owned by: (1) an Acquiring Person or any Associate or Affiliate thereof, (2) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (3) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of this Section 11.1.2, and any Right
Certificate issued pursuant to Section 6, 7.4 or 22 hereof or this Section 11
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following legend
(PROVIDED, HOWEVER, that the Rights Agent shall not be responsible for affixing
such legend unless it has actual knowledge as to the foregoing circumstances or
the Company has notified the Rights Agent in writing thereof):
THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE HELD OR HAVE BEEN
HELD BY A PERSON WHO IS OR WAS AN ACQUIRING PERSON OR AN AFFILIATE OR
AN ASSOCIATE OF AN ACQUIRING PERSON OR A NOMINEE THEREOF. THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY HAVE BECOME NULL AND
VOID AS SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS AGREEMENT.
The Company shall use all reasonable efforts to insure that the
provisions of this Section 11.1.2 are complied with, but the Company shall have
no liability to any holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to any Acquiring Person or
its Affiliates, Associates or transferees hereunder.
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11.1.3 INSUFFICIENT SHARES. In the event that upon the occurrence of
one or more of the events listed in Section 11.1.2 above there shall not be
sufficient Common Shares authorized but unissued, or held by the Company as
treasury shares, to permit the exercise in full of the Rights in accordance with
the foregoing Section 11.1.2, the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon exercise of
the Rights, PROVIDED, HOWEVER, that if the Company determines that it is unable
to cause the authorization of a sufficient number of additional Common Shares,
then, in the event the Rights become exercisable, the Company, with respect to
each Right and to the extent necessary and permitted by applicable law and any
agreements or instruments in effect on the date hereof to which it is a party,
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) Common Shares or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as Common Shares)
(each such share of preferred stock constituting a "COMMON STOCK EQUIVALENT")),
(4) debt securities of the Company, (5) other assets or (6) any combination of
the foregoing having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; PROVIDED, HOWEVER, 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 one of the events listed in Section 11.1.2 above and (y) the date on which
the Company's right of redemption pursuant to Section 23.1 hereof expires (the
later of (x) and (y) being referred to herein as the "SECTION 11.1.3 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 in the
aggregate are equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is unlikely that sufficient additional
Common Shares could, within the 30 day period set forth above, be authorized for
issuance upon exercise in full of the Rights, such 30 day period may be extended
and re-extended to the extent necessary, but not more than 90 days following the
Section 11.1.3 Trigger Date in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period as 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 11.1.3, the Company (x) shall provide 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 11.1.3, the
value of a Common Share shall be the current per share market price (as
determined pursuant to Section 11.4.1) on the Section 11.1.3 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.
11.2 DILUTIVE RIGHTS OFFERING. In case the Company shall fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares (or
securities having the same rights, privileges and preferences as the Preferred
Shares ("EQUIVALENT PREFERRED STOCK")) or securities convertible into Preferred
Shares or equivalent preferred stock at a price
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per share of Preferred Shares or per share of equivalent preferred stock (or
having a conversion or exercise price per share, if a security convertible into
or exercisable for Preferred Shares or equivalent preferred stock) less than the
current per share market price of the Preferred Shares (as defined in Section
11.4.1) 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 stock to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current per share 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 stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid 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 Rights Agent and the holders of the Rights. Preferred
Shares owned by or held for the account of the Company or any Subsidiary 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 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.
11.3 DISTRIBUTIONS. 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, cash, securities 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, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend payable in
Preferred Shares (which dividend, for purposes of this Agreement, shall be
subject to the provisions of Section 11.1.1(A) hereof)) or convertible
securities, or subscription rights or warrants (excluding those referred to in
Section 11.2), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current per
share market price of the Preferred Shares (as defined in Section 11.4.1) on
such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets,
securities or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares. 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.
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11.4 CURRENT PER SHARE MARKET VALUE.
11.4.1 GENERAL. For the purpose of any computation hereunder, the
"CURRENT PER SHARE MARKET PRICE" of any security (a "SECURITY" for the purpose
of this Section 11.4.1) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; PROVIDED, HOWEVER, that in the event that the current per share market
price of the Security is determined during any period following the announcement
by the issuer of such Security of (i) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of thirty (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 per share market price" shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the 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 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 such market maker is making a market in the Security, the fair
value of the Security 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. If the Security is not publicly held or not so listed
or traded, "current per share market price" shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company or, if at
the time of such determination there is an Acquiring Person, by a majority of
the Continuing Directors then in office, or if there are no Continuing
Directors, by a nationally recognized investment banking firm selected by the
Board of Directors, which shall have the duty to make such determination in a
reasonable and objective manner, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
11.4.2 PREFERRED SHARES. Notwithstanding Section 11.4.1, for the
purpose of any computation hereunder, the "current per share market price" of
the Preferred Shares shall be determined in the same manner as set forth above
in Section 11.4.1 (other than the last sentence thereof). If the current per
share market price of the Preferred Shares cannot be determined in the manner
described in Section 11.4.1, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be an amount equal to 200 (as
such number may be 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 the current per share market
price of the Common Shares. If neither the Common Shares nor the Preferred
Shares is publicly held or so listed or traded, "current per share market price"
of the Preferred Shares shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, or, if at the time of such
determination there is an Acquiring
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Person, by a majority of the Continuing Directors then in office, or if there
are no Continuing Directors, by a nationally recognized investment banking firm
selected by the Board of Directors of the Company, which shall have the duty to
make such determination in a reasonable and objective manner, which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For purposes of this Agreement, the
"current per share market price" of one two-hundredth of a Preferred Share shall
be equal to the "current per share market price" of one Preferred Share divided
by 200.
11.5 INSIGNIFICANT CHANGES. 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. Any adjustments which by reason of this Section
11.5 are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one-millionth of a Preferred Share or
the nearest ten-thousandth of a Common Share, as the case may be.
11.6 SHARES OTHER THAN PREFERRED SHARES. If as a result of an
adjustment made pursuant to Section 11.1, 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 Sections 11.1
through 11.3, inclusive, and the provisions of Sections 7, 9, 10 and 13 hereof
with respect to the Preferred Shares shall apply on like terms to any such other
shares.
11.7 RIGHTS ISSUED SUBSEQUENT TO ADJUSTMENT. All Rights originally
issued by the Company subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one two-hundredths of a Preferred Share purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
11.8 EFFECT OF ADJUSTMENTS. Unless the Company shall have exercised
its election as provided in Section 11.9, upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11.2 and 11.3, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one two-hundredths of a Preferred Share (calculated to the nearest one-millionth
of a Preferred Share) obtained by (i) multiplying (x) the number of one
two-hundredths of a Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
11.9 ADJUSTMENT IN NUMBER OF RIGHTS. The Company may elect on or
after the date of any adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of one two-hundredths
of a Preferred Share issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one two-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest 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
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of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have been issued, it shall
be at least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11.9, the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.
11.10 RIGHT CERTIFICATES UNCHANGED. Irrespective of any adjustment
or change in the Purchase Price or the number of one two-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price per
share and the number of one two-hundredths of a Preferred Share which were
expressed in the initial Right Certificates issued hereunder.
11.11 PAR VALUE LIMITATIONS. Before taking any action that would
cause an adjustment reducing the Purchase Price below one two-hundredth of the
then par value, if any, of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preferred Shares at such adjusted Purchase
Price.
11.12 DEFERRED ISSUANCE. In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right exercised after
such record date of the Preferred Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
11.13 REDUCTION IN PURCHASE PRICE. 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, dividends on Preferred Shares payable in Preferred Shares
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.
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11.14 COMPANY NOT TO DIMINISH BENEFITS OF RIGHTS. The Company
covenants and agrees that after the Distribution Date it will not, except as
permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
11.15 ADJUSTMENT OF RIGHTS ASSOCIATED WITH COMMON SHARES.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that the Company shall at any time after the date hereof and prior to the
Distribution Date (i) declare or pay any dividend on the outstanding Common
Shares payable in Common Shares, (ii) effect a subdivision or consolidation of
the outstanding Common Shares (by reclassification or otherwise than by the
payment of dividends payable in Common Shares), or (iii) combine the outstanding
Common Shares into a greater or lesser number of Common Shares, then in any such
case, the number of Rights associated with each Common Share then outstanding,
or issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction, the numerator of which shall be the total
number of Common Shares outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event. The adjustments
provided for in this Section 11.15 shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and the new Purchase Price and/or other issuable security or other
payment, and a brief statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing Common Shares)
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.
13.1 GENERAL. In the event that, from and after the first occurrence
of a Trigger Event, directly or indirectly, (A) the Company shall consolidate
with, or merge with and into, any other Person and the Company shall not be the
continuing or surviving corporation, (B) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of the Company or any other Person or cash or any
other property, or (C) the Company shall sell, exchange, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, exchange, mortgage or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons, then, and in
each such case, proper provision shall be made so that (i) each holder of a
Right (except as provided in Section 11.1.2 hereof and as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof at
a price per Right equal to the then current Purchase Price multiplied by the
number
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of one two-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12 hereof),
in accordance with the terms of this Rights Agreement and in lieu of Preferred
Shares, such number of Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall be equal to the
result obtained by (x) multiplying the then current Purchase Price by the number
of one two-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12 hereof)
and (y) 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
11.4.1) on the date of consummation of such consolidation, merger, sale or
transfer; PROVIDED, that the price per Right so payable and the number of Common
Shares of such Person so purchasable shall thereafter be adjusted in accordance
with Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12 hereof by reason of such
subsequent events covered thereby occurring in respect of such Person; (ii) the
issuer of such Common Shares shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Rights Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights. The Company shall not enter into any transaction of the kind
referred to in this Section 13 if (x) at the time of or immediately after 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 eliminate or substantially diminish the
benefits intended to be afforded by the Rights or (y) prior to, simultaneously
with or immediately after such transaction, the shareholders of the Person with
whom the Company consummated such transaction shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates. 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.
13.2 APPROVED ACQUISITIONS. Notwithstanding anything contained
herein to the contrary, in the event of any merger or other acquisition
transaction involving the Company pursuant to a merger or other acquisition
agreement between the Company and any Person (or one or more of such Person's
Affiliates or Associates) which agreement has been approved by the Board of
Directors of the Company prior to any Person becoming an Acquiring Person, this
Rights Agreement and the rights of holders of Rights hereunder shall be
terminated in accordance with Section 7.1 hereof.
13.3 Notwithstanding anything in this Rights Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (A) and (B) of Section 13.1 if (i) such transaction is consummated
with a Person or Persons who acquired Common Shares pursuant to a tender offer
or exchange offer for all outstanding Common Shares which complies with the
provisions of Section 1.11 hereof (or a wholly owned subsidiary of any such
Person or Persons), (ii) the price per Common Share offered in such transaction
is not less than the price per Common Share paid to all holders of Common Shares
whose shares were purchased pursuant to such tender offer or exchange offer, and
(iii) the form of consideration being offered to the remaining holders of Common
Shares pursuant to such transaction is the same as the form of consideration
paid pursuant to such tender offer or exchange offer.
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Upon consummation of any such transaction contemplated by this Section 13.3, all
Rights hereunder shall expire.
13.4 The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Person with whom the Company consummates such
transaction shall have a sufficient number of authorized Common Shares which
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and such other Person shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in Section 13.1
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in Section 13.1, the Person
with whom the Company consummated such consolidation, merger, sale or transfer
will
(a) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earliest of (i) the Final
Expiration Date, (ii) the Redemption Date, (iii) the closing of any merger
or other acquisition transaction involving the Company pursuant to an
agreement of the type described in Section 1.3(ii)(A)(4) hereof, at which
time the Rights are deemed terminated, or (iv) the time at which the Rights
are exchanged as provided in Section 27 hereof; and
(b) deliver to holders of the Rights historical financial statements
for such Person and each of its Affiliates which comply in all respects
with the requirements for registration on Form 10 under the Exchange Act.
In the event that an event described in clauses (A), (B) or (C) of Section 13.1
shall occur at any time after the occurrence of an event described in Section
11.1.2(A) or (B) hereof, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13.1.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
14.1 CASH IN LIEU OF FRACTIONAL RIGHTS. The Company shall not be
required to issue fractions of Rights, except prior to the Distribution Date as
provided in Section 11.5 hereof, or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Right. For the
purposes of this Section 14.1, 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
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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.
14.2 CASH IN LIEU OF FRACTIONAL SHARES. The Company shall not be
required to issue fractions of Preferred Shares (other than fractions which are
integral multiples of one two-hundredth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are integral multiples of one two-hundredth
of a Preferred Share). Fractions of Preferred Shares in integral multiples of
one two-hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; PROVIDED, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as Beneficial Owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one two-hundredth
of a Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current per share market price of one
Preferred Share. For purposes of this Section 14.2, the current per share
market price of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to the second sentence of Section 11.4.2 hereof)
for the Trading Day immediately prior to the date of such exercise.
Following the occurrence of a Trigger Event, the Company shall not be
required to issue fractions of Common Shares upon exercise of the Rights or to
distribute certificates which evidence fractional Common Shares. In lieu of
fractional Common Shares, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current per share market price of one
Common Share. For purposes of this Section 14.2, the current per share market
price of a Common Share shall be the closing price of a Common Share (as
determined pursuant to Section 11.4.1 hereof) for the Trading Day immediately
prior to the date of such exercise.
14.3 WAIVER OF RIGHT TO RECEIVE FRACTIONAL RIGHTS OR SHARES. The
holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise of a Right,
except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Rights Agreement, except the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce this Rights Agreement, and may institute and maintain any
suit, action or proceeding against the Company to enforce this Rights Agreement,
or otherwise enforce or act in respect of his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights 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 Rights Agreement and shall be entitled to specific
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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 Rights Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) as of and after the Distribution Date, the Right
Certificates are transferable only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer
with all required certifications completed;
(c) subject to Section 6 and Section 7.5 hereof, the Company and
the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary; and
(d) notwithstanding anything in this Rights Agreement to the
contrary, the Company shall have no liability to any holder of a Right or
other Person as a result of the Company's inability to perform any of its
obligations under this Rights 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,
that the Company must use its best efforts to have any such order, decree
or ruling lifted or otherwise overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed to in writing
by the Company and the Rights Agent and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred
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in the administration and execution of this Rights 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 Rights Agreement,
including, the costs and expenses of defending against any claim of liability in
the premises.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or the 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.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Rights
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 Rights Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
20.1 LEGAL COUNSEL. The Rights Agent may consult with legal counsel
selected by it (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.
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20.2 CERTIFICATES AS TO FACTS OR MATTERS. Whenever in the
performance of its duties under this Rights Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of an Acquiring Person and the determination of
"current per share market price") be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board of Directors, the Chief Executive Officer, the President,
the Chief Financial Officer, any Vice President, the Treasurer, the Secretary or
any Assistant Treasurer or Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Rights Agreement in reliance upon such certificate.
20.3 STANDARD OF CARE. The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful misconduct.
20.4 RELIANCE ON RIGHTS AGREEMENT AND RIGHT CERTIFICATES. The Rights
Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Rights Agreement or in the Right 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.
20.5 NO RESPONSIBILITY AS TO CERTAIN MATTERS. The Rights Agent shall
not be under any responsibility in respect of the validity of this Rights
Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Rights Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights becoming
void pursuant to Section 11.1.2) or any adjustment required under the provisions
of Sections 3, 11, 13, 23 or 27 or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares to be issued
pursuant to this Rights Agreement or any Right Certificate or as to whether any
Preferred Shares will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
20.6 FURTHER ASSURANCE BY COMPANY. 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 Rights
Agreement.
20.7 AUTHORIZED COMPANY OFFICERS. 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 Chief Executive Officer, the President, the Chief Financial Officer, any
Vice President, the Treasurer, the Secretary or any Assistant Treasurer or
Assistant Secretary 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 or for any delay in
acting while waiting for these instructions. Any application by the Rights
Agent for written instructions from the Company
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<PAGE>
may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent with respect to its duties or
obligations under this Rights Agreement and the date on and/or after which such
action shall be taken or omitted. The Rights Agent shall not be liable to the
Company for any action taken or omitted in accordance with a proposal included
in any such application on or after the date specified therein (which date shall
not be less than three business days after the date any such officer actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking of any such action (or the
effective date in the case of omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
20.8 FREEDOM TO TRADE IN COMPANY SECURITIES. 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 Rights Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
20.9 RELIANCE ON ATTORNEYS AND AGENTS. The Rights Agent may execute
and exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, omission, default, neglect or misconduct,
PROVIDED that reasonable care was exercised in the selection and continued
employment thereof.
20.10 RIGHTS HOLDERS LIST. 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.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares and/or Preferred Shares, as
applicable, by registered or certified mail. The Company shall promptly notify
the holders of the Right Certificates by first-class mail of any such
resignation. The Company may remove the Rights Agent or any successor Rights
Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and/or Preferred Shares, as applicable, by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the 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 thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the Company shall act as Rights
Agent until
25
<PAGE>
such a successor Rights Agent has been appointed, or any registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the State of New
York (or 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) in
good standing, having a principal office in the State of New York, which is
authorized under such laws to exercise stock transfer or corporate trust 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 $100 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and/or Preferred Shares, as applicable, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement. In addition, in
connection with the issuance or sale of Common Shares following the Distribution
Date and prior to the redemption, exchange, termination or expiration of the
Rights, the Company (a) shall, with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or upon exercise,
conversion or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; PROVIDED, HOWEVER,
that (i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof and (iii) at the
time of a determination by the Board of Directors to cause the Company to issue
a Right Certificate under clause (b) above, there must be Continuing Directors
then in office and any such determination shall require the approval of at least
a majority of such Continuing Directors.
Section 23. REDEMPTION.
23.1 RIGHT TO REDEEM. The Board of Directors of the Company may, at
its option, at any time prior to the earlier of (i) the close of business on the
10th day following the Shares Acquisition Date or (ii) the Final Expiration
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend, recapitalization or similar transaction occurring after
the date hereof (such redemption price being
26
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hereinafter referred to as the "REDEMPTION PRICE") and the Company may, at its
option, pay the Redemption Price in cash, Common Shares (based on the "current
per share market price," as defined in Section 11.4.1 hereof, of the Common
Shares at the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors. In the event that, pursuant to the last
sentence of Section 1.1 hereof, the Board of Directors determines that a Person
has become an Acquiring Person inadvertently, and such Person divests Common
Shares in accordance with such sentence, then the Company's right of redemption
hereunder shall be deemed to have not expired as a result of such inadvertent
acquisition. Anything contained in this Rights Agreement to the contrary
notwithstanding, the Rights shall not be exercisable following a transaction or
event described in Section 11.1.2 hereof prior to the expiration of the
Company's right of redemption hereunder.
23.2 REDEMPTION PROCEDURES. 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 for each Right so held. Promptly after the action
of the Board of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent, and the Company shall
give, or cause the Rights Agent to 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 or in Section 27 hereof, and other than in connection with the
purchase, acquisition or redemption of Common Shares prior to the Distribution
Date.
Section 24. NOTICE OF CERTAIN EVENTS. In case the Company shall
propose at any time after the Distribution Date (a) to pay any dividend payable
in stock of any class to the holders of Preferred Shares or to make any other
distribution to the holders of 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, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividends, or a stock dividend on, or a
subdivision, combination or reclassification of the Common Shares), or (b) to
offer to the holders of Preferred Shares rights or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of stock of any class or
any other securities, rights or options, or (c) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), or (d) to effect any consolidation
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 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person (other than
pursuant to a merger or other acquisition agreement of the type described in
Section 1.3(ii)(A)(4) hereof), or (e) to effect the liquidation, dissolution or
winding up of the Company, or (f) 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 Right Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of such
proposed action, which shall specify the record date for the purposes
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<PAGE>
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 Preferred Shares and/or Common Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Preferred Shares for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Shares and/or Common Shares, whichever shall be the
earlier.
In case any event set forth in Section 11.1.2 of this Rights Agreement
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11.1.2, and (ii) all references in this
Section 24 hereof to Preferred Shares shall be deemed thereafter to refer to
Common Shares and/or, if appropriate, other securities.
Notwithstanding anything in this Rights Agreement to the contrary,
prior to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Rights
Agreement and no other notice need be given.
Section 25. NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Dames & Moore, Inc.
911 Wilshire Blvd., Suite 700
Los Angeles, CA 90017
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services LLC
Attention: Sharon Knepper
400 S. Hope Street, 4th Flr.
Los Angeles, California 90071
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate (or,
prior to the Distribution Date, to the holder of any certificate representing
Common Shares) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
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Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date and subject to the last sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Rights Agreement without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date and subject to
the last sentence of this Section 26, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Rights Agreement without the
approval of any holders of Right Certificates (i) to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (ii) to shorten or lengthen any
time period hereunder (which shortening or lengthening, after the time a Person
becomes an Acquiring Person, shall be effective only if there are Continuing
Directors and shall require the approval of at least a majority of such
Continuing Directors) or (iii) so long as the interests of the holders of the
Right Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person) are not adversely affected thereby, to make any other
changes or provisions in regard to matters or questions arising hereunder which
the Company and the Rights Agent may deem necessary or desirable, including but
not limited to extending the Final Expiration Date; PROVIDED, HOWEVER, that the
right of the Board of Directors to extend the Distribution Date shall not
require any amendment or supplement hereunder. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares. Without limiting
the foregoing, at any time prior to such time as any Person becomes an Acquiring
Person, the Company and the Rights Agent may amend this Agreement to lower the
thresholds set forth in Sections 1.1 and 3.1 hereof to not less than the greater
of (i) any percentage greater than the largest percentage of the outstanding
Common Shares then known by the Company to be beneficially owned by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan) and (ii) 10%.
Section 27. EXCHANGE.
27.1 EXCHANGE OF COMMON SHARES FOR RIGHTS. The Board of Directors of
the Company may, at its option, at any time after the occurrence of a Trigger
Event, exchange Common Shares for all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11.1.2 hereof) by exchanging that number
of Common Shares having an aggregate value equal to the Spread (with such value
being based on the current per share market price (as determined pursuant to
Section 11.4.1 hereof) on the date of the occurrence of a Trigger Event) per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such amount per Right being
hereinafter referred to as the "EXCHANGE CONSIDERATION"). Notwithstanding the
foregoing, (i) the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding and (ii)
the Board shall not be empowered to effect an exchange for more than that number
of Rights for which there are sufficient Common Shares authorized but unissued,
or held by the Company as treasury shares, to permit the exchange for Rights.
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27.2 EXCHANGE PROCEDURES. Immediately upon the action of the Board
of Directors of the Company ordering the exchange for any Rights pursuant to
Section 27.1 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange
Consideration. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected PRO RATA based
on the number of Rights (other than the Rights which have become void pursuant
to the provisions of Section 11.1.2 hereof) held by each holder of Rights.
27.3 NO FRACTIONAL SHARES UPON EXCHANGE. The Company shall not be
required to issue fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional Common Shares,
the Company shall pay to the registered holders of the Right Certificates, with
regard to which such fractional Common Shares would otherwise be issuable, in an
amount in cash equal to the same fraction of the current market value of a whole
Common Share. For the purposes of this Section 27.3, the current market value
of a whole Common Share shall be the current per share market price (as
determined pursuant to Section 11.4.1) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 27.
Section 28. SUCCESSORS. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. For all purposes of this Rights Agreement, any calculation of the number
of Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company shall have the exclusive
power and authority to administer this Rights Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Rights Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Rights Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board to
any liability to the holders of the Rights.
Section 30. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this
Rights Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and
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exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated; PROVIDED, HOWEVER, that notwithstanding anything in
this Rights Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Rights Agreement
would adversely affect the purpose or effect of this Rights Agreement, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such
determination by the Board of Directors.
Section 32. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. COUNTERPARTS. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. DESCRIPTIVE HEADING. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
DAMES & MOORE, INC.
By
------------------------------
Mark Snell
Executive Vice President and
Chief Financial Officer
CHASEMELLON SHAREHOLDER SERVICES LLC
By
------------------------------
Derek Lenington
Vice President
S-1
<PAGE>
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
DAMES & MOORE, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
----------------------------------
Dames & Moore, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "CORPORATION"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law of the State of Delaware at a meeting duly called and held on
March 14, 1997.
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (hereinafter called the "BOARD OF DIRECTORS" or
the "BOARD") in accordance with the provisions of the Certificate of
Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $0.01 per share (the "PREFERRED STOCK"), of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "SERIES A
PREFERRED STOCK") and the number of shares constituting the Series A Preferred
Stock shall be 135,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
A-1
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Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of Common Stock,
par value $0.01 per share (the "COMMON STOCK"), of the Corporation, and of
any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on or about the first day of
March, June, September and December in each year (each such date being
referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or
(b) subject to the provision for adjustment hereinafter set forth, 200
times the aggregate per share amount of all cash dividends, and 200 times
the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time after the date on which the Preferred Stock
Purchase Rights of the Corporation are declared by the Board of Directors
(the "RIGHTS DECLARATION DATE") declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the
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<PAGE>
total amount of such dividends at the time accrued and payable on such
shares shall be allocated PRO RATA on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date fixed
for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
200 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
which may from time to time be accorded such voting right shall vote
together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all
shares of Series A Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period,
the holders of Series A Preferred Stock, voting as a class, shall have the
right to elect two (2) directors.
(ii) During any default period, such voting right of the holders
of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or
at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that such voting right shall NOT be
exercised unless the holders of ten percent (10%) in number of shares
of Series A Preferred Stock outstanding shall be present in person or
by proxy. The absence of a quorum of the holders of Common Stock shall
not affect the exercise by the holders of Series A Preferred Stock of
such voting right. At any meeting at which the holders of Series A
Preferred Stock shall exercise such voting right initially during an
existing default period, they shall have the right, voting as a class,
to elect directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) directors or, if such right
is exercised at an annual meeting, to elect two (2) directors. If the
number
A-3
<PAGE>
which may be so elected at any special meeting does not amount to the
required number, the holders of the Series A Preferred Stock shall
have the right to make such increase in the number of directors as
shall be necessary to permit the election by them of the required
number. After the holders of the Series A Preferred Stock shall have
exercised their right to elect directors in any default period and
during the continuance of such period, the number of directors shall
not be increased or decreased except by vote of the holders of Series
A Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or PARI PASSU with the Series A
Preferred Stock.
(iii) Unless the holders of Series A Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Series A Preferred
Stock outstanding may request, the calling of a special meeting of the
holders of Series A Preferred Stock, which meeting shall thereupon be
called by the President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which
holders of Series A Preferred Stock are entitled to vote pursuant to
this paragraph (C)(iii) shall be given to each holder of record of
Series A Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 20 days and
not later than 60 days after such order or request or in default of
the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Series A Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock and other
classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of directors until the holders
of Series A Preferred Stock shall have exercised their right to elect
two (2) directors voting as a class, after the exercise of which right
(x) the directors so elected by the holders of Series A Preferred
Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided
in paragraph (C)(iii) of this Section 3) be filled by vote of a
majority of the remaining directors theretofore elected by the holders
of the class or classes of stock which elected the director whose
office shall have become vacant. References in this paragraph (C) to
directors elected by the holders of a particular class or classes of
stock shall include directors elected by such directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Series A Preferred Stock as a class to elect
directors shall cease, (y) the term of any directors elected by the
holders of Series A Preferred Stock as a class shall terminate, and
(z) the number of directors shall be such number as may be provided
for in the certificate of incorporation or bylaws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this
Section 3 (such number being subject, however, to change thereafter in
any manner provided by law or in the certificate of
A-4
<PAGE>
incorporation or bylaws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining directors.
(D) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock and other classes of stock of the
Corporation, if applicable, as set forth herein) for taking any corporate
action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, redeem on or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on, or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such on a parity stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding
up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
A-5
<PAGE>
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein, in the
Corporation's Certificate of Incorporation, or in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
liquidation (voluntary, or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $100 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "LIQUIDATION
PREFERENCE"). Following the payment of the full amount of the Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "COMMON ADJUSTMENT")
equal to the quotient obtained by dividing (i) the Liquidation Preference by
(ii) 200 (as appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the "ADJUSTMENT
NUMBER"). Following the payment of the full amount of the Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Preferred Stock and Common Stock, respectively, holders of Series A Preferred
Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series A Preferred Stock and
Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Liquidation Preference and the liquidation
preferences of all other series of stock, if any, which rank on a parity with
the Series A Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision, combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
A-6
<PAGE>
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 200 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. RANKING. The Series A Preferred Stock shall rank junior to all
other series of the Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
Section 9. AMENDMENT. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of a majority
or more of the outstanding shares of Series A Preferred Stock, voting together
as a single class.
Section 10. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share which, shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
A-7
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its Executive Vice President and attested by its Secretary
this 28th day of March, 1997.
-------------------------
Mark Snell
Attest:
- ------------------------
Secretary
A-8
<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- Rights
----------
NOT EXERCISABLE AFTER MARCH 28, 2007 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED PURSUANT TO AN
AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(ii)(A)(4) OF THE RIGHTS
AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, OR ITS
AFFILIATES OR ASSOCIATES, OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE HELD
OR HAVE BEEN HELD BY A PERSON WHO IS OR WAS AN ACQUIRING PERSON OR AN
ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR A NOMINEE THEREOF. THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY HAVE BECOME NULL AND
VOID AS SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS AGREEMENT.](1)
Right Certificate
Dames & Moore, Inc.
This certifies that , or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of March 28, 1997, as the same may be amended
from time to time (the "Rights Agreement"), between Dames & Moore, Inc., a
Delaware corporation (the "Company"), and ChaseMellon Shareholder Services LLC,
a New Jersey limited liability company, as Rights Agent (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date and prior to
5:00 P.M. (New York City time) on March 28, 2007, at the offices of the Rights
Agent, or its successors as Rights Agent, designated for such purpose, one
two-hundredth of a fully paid, nonassessable share of Series A Junior
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares") of the Company, at a purchase price of $65.00 per one two-hundredth of
a share, subject to adjustment (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase and
certification duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one two-hundredths of a Preferred Share which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the
- ----------------------
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
B-1
<PAGE>
number and Purchase Price as of March 28, 1997 based on the Preferred Shares as
constituted at such date.
Upon the occurrence of certain events described in Section 11.1.2 of
the Rights Agreement, if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person, (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become void, and no holder hereof shall have any right to exercise
such Rights under any provision of the Rights Agreement or otherwise from and
after the occurrence of such event described in Section 11.1.2 of the Rights
Agreement.
Capitalized terms used in this Right Certificate without definition
shall have the meanings ascribed to them in the Rights Agreement. As provided
in the Rights Agreement, the Purchase Price and the number and kind of Preferred
Shares or other securities which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal offices of the Company and the
Rights Agent.
This Right Certificate, upon surrender at the offices of the Rights
Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one two-hundredths
of a Preferred Share as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Board of
Directors may, at its option, (i) redeem the Rights evidenced by this Right
Certificate at a redemption price of $0.01 per Right at any time prior to the
earlier of (A) the close of business on the 10th day following the Shares
Acquisition Date or (B) the Final Expiration Date, or (ii) exchange Common
Shares for the Rights evidenced by this Certificate, in whole or in part, after
the occurrence of a Trigger Event. In the event that, pursuant to the last
sentence of Section 1.1 of the Rights Agreement, the Board of Directors
determines that a Person has become an Acquiring Person inadvertently, and such
Person divests Common Shares in accordance with such sentence, then the
Company's right of redemption shall be deemed to have not expired as a result of
such inadvertent acquisition. Under certain circumstances set forth in the
Rights Agreement, the decision to redeem shall require the concurrence of a
majority of the Continuing Directors.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, (other than fractions which are integral
multiples of one two-hundredth of a Preferred
B-2
<PAGE>
Share, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
If any term, provision, covenant or restriction of the Rights
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 the Rights Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated; PROVIDED,
HOWEVER, that notwithstanding anything in the Rights Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board of Directors of the
Company determines in its good faith judgment that severing the invalid language
from the Rights Agreement would adversely affect the purpose or effect of the
Rights Agreement, the Company's right of redemption shall be reinstated and
shall not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors.
This Right Certificate shall not be valid or binding 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 March 28, 1997.
Attest: DAMES & MOORE, INC.
By By
-------------------------------- -------------------------------
Name: Mark Snell
Executive Vice President and
Title: Chief Financial Officer
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES LLC
By:
-------------------------------------
Derek Lenington
Vice President
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<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address
of transferee)
this Right Certificate and the Rights evidenced thereby, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint __________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
------------------
------------------------------
Signature
Signature Guaranteed:
- ------------------------------------
Signatures must be guaranteed by an eligible institution (as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934) which may include a
commercial bank, trust company, savings association, credit union or a member
firm of the American Stock Exchange, New York Stock Exchange, Pacific Stock
Exchange or Midwest Stock Exchange.
B-4
<PAGE>
- -------------------------------------------------------------------------------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not beneficially owned by an Acquiring Person or an Affiliate or an
Associate (as such terms are defined in the Rights Agreement) thereof; and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:
--------------
------------------------------
Signature
Signature Guaranteed:
- --------------------------------------
Signatures must be guaranteed by an eligible institution (as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934) which may include a
commercial bank, trust company, savings association, credit union or a member
firm of the American Stock Exchange, New York Stock Exchange, Pacific Stock
Exchange or Midwest Stock Exchange.
- -------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Form of Assignment must conform to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate hereof and, in the case of an Assignment, will affix a
legend to that effect on any Right Certificates issued in exchange for this
Right Certificate.
B-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the Right Certificate.)
To: DAMES & MOORE, INC.
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights (or such other
securities of the Company or of any other Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of:
Please insert social security
or other identifying number
- ------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- ------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------
Dated:
----------------------
---------------------------
Signature
Signature Guaranteed:
- ------------------------------------------------------------
Signatures must be guaranteed by an eligible institution (as defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934) which may include a
commercial bank, trust company, savings association, credit union or a member
firm of the American Stock Exchange, New York Stock Exchange, Pacific Stock
Exchange on Midwest Stock Exchange.
B-6
<PAGE>
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof; and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:
----------------
------------------
Signature
Signature Guaranteed:
- --------------------------------------
Signatures must be guaranteed by an eligible institution (as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934) which may include a
commercial bank, trust company, savings association, credit union or a member
firm of the New York Stock Exchange, American Stock Exchange, Pacific Stock
Exchange or Midwest Stock Exchange.
- --------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Form of Assignment and Form of Election
to Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or Form of Election to Purchase is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate hereof and, in the case of
an Assignment, will affix a legend to that effect on any Right Certificates
issued in exchange for this Right Certificate.
B-7
<PAGE>
EXHIBIT C
AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS WHICH ARE HELD BY
OR HAVE BEEN HELD BY ACQUIRING PERSONS OR ASSOCIATES OR AFFILIATES
THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT) SHALL BECOME NULL AND VOID.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On March 14, 1997, the Board of Directors of Dames & Moore, Inc. (the
"COMPANY") declared a dividend of one Right for each share of common stock,
$0.01 par value (the "COMMON SHARES"), of the Company outstanding at the close
of business on March 28, 1997 (the "RECORD DATE"). As long as the Rights are
attached to the Common Shares, the Company will issue one Right (subject to
adjustment) with each new Common Share so that all such shares will have
attached Rights. When exercisable, each Right will entitle the registered
holder to purchase from the Company one two-hundredth of a share of Series A
Junior Participating Preferred Stock (the "PREFERRED SHARES") at a price of
$65.00 per one two-hundredth of a Preferred Share, subject to adjustment (the
"PURCHASE PRICE"). The description and terms of the Rights are set forth in a
Rights Agreement, dated as of March 28, 1997, as the same may be amended from
time to time (the "RIGHTS AGREEMENT"), between the Company and ChaseMellon
Shareholder Services LLC as Rights Agent (the "RIGHTS AGENT").
Until the earlier to occur of (i) the 10th day following a public
announcement that a person or group of affiliated or associated persons (an
"ACQUIRING PERSON") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the Common Shares or (ii) the 10th day following the
commencement or announcement of an intention to make a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of 15% or more of the Common Shares (the earlier of (i) and (ii)
being called the "DISTRIBUTION DATE," whether or not either such date occurs
prior to the Record Date), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record Date, by such Common
Share certificate together with a copy of this Summary of Rights.
Until the Distribution Date, the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier
redemption, exchange, termination or expiration of the Rights), new Common Share
certificates issued after the close of business on the Record Date upon transfer
or new issuance of the Common Shares will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption, exchange, termination or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("RIGHT CERTIFICATES") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and, thereafter, such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on March 28, 2007, subject to the Company's right to extend
such date (the "FINAL EXPIRATION DATE"), unless earlier redeemed or exchanged by
the Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled to a minimum preferential quarterly dividend payment of $1.00 per share
but will be entitled to an aggregate dividend
C-1
<PAGE>
of 200 times the dividend, if any, declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 200 times the payment made per Common Share. Each
Preferred Share will have 200 votes and will vote together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 200 times the amount received per Common Share. These rights are
protected by customary antidilution provisions. Because of the nature of the
Preferred Share's dividend, liquidation and voting rights, the value of one
two-hundredth of a Preferred Share purchasable upon exercise of each Right
should approximate the value of one Common Share.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash, securities or assets (excluding regular periodic cash
dividends at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or dividends payable in
Preferred Shares (which dividends will be subject to the adjustment described in
clause (i) above)) or of subscription rights or warrants (other than those
referred to above).
In the event that a Person becomes an Acquiring Person (except
pursuant to certain cash offers for all outstanding Common Shares approved by
the Board) or if the Company were the surviving corporation in a merger with an
Acquiring Person or any affiliate or associate of an Acquiring Person and the
Common Shares were not changed or exchanged, each holder of a Right, other than
Rights that are or were acquired or beneficially owned by the 15% stockholder
(which Rights will thereafter be void), will thereafter have the right to
receive upon exercise that number of Common Shares (or, in certain
circumstances, cash, property or other securities of the Company) having a
market value of two times the then current Purchase Price of the Right. With
certain exceptions, in the event that (i) the Company is acquired in a merger or
other business combination transaction in which the Company is not the surviving
corporation or its Common Shares are changed or exchanged (other than a merger
which follows certain cash offers for all outstanding Common Shares approved by
the Board or Directors) or (ii) more than 50% of the Company's assets or earning
power is sold, proper provision shall be made so that each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the then current Purchase Price of the Right.
At any time after a Person becomes an Acquiring Person (except
pursuant to certain cash offers for all outstanding Common Shares approved by
the Board of Directors) and prior to the acquisition by such Acquiring Person of
50% or more of the outstanding Common Shares, the Board of Directors may cause
the Company to acquire the Rights (other than Rights owned by an Acquiring
Person which have become void), in whole or in part, in exchange for that number
of Common Shares having an aggregate value equal to the Spread (the excess of
the value of the Common Shares issuable upon exercise of a Right after a Person
becomes an Acquiring Person over the Purchase Price) per Right (subject to
adjustment).
C-2
<PAGE>
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No
fractional shares will be issued and in lieu thereof, a payment in cash will be
made based on the market price of the Preferred Shares on the last trading date
prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of
$0.01 per Right (the "REDEMPTION PRICE") by the Board of Directors at any time
prior to the earlier of (i) the 10th date following the public announcement that
a Person has become an Acquiring Person or (ii) the Final Expiration Date. In
the event that, pursuant to the last sentence of Section 1.1 of the Rights
Agreement, the Board of Directors determines that a Person has become an
Acquiring Person inadvertently, and such Person divests Common Shares in
accordance with such sentence, then the Company's right of redemption shall be
deemed to have not expired as a result of such inadvertent acquisition. Under
certain circumstances set forth in the Rights Agreement, the decision to redeem
shall require the concurrence of a majority of the Continuing Directors. The
Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the current per share market price at the time of the redemption) or
any other form of consideration deemed appropriate by the Board of Directors.
Immediately upon the action of the Board of Directors of the Company electing to
redeem the Rights, the Company shall make an announcement thereof, and upon such
election, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The term "CONTINUING DIRECTORS" means any member of the Board of
Directors of the Company who was a member of the Board prior to the time that
any Person becomes an Acquiring Person, and any person who is subsequently
elected to the Board if such person is recommended or approved by a majority of
the Continuing Directors. Continuing Directors do not include an Acquiring
Person, or an affiliate or associate of an Acquiring Person, or any
representative of the foregoing.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company beyond those as an existing stockholder,
including, without limitation, the right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, amend or supplement the Rights Agreement without the approval of any
holders of Right Certificates to cure any ambiguity, to correct or supplement
any provision contained therein which may be defective or inconsistent with any
other provisions therein, to shorten or lengthen any time period under the
Rights Agreement (so long as, under certain circumstances, a majority of
Continuing Directors approve such shortening or lengthening) or so long as the
interests of the holders of Right Certificates (other than an Acquiring Person
or an affiliate or associate of an Acquiring Person) are not adversely affected
thereby, to make any other provisions in regard to matters or questions arising
thereunder which the Company and the Rights Agent may deem necessary or
desirable, including but not limited to extending the Final Expiration Date.
The Company may at any time prior to such time as any Person becomes an
Acquiring Person amend the Rights Agreement to lower the thresholds described
above to not less than the greater of (i) any percentage greater than the
largest percentage of the outstanding Common Shares then known by the Company to
be beneficially owned by any person or group of affiliated or associated persons
(other than the Company and certain of its affiliates) and (ii) 10%.
C-3
<PAGE>
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Current Report on Form 8-K.
A copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
C-4
<PAGE>
EXHIBIT 99.1
DAMES & MOORE GROUP DECLARES DIVIDEND
DISTRIBUTION OF PREFERRED SHARE PURCHASE RIGHTS
Los Angeles, California, March 14, 1997 -- The Board of Directors of
Dames & Moore Group today declared a dividend distribution of one Preferred
Share Purchase Right on each outstanding share of Dames & Moore Group common
stock. Each Right will entitle stockholders to buy one two-hundredth of a share
of newly created Series A Junior Participating Preferred Stock of the company at
an exercise price of $65. The rights will be exercisable if a person or group
acquires 15% or more of the company's common stock or announces a tender offer
for 15% or more of the common stock. The Dames & Moore Group Board will be
entitled to redeem the rights at $0.01 per right at any time before the tenth
day after a person has acquired 15% or more of the outstanding common stock.
The rights are not being distributed in response to any specific
effort to acquire control of the company. The rights are designed to assure
that all Dames & Moore Group stockholders receive fair and equal treatment in
the event of any proposed takeover of the company and to guard against partial
tender offers, open market accumulations and other abusive tactics to gain
control of Dames & Moore Group without paying all stockholders a control
premium.
If a person acquires 15% or more of the outstanding common stock of
Dames & Moore Group, each right will entitle its holder to purchase, at the
right's then-current exercise price, a number of common shares of Dames &
Moore Group having a market value at that time of twice the right's exercise
price. Rights held by the 15% holder will become void and will not be
exercisable to purchase shares at the bargain purchase price. If Dames & Moore
Group is
<PAGE>
acquired in a merger or other business combination transaction which has not
been approved by the Board of Directors, each right will entitle its holder to
purchase, at the right's then-current exercise price, a number of the acquiring
company's common shares having a market value at that time of twice the right's
exercise price.
"The rights are intended to enable all Dames & Moore Group
stockholders to realize the long-term value of their investment in the company.
They do not prevent a takeover, but should encourage anyone seeking to acquire
the company to negotiate with the Board of Directors prior to attempting a
takeover. Over 1,500 other public companies have adopted rights plans in recent
years," said Arthur C. Darrow, President and Chief Executive Officer of Dames &
Moore Group.
The dividend distribution will be payable to stockholders of record on
March 28, 1997. The rights will expire in 10 years. The rights distribution is
not taxable to stockholders.
2
<PAGE>
EXHIBIT 99.2
Arthur C. Darrow
President and (213) 683-1560 (ph)
Chief Executive Officer (213) 628-0015 (fax)
DAMES & MOORE, INC.
911 Wilshire Blvd., Suite 700
Los Angeles, CA 90017
March 28, 1997
To Our Stockholders:
On March 14, 1997, the Board of Directors of Dames & Moore, Inc.
("Dames & Moore" or the "Company") adopted a Rights Plan (the "Plan") that is
intended to protect your interests in the event you and the Company are
confronted with coercive takeover tactics.
The Plan provides for a dividend distribution to all stockholders of
record on March 28, 1997, of Rights to purchase shares of a newly created series
of the Company's Preferred Stock. Under certain circumstances, the Rights could
become exercisable to purchase Company's Common Stock, or securities of an
acquiring entity, at one-half market value. The Rights may be exercised only if
certain events occur. As a holder of Dames & Moore Common Stock, you are now
the owner of one Right for each share of the Company's Common Stock you own.
Attached is a summary description that outlines the principal features of the
Plan, and I urge you to read the summary carefully.
NO ACTION BY STOCKHOLDERS IS REQUIRED OR PERMITTED AT THIS TIME, AND
NO MONEY SHOULD BE SENT TO DAMES & MOORE. THE RIGHTS WILL AUTOMATICALLY ATTACH
TO THE SHARES OF COMMON STOCK YOU HOLD AND WILL TRADE WITH THEM. SEPARATE RIGHT
CERTIFICATES WILL BE SENT TO STOCKHOLDERS ONLY IF A PERSON OR GROUP ACQUIRES 15%
OR MORE OF DAMES & MOORE OUTSTANDING COMMON STOCK OR MAKES A TENDER OFFER FOR
15% OR MORE OF THE COMMON STOCK. DAMES & MOORE COMMON STOCK CERTIFICATES ISSUED
AFTER MARCH 28, 1997 WILL CONTAIN A REFERENCE TO THE RIGHTS PLAN, BUT THERE IS
NO NEED TO SEND IN YOUR CERTIFICATES TO HAVE THIS REFERENCE ADDED.
The Rights are not being distributed in response to any specific
effort to acquire control of the Company. The Rights are designed to assure
that all Dames & Moore stockholders receive fair and equal treatment in the
event of an unsolicited attempt to acquire the Company, including through an
accumulation of stock in the open market, and to guard against partial, two-tier
or inadequate tender offers and other abusive takeover tactics which the Board
of Directors believes are not in the best interests of stockholders. These
tactics can unfairly pressure stockholders and deprive them of the full value of
their Common Stock. The Board considers these Rights to be a valuable means of
protecting both your right to retain your equity investment in Dames & Moore and
the full value of that investment, while not foreclosing a fair acquisition bid
for the Company.
<PAGE>
Letter to Stockholders
March 28, 1997
Page 2
The Rights are not intended to prevent a takeover of Dames & Moore and
will not do so. They are designed to deal with the possibility of unilateral
actions by hostile acquirors that could deprive the Board of Directors and
stockholders of Dames & Moore of their ability to determine the Company's
destiny and obtain the highest price for their Common Stock.
Adoption of the Plan should not by itself affect any prospective
acquiror who is willing to make an all-cash offer at a full and fair price or
who is willing to negotiate with the Company's Board of Directors, nor will it
interfere with a merger or other business combination transaction approved by
the Board of Directors.
The issuance of the Rights has no dilutive effect, will not affect
reported earnings per share and is not taxable to the Company or to you.
Stockholders may, under certain circumstances, recognize taxable income if the
Rights become exercisable.
Our overriding objective is to continue building value for Dames &
Moore's stockholders, and we feel that the Plan will assist in that effort.
Sincerely,
Arthur C. Darrow
President & Chief Executive Officer
